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Coming To America: The Greek Sovereign Debt Crisis

Tyler Durden's picture




 

Yesterday we presented our views on why Europe's decision to tip over the first of the bailout dominoes will be inherently a catastrophic one in the long term, and will ultimately transfer the peripheral liquidity risk into funding, and ultimately, solvency (and once again, liquidity) risk to the very core. Today, Niall Ferguson joins in, in this latest Op-Ed in the Financial Times. "It began in Athens. It is spreading to Lisbon and Madrid. But it would be a grave mistake to assume that the sovereign debt crisis that is unfolding will remain confined to the weaker eurozone economies. For this is more than just a Mediterranean problem with a farmyard acronym. It is a fiscal crisis of the western world. Its ramifications are far more profound than most investors currently appreciate." In other words, Marc Faber 1, CNBC talking heads, 0... as usual.

Ferguson lists the current dead ends presented before the EU:

There is of course a distinctive feature to the eurozone crisis.
Because of the way the European Monetary Union was designed, there is
in fact no mechanism for a bail-out of the Greek government by the
European Union, other member states or the European Central Bank
(articles 123 and 125 of the Lisbon treaty). True, Article 122
may be invoked by the European Council to assist a member state that is
“seriously threatened with severe difficulties caused by natural
disasters or exceptional occurrences beyond its control”, but at this
point nobody wants to pretend that Greece’s yawning deficit was an act
of God. Nor is there a way for Greece to devalue its currency, as it
would have done in the pre-EMU days of the drachma. There is not even a
mechanism for Greece to leave the eurozone.

The options are no surprise to anyone who has followed this drama as it has unfolded over the past two months, starting with the Dubai implosion in late November (whose CDS, incidentally, is almost back to all time wides). It is certainly no surprise to anyone who, like us, has been concerned about the sovereign implosion almost a year ago.

That leaves just three possibilities: one of the most excruciating
fiscal squeezes in modern European history – reducing the deficit from
13 per cent to 3 per cent of gross domestic product within just three
years; outright default on all or part of the Greek government’s debt;
or (most likely, as signalled by German officials on Wednesday) some kind of bail-out led by Berlin.
Because none of these options is very appealing, and because any
decision about Greece will have implications for Portugal, Spain and
possibly others, it may take much horse-trading before one can be
reached.

To be sure, Keynesianism is starting to unravel. The greatest failed experiment in economic history could only have been propped up for so long, courtesy of its core beneficiaries: the very oligarchs and financiers who transferred wealth over the ages from the working class to the "financially creative" product class (i.e., those that "packaged" and managed risk...look where they got us, but don't look how much they got paid for it).

What we in the western world are about to learn is that there is no
such thing as a Keynesian free lunch. Deficits did not “save” us half
so much as monetary policy – zero interest rates plus quantitative
easing – did. First, the impact of government spending (the hallowed
“multiplier”) has been much less than the proponents of stimulus hoped.
Second, there is a good deal of “leakage” from open economies in a
globalised world. Last, crucially, explosions of public debt incur
bills that fall due much sooner than we expect

For the world’s
biggest economy, the US, the day of reckoning still seems reassuringly
remote. The worse things get in the eurozone, the more the US dollar
rallies as nervous investors park their cash in the “safe haven” of
American government debt. This effect may persist for some months, just
as the dollar and Treasuries rallied in the depths of the banking panic
in late 2008.

Yet even a casual look at the fiscal position of
the federal government (not to mention the states) makes a nonsense of
the phrase “safe haven”. US government debt is a safe haven the way
Pearl Harbor was a safe haven in 1941.

Even according to the
White House’s new budget projections, the gross federal debt in public
hands will exceed 100 per cent of GDP in just two years’ time. This
year, like last year, the federal deficit will be around 10 per cent of
GDP. The long-run projections of the Congressional Budget Office
suggest that the US will never again run a balanced budget. That’s
right, never.

This is where shades or Reinhart and Rogoff emerge.

Explosions of public debt hurt economies in the following way, as
numerous empirical studies have shown. By raising fears of default
and/or currency depreciation ahead of actual inflation, they push up
real interest rates. Higher real rates, in turn, act as drag on growth,
especially when the private sector is also heavily indebted – as is the
case in most western economies, not least the US.

