Euro was created as a common currency initially among the first twelve European nations and then expanded in to others. The efforts for the European common market currency started post 1950 as an effort by the marginalized European colonial powers who after World War II saw the rise of United States as a world financial power house and dollar as a medium of petro-buying. The efforts along with the collapse of gold backing of dollar in 1971 saw the first oil crisis speed up the need of an alternate international currency to trade in as an alternate of petrodollar. Every such effort for an alternate international currency was shot down by US either overtly or covertly, as US gained tremendously by printing and selling dollars to the demand of petro products. This also made the US dollar an international reserve currency, a position used by the US to bring its enemies to the knees by freezing their dollar deposits.
So from 1980 onwards many oil producing countries wanted to shift to an alternate currency/barter. Any such move reduced the US influence internationally currency wise and domestically economy wise. The more petrol is demanded; more dollars are demanded worldwide thus fueling the domestic American economy growth.
The flow of dollars into the US economy resulted in terrific real-estate boom which peaked in 1980. In order to show the myth of perpetual American economic strength the unholy alliance between mortgage brokers, private bankers and Wall Street big firms started subprime lending (lending below 0% interest rate without bothering inflation rate) and securitization of debt (selling housing mortgages as bank backed tradable stocks) first in Wall Street then everywhere in the world. This process is called derivative markets. As against world’s total GDP of $50 trillion a whopping $150 trillion derivative market came into life, sowing the seeds for the beginning of the current financial doom which is now known as US Meltdown in 2008, Eurozone crisis of 2012 and if not prudent will be called Indian Crisis of 2020.
Contents of the article:
- American Greed
- Europe in Perspective
- Birth of Euro
- Eurozone Crisis
- Extent of the Crisis
- What is the Solution? Where is the Money?
- Implication to India
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