Newman: Can Lagarde and the IMF save the Euro?

By: /
July 4, 2011

Lagarde and the IMF will not save the Euro.

The Chinese will save the Euro at least for the forseeable future. Europeans will think they are saving the Euro because they will refinance their sovereign debt by selling it to the Chinese. Just this week the Chinese agreed to buy  Polish debt and British debt and Beijing won't stop there. The next European debt the Chinese buy will be denominated in Euros. 

Buying the Euro debt means the Chinese won't let the Euro fail. The Chinese are already the Americans' principal banker and soon they will be the Europeans too. The Euro will be "saved" but even more power will be shifted from the North Atlantic zone to China.

This is not happening just because the Chinese have embarked on a long-term plan to become a dominant world power. It is happening because the countries which heve previously dominated have now lost the will to discipline themselves. They are selling their sovereign debt and their power to China.The price of "saving" the Euro will be high.