As we approach the proverbial endgame, the biggest supporter and enactor of flawed Keynesian policy, the Fed, is fast running out of bullets. Simply without the consumer becoming once again intimiately involved with the lie, the game can not continue.

Although the US household savings rate has risen since the Great
Recession began, it has not risen enough to absorb a trillion dollars
of net Treasury issuance a year. Only two things have thus far stood
between the US and higher bond yields: purchases of Treasuries (and
mortgage-backed securities, which many sellers essentially swapped for
Treasuries) by the Federal Reserve and reserve accumulation by the
Chinese monetary authorities.

But now the Fed is phasing out such
purchases and is expected to wind up quantitative easing. Meanwhile,
the Chinese have sharply reduced their purchases of Treasuries from
around 47 per cent of new issuance in 2006 to 20 per cent in 2008 to an
estimated 5 per cent last year. Small wonder Morgan Stanley assumes
that 10-year yields will rise from around 3.5 per cent to 5.5 per cent
this year. On a gross federal debt fast approaching $1,500bn, that
implies up to $300bn of extra interest payments – and you get up there
pretty quickly with the average maturity of the debt now below 50
months.

The conclusion, knowing all too well that our political and financial leaders will do everything in their power, even sacrifice the population, to prevent the collapse of the system, can only be a rhetorical one.

The Obama administration’s new budget blithely assumes real GDP growth
of 3.6 per cent over the next five years, with inflation averaging 1.4
per cent. But with rising real rates, growth might well be lower. Under
those circumstances, interest payments could soar as a share of federal
revenue – from a tenth to a fifth to a quarter.

Last week Moody’s Investors Service warned that the triple A credit
rating of the US should not be taken for granted. That warning recalls
Larry Summers’ killer question (posed before he returned to
government): “How long can the world’s biggest borrower remain the
world’s biggest power?”

On reflection, it is appropriate that the
fiscal crisis of the west has begun in Greece, the birthplace of
western civilization. Soon it will cross the channel to Britain. But
the key question is when that crisis will reach the last bastion of
western power, on the other side of the Atlantic.

America no longer has the luxury of expecting that shoving its head in the sand long enough will fix everything. Indeed, we now live in a world where whole developed countries are being bailed out. A mere 3 years ago this would have sounded ludicrous and deranged, and now it causes a flurry of buying excitement in the stock market. Unfortunately, a repeat of the days of September 2008 is fast approaching, only this time absent Marsians coming to bail out the world, we are on our own.

 

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Wed, 02/10/2010 - 20:22 | 225887 VegasBD
VegasBD's picture

When can we start openly burning Keynesian books?

Wed, 02/10/2010 - 20:29 | 225909 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Do it in front of an economics "Professor".  The looks on their faces are priceless!

Thu, 02/11/2010 - 01:08 | 226281 DoChenRollingBearing
DoChenRollingBearing's picture

Just say "Reinhart and Rogoff" to those arrogant Professor Schmucks of economics.  Like waving a silver cross at the vampires.

I really do not understand why .gov and even the financial PTB are not alarmed by our grave situation.  Nor is anyone among TPTB ready to cut spending!  That would be the key to our revival, CHOP spending and chop it hard.

Such a great country we have/had.  Why can't our leaders do what is required before the wheels come off, and we have our train wreck?

Maybe I'll go back to screaming that we should all buy gold again, pity that some of my fellow gold guys are layin' low lately.

Thu, 02/11/2010 - 03:53 | 226386 Gold...Bitches
Gold...Bitches's picture

not me.  i hope they do flow into the dollar and gold goes down in the reflexive trade.  lets me buy more for cheaper.  gold is going higher, much higher, by the end of this game

Thu, 02/11/2010 - 11:50 | 226671 Master Bates
Master Bates's picture

That's what happens when you know you bought an asset at the top (IE fucked up) and were the most vocal and loudest about it.

Wed, 02/10/2010 - 20:46 | 225947 e_goldstein
e_goldstein's picture

Probably about the same time we are burning FEDRES bills to keep warm.

Wed, 02/10/2010 - 21:57 | 226053 A Broken Bear
A Broken Bear's picture

Quality...You see, its comments like these (plus the dam good reading ZH offers) that made me join the ZH community.

