Ways to trade the Euro debt crisis
Short the Pound and other English financial items.  Because the English economy is tied to the EU, it will be hit as well.  You might prefer this over Euro denominated investments, since it's not exactly clear who your counterpart is if the Euro really crashes hard.  Meaning suppose you have a short position Euro's versus dollars, but the clearing house is taken down by the crash. "The way I am trading this is:  I am long the USD / EUR in cash. I also hold USD / EUR futures, which are traded on the Globex exchange. I am long US equities which have a low exposure to Europe and China (as I expect China to growth significantly slower if the European weakens).  I would not short US equities because Europe-based investors (like me) are buying comparatively ""safe"" US equities to reduce their EUR exposure."
&gt; Trade with who?  Intra asia trade.  China is worlds largest trading partner. (why would anybody in asia pay middle man, american banks, just to trade with themselves?  Using Yuan is instant 1.5% saving.)  Dollar is mainly for financial and trade with US based countries. Even euro is less hassle than using dollar by now for asian country. "I'm surprised people don't bring this up more often....if you add together, not just our sovereign debt, but public and private debt, plus our contingent liabilities, meaning FHA, student loans, fannie mae, freddie mac, AIG, etc.  that totals over $100 TRILLION dollars, more than we could ever pay back, meaning literally there is no amount of growth and taxes that could ever pay this money back. (cite my sources do a google search of James Rickards Hopkins lecture it's in the first few minutes)  The reason you need to add all that together is because the economy can't grow if nobody has any money for investment, etc. (there isn't much home equity left after the housing crisis, retirement plans aren't holding as much, etc.) there wouldn't be an easy way to grow this economy, that's why we have ""currency wars"" competitive devaluations....to me we're already over the cliff I don't see us heading back, but I'm not saying that means we're going to collapse, just we'll need to go back to some sort of standard where our currency is backed by something (i.e. commodities or gold or something) and there are going to be A LOT of losses in the near term....meaning I want OUT of dollars....  combined with our lazy/entitled generation (don't tell me creating some website where you can order artistic candy on a stick is going to save our economy...we need to produce and innovate again to lower our trade deficit and so people actually bring their capital here), and dwindling resources I'd say it's already game over, the pieces just need to move into place" "I'm assuming the central bank of Italy will initiate quantitative easing (print money) to pay for this. This should devalue the euro.  This may be ""rescuing"" these banks but it's fucking over everyone who is saving/trading with the euro." This would effectively be currency speculation, betting that the Pound will be stronger vs. the Euro in November (or whenever) than it is today.  This would be a profitable transaction if the exchange fees are less than the swing between the two. In my (very limited) experience, exchange fees are going to be at least a few percent, and she's going to have to do the exchange twice if she wants to turn current Euros into Pounds and back into Euros later; that's at least a 6% hit.   I'd recommend against this.  While it's quite plausible for the two currencies to move more than 6% against each other in that time, it's also quite possible for them to move the other way, causing her a large loss.   The unfortunate thing about large, heavily traded things like GBP/EUR is that you're very unlikely to have some information that the big traders don't.  While lots of people think that the pound is going to become stronger, just as many people think that the Euro is going to be stronger.  These two camps are constantly bidding against each other, resulting in the 1.15 Pounds/Euro exchange rate as of this writing.  The current price and current direction that the line is moving in no way tells you what it's going to do next. For questions 1 and 2.  1) If you are packing the loans into a CDO, they are being sold on the open market. Once it achieves a AAA rating, as most did even though they were mostly subprime, alt a, or arm, it is sold and shipped off the originator's books (While the originator of the CDO collects X% in fees)  Basically how the originator makes their money is by X amount of CDOs they sell. There was no incentive to pick and choose the best borrowers to sell a loan to because how the CDOs were sold they achieved the best rating regardless of the borrowers credit risk.  Due to this model, people are going to try and get as many people into the homes and sell the CDO asap. This caused questionable lending practices to result, NINJA (no income, no job, no assets) loans, manipulating borrowers income, assets, etc.   Things that could be changed to help not have this occur again:  a) Feds monetary policy was pretty meh during this period, due to low interest rates the banks had pretty much an endless supply of money and when all the reasonable ventures dried up they had to explore other opportunities to lend.  b) Ratings agencies need an overhaul in how they receive their commission, preferably they should be being paid by the investor not the person issuing the security. This will help to eliminate the bias that results.  c) Having X% (2-5) remain on the institutions books who created the CDO will help to make them responsibly lend. This is because if they are required to have it remain on their books, they will make better longer term decisions in who to lend to.  I'm pretty sure all of these issues are discussed in Nouriel Roubini's book [Crisis Economics](http://www.amazon.com/Crisis-Economics-Course-Future-Finance/dp/1594202508)  Another Great book already mentioned in this thread is by Michael Lewis [The Big Short](http://www.amazon.com/Big-Short-Inside-Doomsday-Machine/dp/0393338827/ref=sr_1_1?s=books&amp;ie=UTF8&amp;qid=1324140607&amp;sr=1-1)  If your interested in the European Crisis Michael Lewis also just came out with [Boomerang](http://www.amazon.com/Boomerang-Travels-New-Third-World/dp/0393081818/ref=sr_1_1?s=books&amp;ie=UTF8&amp;qid=1324140665&amp;sr=1-1) Not directly an answer to your question, but somewhat related: There are derivatives (whose English name I sadly don't know) that allow to profit from breaking through an upper or alternatively a lower barrier. If the trade range does not hit either barrier you lose. This kind of derivative is useful if you expect a strong movement in either direction, which typically occurs at high volume. Use other currencies, if available. I'm not familiar with the banking system in South Africa; if they haven't placed any currency freezes or restrictions, you might want to do this sooner than later.  