Jan. 29 ( take from Bloomberg.com)

Dollar will benefit as a potential "financial stone age" for Greece and threaten other countries to break the euro, according to Walter J. Zimmermann Jr., chief technical analyst at United-ICAP.

The greenback would rise to the final level reached more than six years ago against the major currencies U.S. trading partners as the European budget crisis reduced demand for higher yield assets, according to Zimmerman, the company which is a unit of ICAP Plc, technical research, the world's largest inter-dealer broker.

"There is such a high risk of fracture of the euro in mid-2011," said Zimmerman, 58, in a telephone interview from Jersey City, New Jersey. "The response of the same fear that drives the rally from March '08 to March '09 will cause the dollar to act as a vehicle of salvation."

The Dollar Index, which IntercontinentalExchange Inc. are used to track the greenback against currencies including the euro, yen and pound, could increase in mid-2011 at least 93, according to Zimmermann. Measure of the greenback climbed to 79.156 today, the strongest level since August 19. Index reached a three-year high of 89.624 on March 4.

The U.S. currency will rally as investors seek refuge from an "economic boom of large-scale," according to Zimmerman, who wrote in a January 21 research note that the U.S. stock market in 2009 is a face similar to the 1929-1930 rebound followed by an era Depression defeat. Under the bearish scenario, the stock will reach bottom in 2014-2015, according to Zimmermann.

In Minsky's Footsteps

Drawing on the late Hyman Minsky model for the cycle of debt, Zimmermann estimate the potential "financial stone age" in which Greece, Spain, Portugal and Ireland struggle to keep their budget deficits and the default-free loan lender of last resort such as the Federal Reserve.

Minsky was an American economist who argued that the capitalist economy triggered a wave of credit expansion and asset inflation are followed by credit contraction and asset deflation. Economists pay attention to him when the subprime crisis turbulent market. That is the "Minsky moment," when the credit dried up.

European Central Bank President Jean-Claude Trichet on January 14 is considered as an "unreasonable hypothesis" suggested that Greece could be forced to exit from the euro area.

Euro, which contributed 57.6 percent of the Dollar Index, would fall into the range of $ 1.15 to $ 1.17 in mid-2011, according to Zimmermann. The median estimates of 14 analysts in a Bloomberg News survey was for the euro to trade at $ 1.41 at the end of 2011.

Status of the dollar as the world's major reserve currency will also help promote the rally, according to Zimmermann. With most of the world price in dollars of debt and further "broken down" is expected in commercial real estate market, there will be a growing need for dollars to pay the debt, he said.

Dollar index futures expire on March increased for the fourth straight day, rising as much as 0.3 percent to 79.335. Today's dollar rally as much as 0.4 percent to $ 1.3913 per euro, the strongest level since July 14.