Thu, 02/11/2010 - 00:43 | 226252 jeff montanye
jeff montanye's picture

keynesian in the article above should be in quotes.  the deficit spending, in boom times and bust, that characterizes much of western society in the last forty years and certainly the siphoning of wealth from the bottom to the top of society via the state are nothing like what keynes advocated.  he was a cogent and prescient geopolitical observer (who predicted, in published detail, how the armistice that ended ww1 would bankrupt germany via hyperinflation and produce a greater war when a new generation of soldiers could be grown), wrote the most important book on economics in the last century (the general theory of employment, interest and money) and was an extremely astute and profitable investor for himself and his alma mater.

Wed, 02/10/2010 - 20:27 | 225901 ghostfaceinvestah
ghostfaceinvestah's picture

Let's break this down to its most basic level - the pure fiat currency system is failing, and will fail completely soon.

Wed, 02/10/2010 - 21:07 | 225982 VegasBD
VegasBD's picture

We are most deffinately living in intersting times.

Id like to say that Im a patriot and will help take this country back from the govt and rebuild from the rubble...but honestly ill be way deep in Mexico drinkin margaritas. Paying for them in silver probably. =)

Thu, 02/11/2010 - 01:10 | 226285 DoChenRollingBearing
DoChenRollingBearing's picture

Or Peru for me...

Wed, 02/10/2010 - 20:27 | 225902 RobotTrader
RobotTrader's picture

Meanwhile, Riverboaters are starting to "front run" a positive resolution to this mess by buying junker stocks like this:

 

 

Wed, 02/10/2010 - 22:24 | 226086 hidingfromhelis
hidingfromhelis's picture

The decimal point on the share price is a couple/few places too far right.  But then again, those penny stocks are vulnerable to pump & dump scenarios.

Wed, 02/10/2010 - 22:35 | 226094 bulldung
bulldung's picture

Really,Why? Technicals or does AIG benefit from Greecey bailot?

Thu, 02/11/2010 - 02:37 | 226341 Anonymous
Anonymous's picture

I loaded up with all I could buy when it crossed the moving avg. Classic buy signal.

Wed, 02/10/2010 - 20:28 | 225903 dark pools of soros
dark pools of soros's picture

"even sacrifice the population"   9/11 only saved the dollar a decade eh?

Wed, 02/10/2010 - 21:05 | 225975 Anonymous
Anonymous's picture

Truthers in this forum. who'da thunk it?

Wed, 02/10/2010 - 21:36 | 226020 Dark Helmet
Dark Helmet's picture

When the Soviet American empire collapses, it will be common knowledge that 9/11 was either ignored and allowed to happen or there was actually some involvement at some level. Lots of stuff became common knowledge when the USSR collapsed.

So clap comrade! Keep clapping for Premier Bush... err... Obama of the Republicrat Party!

 

Wed, 02/10/2010 - 22:14 | 226066 andy55
andy55's picture

As a former US navy submarine LT with top secret/SCI clearance that served from 99 to 04 on a 688i in the Persian Gulf, I've always been skeptical of 9/11 being an inside job on the basis that the government is basically inept and inefficient at everything.  I generally regarded it as impossible for the government to plan an operation like that with that many moving parts in complete secrecy.

That said, someone linked to the 'second edition' of "Loose Change" the other day and I thought I'd give it another try.  I was never that moved by the original version, but I have to admit that the second edition is significantly more convincing, both in terms of organization and evidence.  Granted, there's circumstantial evidence all over the place, but then again there's a enough evidence to paint a picture that stands very well on its own (which I did not feel after seeing the original cut).

For those interested in the 'second edition':

http://video.google.com/videoplay?docid=7866929448192753501&ei=8GRzS-TCO...

Wed, 02/10/2010 - 23:12 | 226136 moneymutt
moneymutt's picture

I've said before, I don't buy all truther stuff, but there is very little to convince me that it's definitively wrong, and lots of stuff that fits insider story more than MSM story..

also on the incompetence thing...it seems there are two tracks, but we have seen in history very involved shadow stuff going on that only later got exposed only by some accident of some such...I believe it was a crashed helicopter and some guy singing like a bird at that point that lead to the whole  exposure of the Iran/Contra arms to terrorist, drugs flown into Homestead AFB and sold in domestically in US by CIA contractors...eventually linking to the sudden explosion of crack epidemic...these are all facts in multiple court case sworn testimony, Reagan even admitted to the facts of selling arms for hostages but denied/ compartmentalized this as not being what it was. So what if the helicopter had not crashed, would Oli North be a general by now? Think how many people were involved in this massive conspiracy, people negotiating arms deal, people funding contras, people bringing drugs into use, people negotiating hostages...you have many people in many people countries doing this, and we only found out when helicopter crashed.