In full crises, like Russian and Ukraine, once the crisis worsened, they started limiting purchases of foreign currencies. PayPal might allow currency swaps (it implies that it does at the bottom of this page); if not, I know Uphold does. Short the currency Brokerage in the US allow us to short the US Dollar.  If banks allow you to short the ZAR, you can always use that for protection.  I looked at the interest rates in the ZAR to see how the central bank is offsetting this currency crisis - WOW - I'd be running, not walking toward the nearest exit.  A USA analogy during the late 70s/early 80s would be Paul Volcker holding interest rates at 2.5%, thinking that would contain 10% inflation. Bitcoin Comes with significant risks itself, but if you use it as a temporary medium of exchange for swaps - like Uphold or with some bitcoin exchanges like BTC-e - you can get other currencies by converting to bitcoin then swapping for other assets.  Bitcoin's strength is remitting and swapping; holding on to it is high risk. Commodities I think these are higher risk right now as part of the ZAR's problem is that it's heavily reliant on commodities.  I looked at your stock market to see how well it's done, and I also see that it's done poorly too and I think the commodity bloodbath has something to do with that.  If you know of any commodity that can stay stable during uncertainty, like food that doesn't expire, you can at least buy without worrying about costs rising in the future.  I always joke that if hyperinflation happened in the United States, everyone would wish they lived in Utah. If you do not understand the volatility of the fx market, you need to stop trading it, immediately. There are many reasons that fx is riskier than other types of investing, and you bear those risks whether you understand them or not. Below are a number of reasons why fx trading has high levels of risk: 1) FX trades on the relative exchange rate between currencies. That means it is a zero-sum game. Over time, the global fx market cannot 'grow'. If the US economy doubles in size, and the European economy doubles in size, then the exchange rate between the USD and the EUR will be the same as it is today (in an extreme example, all else being equal, yes I know that value of currency /= value of total economy, but the general point stands).  Compare that with the stock market - if the US economy doubles in size, then effectively the value of your stock investments will double in size. That means that stocks, bonds, etc. tied to real world economies generally increase when the global economy increases - it is a positive sum game, where many players can be winners. On the long term, on average, most people earn value, without needing to get into 'timing' of trades. This allows many people to consider long-term equity investing to be lower risk than 'day-trading'. With FX, because the value of a currency is in its relative position compared with another currency, 1 player is a winner, 1 player is a loser. By this token, most fx trading is necessarily short-term 'day-trading', which by itself carries inherent risk. 2) Fx markets are insanely efficient (I will lightly state that this is my opinion, but one that I am not alone in holding firmly). This means that public information about a currency [ie: economic news, political news, etc.] is nearly immediately acted upon by many, many people, so that the revised fx price of that currency will quickly adjust. The more efficient a market is, the harder it is to 'time a trade'. As an example, if you see on a news feed that the head of a central bank authority made an announcement about interest rates in that country [a common driver of fx prices], you have only moments to make a trade before the large institutional investors already factor it into their bid/ask prices. Keep in mind that the large fx players are dealing with millions and billions of dollars; markets can move very quickly because of this. Note that some currencies trade more frequently than others. The main currency 'pairs' are typically between USD and / or other G10 country-currencies [JPY, EUR, etc.]. As you get into currencies of smaller countries, trading of those currencies happens less frequently. This means that there may be some additional time before public information is 'priced in' to the market value of that currency, making that currency 'less efficient'. On the flip side, if something is infrequently traded, pricing can be more volatile, as a few relatively smaller trades can have a big impact on the market.  3) Uncertainty of political news. If you make an fx trade based on what you believe will happen after an expected political event, you are taking risk that the event actually happens. Politics and world events can be very hard to predict, and there is a high element of chance involved [see recent 'expected' election results across the world for evidence of this]. For something like the stock market, a particular industry may get hit every once in a while with unexpected news, but the fx market is inherently tied to politics in a way that may impact exchange rates multiple times a day. 4) Leveraging. It is very common for fx traders to borrow money to invest in fx. This creates additional risk because it amplifies the impact of your (positive or negative) returns. This applies to other investments as well, but I mention it because high degrees of debt leveraging is extremely common in FX. To answer your direct question: There are no single individual traders who spike fx prices - that is the impact you see of a very efficient market, with large value traders, reacting to frequent, surprising news.  I reiterate: If you do not understand the risks associated with fx trade, I recommend that you stop this activity immediately, at least until you understand it better [and I would recommend personally that any amateur investor never get involved in fx at all, regardless of how informed you believe you are].