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The end of the eurozone, or the third world war fought not with guns but mortgages

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Not With a Gun, But With Mortgages

When is an idea a conspiracy theory?
There is much talk about Target 2, and how the story ends. One theory I have not yet seen publicised. I have held it for some time as readers of my blogs will know. It goes like this.
Once upon a time there was a war in Europe. In fact, throughout recorded history the nations of Europe have spent more time at war with each other than at peace. The creation of the EU is supposed to put a stop to all of that. This is how it works.
You create a system that initially seems to be a great improvement on the old. That system is the eurozone. It is designed to integrate. What it does in fact is the opposite as can be plainly seen. I live in Spain and Portugal. Both countries initially benefitted from the introduction of the euro, and both are now suffering from it.
What is going on?
The actuality is disarmingly simple. It is natural for governments to spend money they don't have. It is the way of the world for them to borrow to pay for what they can't afford.
The current system makes it easy for governments to borrow heavily. Interest rates are ludicrously low, and there is a European central bank that can lend generously, and its manager has said that is precisely how things will be.
Unfortunately, certain governments as a result behave like spendthrift teenagers until their accounts are maxed out. Alternatively, the local economy can't handle competition because of the nature of the structure of the shared currency. Whatever the cause, certain countries end up under-performing while others over-perform.
This situation eventually comes to a head, and two things happen. The first is that Target 2 transfers have to take place to stop the majority of the central currency sliding into one place. We all know the law which says that money goes where it is best treated. And we all know that if a certain country can't run a balanced budget, together with a balanced exporting economy, it will run out of cash.
The above is fact, but this is where conspiracy theory starts to take over.
Target 2 is the first stage of the way in which the problem of the flow of money among nations is dealt with. In short, money that flows out of one country and into another within the union is returned to balance the accounts, and an IOU is issued to the country returning the money. I won't go into a detailed description as to why this happens, but it does. This then creates a situation where the distressed country ends up owing money to the country which is effectively the lender.
Let us walk a little way into the future.
Target 2 debts are built up. They are added to ECB loans. At some stage in the not too distant future these debts become effectively marked as mortgages. The next stage is a request, a very polite request, for the debtor country's government to start repaying those loans or agree to accept a lien on tax revenues. Of course, the general public won't know what is going on behind closed doors, but a mortgage of sorts will be signed.
Let us move forward a few more years.
We are now at the stage where nothing has happened for quite some time. Debtor country's government has become complacent with the status quo. The mortgage or lien is just a piece of paper. The assumption made by the debtor government is that nothing's ever going to happen, until, of course, it does.
Now the creditor nation asks politely for a proper normalisation of financial affairs. There are talks, but there isn't any meaningful money available to pay off the debt. In any case it is now much too large to pay off. It is at this stage that the creditor country takes over the finances of the debtor country.
No-one mentions the day to day government of the debtor country, but the central powers of the EU now have financial control, and there is nothing the debtor country can do about it.
Over the course of the next few years that control becomes universal. He who holds the purse strings can control everything that the central government previously paid for.
Some countries are heading rapidly in that direction already. Those countries will soon cease to be independent states. It may take years, or even decades, but that's where we are headed.
This is modern warfare. This is one way to destroy a country's independence, not be aerial bombardment, but by offering cheap loans that can't be paid back. The modern form of aggression is the take-over bid initiated by debt.
The current questions that need to be addressed relate to the possible disruption of this scenario.
The biggest disruption was Brexit. It showed countries that had their wits about them that there was an alternative scenario. You could leave before things got too bad. If Brussels was unhappy with such a decision, then Brussels would be forced to do something about it. What could be done? Take over the country anyway? Perhaps not. Lose their money? Probably the least damaging scenario.
With a bigger country like Italy, the stakes are somewhat higher, but the options are the same. If Italy exits the eurozone, the dream of a united Europe falls. If Italy accepts the mortgage option, which IMHO is the only alternative, then it's fast forward to a united Europe, but under the control of whichever nation holds the purse strings. That nation will be the front runner in the economic stakes. It will be a united Europe under the control of the country which has the biggest economic clout. At the moment that is clearly Germany.
And that is how world war three is fought: not with a gun but with a mortgage.

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