And notice how something really outrageous and controversial as independent companies that work for our govt smuggling drugs into a US AFB, arms for hostage, negotiating with terrorists etc...is not even hardly in our political memory, you don't hear people constantly beating on Reagan admin about this stain on their historic record etc...its because MSM does not bang on it.

Also, I think we have plenty of examples in ordinary life of many many people knowing something and it still not being in MSM, once again, because of a crash....Tiger Woods sex life. If it is so damn hard to keep a secret in the Internet age, how is it that perhaps 1000s of people knew definitively TW was a major player...so many mistresses, many golfers on the tour, his friends, the friends and family of his mistresses, many media types, many random people that must have seen something etc...shoot, he wasn't even trying to hide things much, leaving a crumb  trail of texts etc..So what if stakes are higher, what if people doing the hiding are richer, more powerful than Tiger...how many people could know something and it still no be known to general population of US. And even when outrageous stuff get exposed and no one can refute credible sources, if they are not picked up by MSM, its like no one exposed anything.

See Sibel Edmonds...whose biggest coverage in media so far is an article in Hustler....even tho no one can credibly refute her sworn testimony.

Did you know this fact, the Bush family was close friends with the family of Reagan's attempted assassin, Hinckley? Did you know W's brother Neil was scheduled to have dine with a Hinckley's brother in Denver day of attempted assassination. This is all facts report in MSM media. May just be bizarre coincident but if Reagan dies, Bush is president, so why is this story common knowledge among US population...no one refuted facts of story...story just died of inattention....again, open secrets... 

Finally this "govt is so incompetent" is ALWAYS the excuse they use when they trash something...we could never have foreseen a hurricane hitting NOLA, never foreseen  terrorist in planes, never foreseen financial crash... yada yada...the schtick is: look stupid, have regular govt do poorly, while you, shadow elite people, make out like bandits due to your access, insider info, ability to pull a few levers and easily manipulate just about anything...

Thu, 02/11/2010 - 00:52 | 226266 jeff montanye
jeff montanye's picture

so true.

Thu, 02/11/2010 - 01:17 | 226293 DoChenRollingBearing
DoChenRollingBearing's picture

Well, guys, I am with Andy55 on this one, at least the bit about government incompetence and inability to keep secrets.

I had Top Secret / TK clearance at one of the alphabet soups.

Something like "the government / Bush / whatever did it" would be so big with so many in the know that it is clear to me to be highly unlikely.

Thu, 02/11/2010 - 08:57 | 226463 Anonymous
Anonymous's picture

Not refuting your experience, but I tend believe that there are always two version of those "alphabet soups" - one that generally is there as an arm of "actual" government (usually very large, unwieldy and bureaucratic - such that incompetence and inefficacy is allow to run writ large) and another which is an arm of a much smaller and much more constant group of people - Kissengers and the like. The latter is very well connected and very well protected; when anyone in that group looks like stepping out of line its curtains! So not so surprising that knowledge rarely comes out and when it does is immediately spun (think Iraq war Niger documents) and forgotten about.

The other thing I don't understand about your line of reasoning is that apparently for the .gov to carry out this operation would involve an enormous number of people but for a bunch of long bearded freaks in a global complete backwater with nary semblance of modern infrastructure its totally doable. Holding both ideas in your head as true seems to me like lunacy.

Thu, 02/11/2010 - 11:07 | 226600 velobabe
velobabe's picture

your heavy, good thing your man's best friend. we all know pure white woman don't enjoy sex. TW, god i miss you babe.

Wed, 02/10/2010 - 23:56 | 226168 Dark Helmet
Dark Helmet's picture

I lean toward what in the "truther" community is called "LIHOP" which stands for "Let It Happen On Purpose." I think there were warnings, and sometimes they were missed out of incompetence. However, sometimes they were also missed because I strongly suspect some people thought "hey, you know... we can really use this! we've been looking for another cold war!"

