Germany And Greece Play Chicken In Demolition Derby, Euro Smashed

It’s the European Demolition Derby. Smash! Crash! Crunch! Whack! Fenders banged up. Radiators steaming. Tires flattened. Greece and Germany are playing chicken. Greece presses down the accelerator and heads for Germany.

“If you force us out of the euro, all of Europe will go up in flames,” say the Greeks.

“Oh, Ja?” say the Germans, turning on the speed in their Mercedes, and we wonder which one will lose his nerve? Or will they crash head-on? Nobody knows for sure, but nobody wants to have money in Greek banks, in European periphery banks–or even in euros–when they find out.

This past week more money leaked out of Greece and out of the euro, which fell to its lowest level in two years as “Europe braced for turmoil.” One headline said Greece was making plans to withdraw from the euro. The Greeks promptly denied it. You know what they used to say in Soviet Russia: no rumor is confirmed until it is officially denied.

De La Rue, an English company that prints most of the world’s currencies, would not say whether an order for drachma had come through or not.

The big beneficiary of all this capital flight from European smash-ups has been the good ol’ greenback. How about these May flowers: just this month, the U.S. Dollar Bullish (UUP) ETF has ticked up 4.6%. The Currency Shares Euro (FXE) have tanked 5.5%.

Commodities from top to bottom have been slayed, too. The US Oil Fund (USO), which tracks the price of crude, has been hammered 13.8% lower in May. Crude spilled below $90 last week but bubbled back at week’s end with the West Texas Intermediate flavor fetching $90.72 per barrel.

Metals have been mauled. For the month, the SPDR Gold Trust (GLD) is down 5.7% and iShares Silver (SLV) has been whacked -8.3%.

forbes