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The Euro continues its freefall against the dollar. The question is where will it bottom against the greenback. Investors should think of the Euro as the stock or an economic barometer, which represents an alliance of a 17 member countries. For that matter every currency acts as an economic meter for each country and that is the Euro’s problem. Before the launch of the Euro in 1999, I can not recall a single instance in the history of the world where one currency was shared by even two countries, much less 17 of them. Every other country with its own currency has its own Central bank, which represents all of the citizens of the specific country. Not so with the European Union as each country has its own Central bank.

What the European Union and Eurozone members are currently facing is the same thing that the U.S. colonies and early U.S. States experienced in the onset of the U.S. Civil war. The inability for the States to agree on slavery was the cause of the Civil War. The inability for the members of the European Union to agree on austerity measures brought on by the crash of 2008 will result in a civil war in Europe and an eventual break up of the European Union and Eurozone.

The question each investor should be asking themselves is would they have bet on the U.S.A., during the Civil War. Not a chance. The Civil war resulted in a collapse of the Dollar, which caused the highest inflation rates in the history of the United States. Ironically, it’s the United States’ survival of the Civil War that has positioned the greenback as the world’s foremost currency once again. For the reasons why see my May 2009, report “Safe Haven Status of U.S. Delays Recovery” which predicted the Euro’s downfall. Now the greater part of Europe is going to face the same challenges that the U.S. faced approximately 150 years ago as they struggle to become a true union which has one Political leader and one Central bank. I would not bet on this happening for Europe.

The ability for the U.S. to come out of its Civil War even stronger than before it went in was because all of the States had natural resources, which were needed by all of the other states. The U.S. also had hard working immigrants who did not rely on the government for social services. The big difference between the U.S. back then and Europe now is that the U.S.’ immigrants went to America to create a new world that had not been settled or politicized. When the immigrants landed in the U.S. they were realistic and knew that they were going to a place, which did not have government services. For Europe in 2010 it’s the totally opposite case as generations of Europeans who have been completely dependent on social services have to come to the reality that those services can no longer be available due to budget constraints.

Based on my theory and recent happenings in Greece, who would want to own Euros? No one. That’s why the Euro continues to fall precipitously. It will continue to do so until it falls to new lows against the Dollar and all other currencies. The only chance for a true European union to develop will be after the Euro has fallen to a level, which had previously never had been considered possible. Assuming that the European Union can last until that happens, a significantly lower Euro would create the huge economic advantage that Europe desperately needs in order to escape its woes.

The jury is out as to whether or not the European Union, Eurozone and the Euro will survive. However, there is no doubt in my mind that the Euro is going to new lows against the Dollar and all major currencies. There are only two ways that this can happen. The first is that the Euro descends gradually over a long period of time. Perhaps, a couple of years. The second is that the Euro dives at warp speed and hits new lows within three to six months. Should the latter happen it could create a global financial panic that would make the 2008 financial crisis seem like a kiddie party. All equity markets would have to readjust down sharply because of the resulting massive financial and economic earthquake. Investors should remain cautious and have at least 80% of their holdings in both short term and long term U.S. government bonds. The rest can be invested in those companies who participate in the online financial sector because it is the only sector of the global economy, which has and will continue to benefit from the increased market volatility and financial crises.

Current and archived information on the Euro and on the Super or secular Bear Market, which began in 2007, and I predict will not end until 2015 is available at http://www.bearmarkettracker.com/. For more information on the online financial sector go to http://www.onlinefinancialsector.com/.