I also think some of the "truthers" are nuts. In some ways they're helping whatever cover-up exists by distracting people with insane out-there explanations. Instead, the questions to ask are things like "who is Osama bin Laden and what's his back story" and "what was Mohammed Atta doing in this country?"

 

Wed, 02/10/2010 - 23:59 | 226181 moneymutt
moneymutt's picture

good points and I tend to agree, crotch bomber could easily be LIHOP...once again govt looks totally incompetent...but are they really that bad..State Dept guys said US was not going to give crotch bomber visa, but CIA told them to cause they were tracking him...then there is the Indian guy trying to get him on with no passport, no video from airport etc....

Thu, 02/11/2010 - 00:10 | 226208 Lord Blankcheck
Lord Blankcheck's picture

In the history of aviation how many "BlacK Boxes" were not recovered?

 

All four are missing from that day

Fri, 02/12/2010 - 18:42 | 229194 Anonymous
Anonymous's picture

Dear Lord Blankcheck,

I used to work at Honeywell in the avionics group (in Redmond, WA) that builds the "black box". The flight data that is stored in the box is actually saved to ePROM chips (flash eraseable electrically programmable read-only-memory chips) that are much the same as what we all have in our digital cameras or the "thumb drives" we use to back up our computers. In the flight data recorders (black boxes) these chips are encased in a large quantity of a special wax and placed in a heavy duty metal case as a sort of armor. The "black box" is physically located in the tail of the aircraft because, in the event of a crash, that area typically receives the least force of impact and also might not be in the center of the aviation fuel fire that usually goes along with a crash.

If all goes well, the box will survive a "typical" crash mechanically (that is, it will not be crushed); then, if a fire occurs, it can survive that for a while because the special wax absorbs a large amount of heat as it melts and then vaporizes to a gas. So as the wax melts and vaporizes, it keeps the memory chips cool enough to survive and retain their data.

Qualification test units of the black boxes must pass a "fire test" in which they sit for an hour and half (if I remember correctly) in a fire that is supposed to simulate a fuel fire after a crash. The units would probably still be readable after sitting in the flames of your gas fireplace for 90 minutes. But, once the wax has all boiled away, the temperature of the memory chips will rise to a level of a thousand degrees or so and will be destroyed.

Of course on 9/11, those aircraft that flew into the World Trade buildings sat in flames from thousands of gallons of jet fuel until the structure of the building itself (steel and concrete) failed. Then everything was crushed to dust as the building came down.

The aircraft that crashed into the Pennsylvania countryside might have been survivable for the black box. (I don't remember.) The black box of the aircraft that was flown into the Pentagon was recovered and the the data was intact and readable, if I remember correctly.

Regards to all.

Thu, 02/11/2010 - 00:00 | 226185 Anonymous
Anonymous's picture

I have a hard time buying the conspiracy theories
LT. People state that the heat wasn't intense enough
to melt steel, but they fail to realize that steel
starts loosing its strength as it heats up and therefore
didn't need to get anywhere melting temp in order
to fail under load
I think this was just a massive failure of our
intelligence services and their communications.
Same thing happened on Christmas day with the
crotch bomber, so nothing has been fixed....

Thu, 02/11/2010 - 10:36 | 226571 Anonymous
Anonymous's picture

You're obviously not an engineer or physicist...

Fri, 02/12/2010 - 10:33 | 228329 Anonymous
Anonymous's picture

How about that thermite they found? It just happened to be there?

Thu, 02/11/2010 - 15:47 | 227233 Absinthe Minded
Absinthe Minded's picture

I found it hard to believe this could happen in our country too. Then I watched "Loose Change", 2nd cut, and was seriously troubled by this video. If there was no editing of the film then it's hard to dispute that charges took out support members in some of the collapse footage. All the info about their mock disasters that the military were planning up to 9/11 was also very weird and coincidental. The fact that they confiscated all security tapes and released only 5 screen grabs of the Pentagon crash was very shady. If you  want to believe our government is wholesome and completely innocent, by all means do not watch this video. Not short though, 80+ minutes, but definitely interesting.

