Market driven economics is the simplest way to understand anything.

When demand increases prices go up until supply increases. Of course supplies increase because someone sees extraordinarily high profits being generated and a consumer base for the item. That someone then becomes an investor or raises capital from those who think it is a good idea to produce more of that which is demanded.

When more investors get in, supplies increase and unless demand increase at an accelerated pace ... prices drop, squeezing profits and driving the inefficient suppliers out of the market.

Pretty simple stuff ... yes there are other factors ... barriers to enter a market, (that is when a government can be of use) possible collusion and acts of antitrust (again when regulators/government are useful to protect the public good). There are things like the laws of diminsihing marginal returns ... i.e. as a consumer consumes more of a demanded product the pleasure or untility derived from each consumption reduces (even with sex).

(On the biography channel watching the life of John Rockfeller and the evolution of perhaps the item of gretaest demand in history, Oil, including how governments reacted is probably the simplest way to learn economic theory in under an hour if you have some vision and ability to extrapolate concepts.)

In any case .... think about the money markets in Europe which are so ANTI INTUITIVE that collapse is inevitable and one has to wonder if the battlefields of bullets has been replaced by the surreptitious provision of debt.

As the PIIGS require more money (refinancing old debt while adding new debt including increased cost to borrow), and the suppliers start backing away (sovereign debt holders), Central Banks (private companioes interested in taking care of their private interests) start reducing the price of the increasingly demanded item when their is a squeeze on the supply.

Is it an act of war or genuine regard for the welfare of another sovereign nation. WAIT, maybe it is that organizational behaviour model kicking in called the prisoners dilemma (two people who committed a crime are separated and interogated ... each is offered the same deal confess, turn states evidence and get a reduced sentence of 1 year, dont and take full responsibility for the crime 10 years facing a 10 year sentence or both confess and each takle a 7 year sentence) ... Even with weak eveidence the likely sceanrio is 7 years each.

BOTTOM LINE ... the ONLY reason to save the Euro for the other countries is trying to avoid their own share of guilt and the ensuing consequences of this massive debt orgy ... it will fail .... so get your gold, but also get your beans rice and other dry goods ... they will come in handy when the shleves are bare because of a worldwide currency implosion.

The best we can hope for is a steady inflationary period 15-20% annually as hoarding of commodities results from the inability of the market forces to operate in an environment where money is no longer available because fear is driving every move of everyone.

orgy