Et tu, Euro?

Many financial pundits have declared the eventual death of the USDollar as the world's reserve currency, as the Fed continues it's currency debasement program (despite claims of a "strong dollar policy"). Some have taken this cue to pile into the Euro, believing it to be a safe haven from USDollar destruction.

No so fast. It seems the southern nations in the EU are having huge debt problems--much like its ally in north America. This includes Greece, Italy, Spain, Portugal, and Ireland (albeit a northern European country). Their sovereign debt has either been downgraded, or in danger of imminent downgrades, exacerbating the debt problems as their borrowing costs increase with each downgrade. These indebted countries want more Euros, but the more fiscally sound EU countries refuse to print more currency, desiring currency stabilization. Hence, the bifurcation and increased tensions among EU countries.

If Greece were to opt out of the Euro in order to resolve their sovereign debt problem (it certainly isn't the correct long-term solution, but it temporarily alleviates their fiscal problems), expect other nations to follow suit, putting the Euro itself in danger of being scuttled.

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/6804156/Greece-defies-Europe-as-EMU-crisis-turns-deadly-serious.html

These are indeed interesting times. So what other currencies are acceptable havens in a world of cascading currency debasement? Countries rich with natural resources should perform relatively well in a global credit contraction. The currencies of Norway, Canada, Australia, and Brazil (how things have turned around--Brazil's real has traditionally been an inflation hot potato) are good candidates.

But the ultimate store of value--real money with no counter party liability, leads us back to gold and silver.