Wed, 02/10/2010 - 22:41 | 226101 Anonymous
Anonymous's picture

Oh, this is nothing. Look out for the Nazi sympathisers.

Wed, 02/10/2010 - 20:28 | 225905 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Ferguson wrote the auto biography for the Rothschildes...it is a fascinating story, worth reading every chapter.  It is two volumes. 

This pretty well sums it up.  Let the games begin!  and like always, the US pressures some one else to make the first move.  Well, Iran, do what you will.  Remember, you are toying with a country that has nothing left to lose.  At least this is the view from the Fed, who know they have lost 'Merica's wealth down the toilet.  The toilet leads to their bat cave btw. 

"To the Batcave!"  Screamed Timmy Geithner.  He ran ahead of the group making 'driving' noises with his mouth.  "VROOM!  VROOM!"  "Do I get a cape and mask?" asked Sheila Bair.  "Sorry SHEila, you have to be a boy to wear a cape and mask.  You are a girl, so you get pom poms."  Replied BS.  "Oh yeah!  Pom Poms!"  Ironically, Hank Pauslon had pom poms too.  "Hey, why does Hank have Pom Poms?" Sheila asked.  "I, I, I wha- want to be puh-puh-pretty."  said Hank, as drool dripped down his chin.

Thu, 02/11/2010 - 01:21 | 226296 DoChenRollingBearing
DoChenRollingBearing's picture

Funny, funny Mr L H.

Please feel free to let us know the name of the book on the Rothschilds, I may buy me a copy.

Thu, 02/11/2010 - 10:33 | 226565 Anonymous
Anonymous's picture

How many books you guess will come up when you enter "ferguson" and "rothschild" in the search form of the online bookstore of your liking?

Wed, 02/10/2010 - 20:28 | 225907 GoldSilverDoc
GoldSilverDoc's picture

We knew it all along - Keynesianism was proposed by a fellow who wanted to please his friends in government - and gain their smiles... how to do it? Propose a theory that involves lots of government spending, thus allowing the pols to blow all the cash they want to buy votes.

And it worked, for awhile. Like the Soviet Union worked, for awhile.

But you can't fool Mother Nature forever. All you folks who have paper or "numbers" in the "bank", trade it all for real things. Land (produces rent). Gold (good insurance). Do it soon. Don't think you can pull off just one more scam/trade and squeeze "just a little more" out of the system. Put 90% of it out of reach of the US tax man, and do it soon.

Be like the Boy Scout. Prepared.

Wed, 02/10/2010 - 20:36 | 225924 dark pools of soros
dark pools of soros's picture

one play that will be interesting is when will people start yanking out their 401ks and damn the penalties??   I'm not talking about old fucks that should of already done that.  I'm saying the Gen Xers that are getting the 100% match and have a lot to lose by pulling out now and even more to lose if it all goes to shit..  

 

Everyone says the Gen Xers never had any power from lack of numbers..  i think a mass pull out and buying of gold/land would be a hell of a statement

 

Wed, 02/10/2010 - 20:43 | 225939 GoldSilverDoc
GoldSilverDoc's picture

I have said it before, and I'll say it again.

 

All it will take is for around 5-6% of the folks with bank balances to walk into their banks and demand CASH (as in, the green crap they give you which you will someday soon use for chicken-house litter) in the same week, to end this little fiasco and put us back (after some serious pain) on the right road.

And what will gold be "priced" at?  One ounce, per ounce.  Same as the past 5000 years.

 

 

Wed, 02/10/2010 - 20:53 | 225961 Anonymous
Anonymous's picture

I have thought about it. Taxes would be a killer too.
If I loose the job, I'll probably cash em out next tax
year. Sept 08 has already demonstrated that we can
loose these things, even when parked in so called
safe assets. Already have much Au and paid off
land. Would stash cashed out 401k in Au and another
10k of 7.62 Nato rounds...

Thu, 02/11/2010 - 01:25 | 226300 DoChenRollingBearing
DoChenRollingBearing's picture

Keep thinking about cashing out.  I did (IRA) in late '08, paid penalties & taxes but have slept better ever since.

Land, Au and lead.  A worthy diversification!  Might want to keep $10,000 or so in FRNs in case we are wrong though...

