RE: Off subject18 Mar 2024 13:32
1984Investor - IMHO the EU will collapse when Italy defaults on its Target 2 loans. It threatened to default in December 2017, unless the ECB bailed out it's banking system by buying Italian Government Bonds. Draghi was the head of the ECB (the future Italian PM) bought more than the protocols allowed. Prior to Target 2, the ERM, Currency Snake and the Latin Monetary Union all collapsed when Italy defaulted on its loans. People and businesses in the UK worry about their loans, whereas in Italy the lenders worry about the loans.
Target 2 was brought in to stop all the Euros ending up in Germany, as there's no self-regulation, when countries are all in the same currency. Prior to the Euro, if too much trade went from Germany to Greece for example by buying Mercedes, the Mark becomes stronger and the Drachma weaker. Eventually the price of Mercedes is too high for the Greeks, but Greek holidays become cheap for Germans. In other words the currency self-regulates. Under Target 2 the money is immediately returned to country of origin in the Eurozone as a compulsory loan, with Zero Percent Interest and No Obligation To Pay. It's like an IOU, but not as strong in law as an IOU. IMHO it's a recipe encouraging a default.