"CHEATER IN THE EURO- FAMILY"/Focus

EDITOR’S CHOICE: Frenchman Dominique Strauss-Kahn, the head of the International Monetary Fund, suggests the organization provide countries with a global reserve currency that would serve as an alternative to the U.S. dollar. China and Russia have called for dumping the dollar – but not for the yuan, ruble or yen -- and have proposed using the IMF’s internal accounting unit special drawing rights, or SDRs. Several decades ago the IMF tried to use a “basket” of currencies to replace the dollar but that didn’t work. Then of course there is the euro, which reports say hedge funds are betting will collapse. It is plagued by the the economies of Portugal, Italy, Ireland, Greece and Spain (PIIGS), all of which have incurred even more debt than Obama. Now Germany is refusing to bail Greece out and Athens isn’t amused. Experts say there is no alternative to the dollar, and at a minimum, the euro could lose as much as a third of its value in the very near future. And – is the U.S. headed inexorably down the Greek road? One Senator thinks so.

DOLLAR: Strauss-Kahn said last week that having other alternatives to the dollar "would limit the extent to which the international monetary system as a whole depends on the policies and conditions of a single, albeit dominant, country." A former finance minister of France, that is no surprise, although he conceded that during the recent global financial crisis, the dollar "played its role as a safe haven" asset, and the current international monetary system demonstrated resilience.

What is surprising is that he would address that issue at all – when the No.1 financial issue in the world is the danger of a total collapse and default of Greece and the impact that might have on the euro. Karl West of the London Daily Mail Online says that George Soros and other hedge fund managers are betting big time that the euro is going to drop by a third and may be headed for extinction.

EURO: The single European currency has been under enormous pressure because of Greece's debt crisis, plus financial worries in the other states of Portugal, Italy, Spain and Ireland. But, it has also struggled because hedge funds have been placing huge bets on the currency's decline, which could make the speculators hundreds of millions of pounds.

The euro traded at $1.51 in December, but has since fallen to $1.34. Soros recently warned in a newspaper article that the euro could “fall apart” even if the EU can agree a deal to shore up support for stricken Greece. Soros, who made more than $1 billion in currency speculation when the pound was ejected from the Exchange Rate Mechanism on Black Wednesday in 1992, believes the structure of the euro is “patently flawed.”

THE PIIGS: Soros said last week: 'Makeshift assistance should be enough for Greece, but that leaves Spain, Italy, Portugal and Ireland. Together they constitute too large a portion of euroland to be helped in this way.” Soros believes that unless the European Commission is given sweeping powers over taxation and spending, the single currency will always be vulnerable to financial turbulence in individual states. “If member countries cannot take the next steps forward, the euro may fall apart,” he added.

Last week, Greek Prime Minister George Papandreou hit back at the “speculators” whom he blames for preying on the country's troubles. Following a visit by EU economic inspectors and experts from the IMF, he told the country's parliament that the worst fears about Greece's economy had been confirmed.

Greece is desperate to restore the confidence of investors in its debt after revealing that the previous government understated its budget deficit by half. Outlining the precarious nature of Greece's finances, Papandreou said: 'There is only one dilemma: Will we let the country go bankrupt or will we react? 'Will we let the speculators strangle us, or will we take our fate in our own hands?' The Greek leader also called for more help from the EU with its debt crisis. Until now, the EU has offered political support but no bailout.

INSULTS: With friends like this: The cover of the German magazine 'Focus' this week, which shows the Venus de Milo giving the finger by a headline accusing Greece of swindling its way into the euro. The Greek daily Eleftheros Typos responded by depicting the statue off the goddess Victoria, atop the Siegessaeule in Berlin, holding a swastika.

German Chancellor Angela Merkel said the situation was “difficult.” A Greek consumer group called for a boycott of German goods today after the German magazine blasted the country as cheats. The new trade war came as Merkel admitted the euro is in 'a difficult situation' for the first time.

She spoke as Focus ran its cover image of the armless lofting her middle finger to suggest that Greece swindled its EU peers.

OUTRAGE: The cover sparked outrage in Greece, prompting the demands for a boycott. A Greek newspaper has also hit back, running an image showing the statue of the goddess Victoria atop the Siegessaeule in Berlin holding a swastika. 'The falsification of a statue of Greek history, beauty and civilisation, from a time when there (in Germany) they were eating bananas on trees is impermissible and unforgivable,' a statement from the Consumer Institute (INKA) said.

“Greeks are no crooks, we want the German government to condemn this most improper publication,” said INKA president George Lakouritis.  If you have such friends, what do you need enemies for?” INKA distributed leaflets in central Athens and in front of German-owned consumer electronics store Media Markt, urging Greeks to heed the boycott. The rest of West’s analysis:

OPINION POLLS: Merkel's government has so far deflected appeals to promise aid to heavily indebted Greece. Opinion polls show that a majority of Germans oppose a bailout. Germany's ambassador to Greece, Wolfgang Schultheiss, said he regretted that German press reports caused offence. “Germany is firmly on Greece's side,” Schultheiss said after being summoned by Greece's parliament speaker Filippos Petsalnikos.

But it wasn't enough for Lakouritis. “The ambassador's statements were not satisfactory,” he said. Merkel has admitted that Greece's debt crisis has endangered the euro. The admission from the leader of Europe's biggest economy has prompted fresh fears about the collapse of the single currency – and the hedge fund predators have taken notice.

U.S TOO: Thanks to President Obama’s near criminal irresponsible spending, the U.S. is heading in the same direction as Greece -- for a debt-driven “financial meltdown” within five to seven years, according to Judd Gregg, the outgoing Republican senator for New Hampshire. In a robust and testy interview with the Financial Times, Gregg also complimented China for showing rising alarm about the US’s mounting levels of public debt. “We have had China say that they are looking for other places to put their reserves and that is probably a smart decision on their part,” he said.

Gregg, who will not seek re-election in November. “So the warning signs are pretty clear and the path is unsustainable and, at this point, unless we take different actions, unavoidable.” But the senator, who was the most high-profile Repub lican invited by Obama to join his administration last year, an offer Gregg accepted and then turned down, said he doubted that the two parties would get together to tackle it. Last month 16 Republicans and 37 Democrats voted to establish a fiscal commission -- seven votes short of what was needed to prevent a filibuster.

Sen. Gregg also played down prospects for the non-statutory fiscal commission that Obama set up by executive order last week. “It was just an edict that came from a Democratic president,” he said, adding, that “it’s the only game in town right now.” He also disputed non-partisan economic studies that showed last year’s $787 billion stimulus cushioned the impact of the recession. “The facts are wrong,” he said. “I can understand how a Keynesian would make that argument. I find them absurd on their face.”

TAX CUTS: He also disputed studies that showed the large tax cuts pushed through by George W. Bush, then president, in 2001 and 2003 had added to the US fiscal deficit. “They were actually paying for themselves,” he said. “If you look at the numbers, they did.” The Sen. also elaborated on why he changed his mind last January on accepting a post in Obama’s cabinet.

“The euphoria of the time made me want to try to help,” he said. “But the practical reality of the situation settled in after a couple of weeks. It would be hard for a hard-line fiscal conservative to serve in this administration.”