Euro trend is beginning to reflect the reality of a new financial crises in Europe. What exactly is going on with the euro trend? It seems that the worse the news the higher the euro goes. That is until recently. Could it be that the fix is no longer working? That a massive back door support operation involving the combined fire power of the Federal Reserve Bank and the European Central Bank is succumbing to market forces? We do know the euro trend has reversed and is now down.

Equity and Currency Markets Have Been Massively Manipulated Including Euro Trend

You bet, the same behind-the-scenes operators who are boosting equity prices in stock markets in America and Europe are bailing out insolvent European banks and have supported a higher euro trend than fundamentals merit. Who are these people? And what is their game? The answer to the two questions is fairly simple and important to better understanding the euro trend.

The elites of primarily America and Europe developed economies based upon the creation of debt and the availability of cheap energy inputs. They are in denial that the financial system they created based upon the creation of debt and ever expanding economies depending upon cheap availability of energy inputs that has powered Western economies since the end of World War II is irreparably broken.

Upward Euro Trend Has Been Supported by Banking and Political Elites

These are essentially greedy people and their game has been to gain a disproportion amount of the world’s wealth to the detriment of billions of people around the world. The European elites are doing everything in their power to keep an upward bias to the euro trend. But no matter how elite you may be you cannot manipulate market fundamentals and currency markets forever. The euro trend is now down.

Now that massive withdrawals of funds from banks are occurring in Greece, Italy, Spain, France, Belgium, and other euro zone nations the endgame is near. An exit by Greece from the euro zone and the euro will not be pretty. A full-fledged panic will likely spread across Europe and throughout the world. In the event of a full-scale panic the euro trend will not just be down, the euro will fall off a cliff.

Mario Draghi - President European Central Bank

The too big to fail(TBTF)banks with their connections to the US government and to European governments contain most of the deposits that are now flying out the door. Ben Bernanke in his role as Chairman of the US Federal Reserve and Mario Draghi, president of the European Central Bank, will in the end print as many dollars and euros as necessary to save the TBTF banks. The problem is has some point their actions will likely lead to a massive hyperinflation.

This is basically how one of the euro trend manipulations works. The European Central Bank established a $500 billion fund in order to assist struggling European banks. Now guess where a significant amount of that money came from? Yup, you guessed it. From the US Federal Reserve Bank. Now the European Central Bank has funds on hand to make almost zero interest rate loans to struggling European banks. The unspoken agreement between the ECB and the crony banks is that the European banks will be active purchasers at European sovereign debt auctions.

The Banking Elite Will Bail Each Other Out Any Way They Can

Since banks on both sides of the Atlantic have considerable exposure to European sovereign debt and the euro trend once again the bankers are being bailed out in a very sneaky backdoor way. The banksters may know how to make lousy sovereign loans but they do know how to care of themselves.

An Old Fashioned Bank Run is Spreading Across Europe and Sending the Euro Trend Lower

Now for the euro trend. The euro benefited against the dollar and most other currencies as expectations increased that once again the banksters will prevail. It seemed the poor citizens of Greece would be forced to make yet more sacrifices in order to keep their banker friends satisfied. However, now the citizens of Greece are saying loud and clear that they have had enough of austerity and mortgaging their futures in order to pay European banking elites. They are currently withdrawing their savings and deposits from Greek banks; a crises for the bankers that is reaching doomsday proportions. A massive bank run across Greek and much of Europe could bring a grave financial crises down on both sides of the Atlantic. The recent downward euro trend reflects the going concern that an old-fashioned bank run may be gaining momentum.

European Bankers Desperate to Keep Greece in Euro and Support Raising Euro Trend

The European Central Bank and the International Monetary Fund advanced the $172 billion in bailout funds that Greece desperately needed in March to stay afloat. Not that Greek citizens are happy about this as they are being converted into homeless street people in order for the banks to avoid taking losses and to support a raising euro trend. More recently in yet another Greek collection voters showed how upset they are about austerity measures. Now the Greeks are unable to form another government.

“Greece is a big part of Europe’s debt crisis, so a step forward to its resolution is seen favorably in the near term, which is spurring the unwinding of short positions on the euro,” said Kengo Suzuki, a foreign-exchange strategist in Tokyo at Mizuho Securities Co., a unit of Japan’s No. 3 listed bank by market value, referring to bets that an asset will decline in value. “I expect the euro to rise to $1.34.” This statement was made in March, 2012 and was about right.

Since then reality is taking hold. The near-term euro trend is clearly down reaching the 1.2700 level. While technically oversold, a bounce could occur at any time, the acceleration of disarray in the euro zone seems to warrant a downward euro trend for the long term. Expect the present trend to continue with a few bounces now and then until conditions in Greece and Europe become so bad that  insolvent banks and the insolvent European Central Bank and the insolvent US Federal Reserve Bank can no longer support the currency. At some point a collapse of the euro trend towards parity with US dollar is a definite possibility.

No one can accurately predict where manipulated markets might go. Why? Because they are manipulated. However, the present 2012 euro trend is probably reaching a point of acceleration. Conditions in Europe and the United States can no longer be papered over and made to look like they are improving while the underlying economic trends are not encouraging.

Still 2012 will likely go into the history books as a year of historic euro trend and stock market manipulation. We could even see a 7.5% unemployment rate in October going into the November election. But hey. That would be an official US government rate. Can you trust them and their statistics?

Being short the euro from above the 1.3400 euro trend level as mentioned on this blog three months ago was a good speculation.

The long-term euro trend for the remainder of this year will likely be down. Of course, there will be rallies to relieve oversold conditions. However, rallies will likely not carry too far and give aggressive short-sellers good entry points to profit from a euro trend that looks increasingly bearish.

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