Paul Legato's  Instablog

Here's an interesting end-game scenario for you all to ponder..

The entire world economy bifurcates again into two parts that don't trade much with each other, only now both are essentially capitalist. one is the US sector, including most of the Americas, Japan, Australia, NZ, and western Europe; the other is the Chinese-Russian sector, consisting of the ex-Soviet Union, China, and most of Asia.

The Chinese and Russians get sick of the dollar-printing and start a currency union or managed exchange rate. Their currency is adopted as a reserve and trade currency across most of Asia and eastern Europe. Most of Africa and the middle east are unaligned and use currency baskets and commodity barter.

The talking points coming from the German world at the ECB are all sunshine and roses. Everything is fine, business as usual in Europe, a mere speedbump on the road to prosperity:

The position of the European economic area, and particularly the currency union, grows more tenuous by the day. The European Commission is weak in leadership (moreso than usual)) and suddenly struck by an uncharacteristic attack of economic liberalism, fiscal conservativism, and above all, noninterventionism. They are banking on the worst being over, a quick return to normalcy that will allow their high-end manufacturing exports to resume at scale; and disingenuously trying to blame the United States for the excesses for which European banks were every bit as responsible.