Wed, 02/10/2010 - 21:07 | 225983 e_goldstein
e_goldstein's picture

Unfortunately, most Xers are just as oblivious as the boomers.

I hate to say that, I'm an Xer too.

Wed, 02/10/2010 - 21:22 | 226006 dark pools of soros
dark pools of soros's picture

the intermediate play is to take as big a loan as you can against your 401k and pay off any high debt you have.. or if you dont have any, buy gold and silver

 

that is the only hedge I see with 401k at this point

Wed, 02/10/2010 - 21:39 | 226025 e_goldstein
e_goldstein's picture

Thanks, I'm all set.  I'm a firm believer in the Mogambo Guru investment strategy,

and have been for awhile.  No debt, long on booze, bullets, beans and bullion (wheee).

Thu, 02/11/2010 - 01:27 | 226301 DoChenRollingBearing
DoChenRollingBearing's picture

10-4 on the Mogambo's bunker startegy!

"Wheeee!  This investing stuff is easy"

Wed, 02/10/2010 - 23:03 | 226124 Anonymous
Anonymous's picture

Before they start confiscating 401k's or introducing regulation that mandates a percentage of 401k's must be in US debt, I see them offering an option to take your money out penalty free. After all, they've got cronies on wall street who need a way out. They'll use the talking heads to further brainwash the public into thinking that liquidating your 401k will ruin your long term retirement. The few who understand what's going on will liquidate which will cause a short term strengthening of the dollar which will be a perfect opp to buy gold before it all goes to hell.

Thu, 02/11/2010 - 02:45 | 226345 Anonymous
Anonymous's picture

When your 401k deflates in price to near zero, what's the use in cashing out?

Thu, 02/11/2010 - 00:06 | 226199 Anonymous
Anonymous's picture

Thats exactly what I did, took out a loan
and bought Au, paid off the wife's credit card.
I am fairly certain though, that I will just cash them
out and take the hit, especially now with
Europe looking bad, and no one is even talking
about the eastern block countries like Hungary
with a 100 percent default rate in housing bought
in Euros...

Thu, 02/11/2010 - 14:32 | 227071 earnyermoney
earnyermoney's picture

Believe Mr. Soros has stated that extraordinary times call for extraordinary actions to justify his father's efforts to escape Nazi Germany.

 

In this context, who says you have to follow established law when you withdrawn your money? Plan accordingly

Thu, 02/11/2010 - 03:36 | 226376 Anonymous
Anonymous's picture

Agree wholeheartedly.
And today Paul Krugman is trying to grow into that role!

Wed, 02/10/2010 - 20:29 | 225910 indyamericanblog
indyamericanblog's picture

Excellent.

Wed, 02/10/2010 - 20:30 | 225913 Shameful
Shameful's picture

So I'm hearing we need to invest more in SETI so we can find alien life, and borrow from them! Space bucks to save America!

Wed, 02/10/2010 - 20:36 | 225925 RobotTrader
RobotTrader's picture

And my buddy Rasputin throws in his 2 cents:

..............................

Youza! Denninger reveals the true extent of EU scroomage.
Rasputin - Wed, Feb 10, 2010 - 07:18 AM

In a missive found here:

http://market-ticker.org

...Karl Denninger reveals just how much debt the EU idiots have run up.

Here is an excerpt:



"Yet unlike Greece, which has a GDP of EUR $261 billion, Spain's
is EUR 1.134 trillion and Italy's EUR 1.406 trillion. Portugal and
Ireland's economies are smaller, but they belie big problems, with the
"best" indication being the external debt to GDP ratio.

Italy's is 127% (the US is running close to 100% at present),
while Greece's is 161%. Spain's, on the other hand, is 171%. Germany,
for all of its vaunted "strength", runs 178% of GDP, Portugal is at
214% and Ireland is running an unbelievable 1267%.

That's right - tiny Ireland with EUR 144 billion in GDP has well north of a trillion Euros outstanding in external debt."



(Ras):And he doesn't even discuss Japan, which I understand is also over 100% debt-to-GDP.

So, it is truly "Inflate or Die" time for the world's economies.

Which one will they choose?


And by the way, all of these fiatscos the Fed is flinging go to fund Uncle Gorilla who is the:



1. Employer

2. Mortgage provider

3. Entitlement disburser

4. Buyer

5. Seller



...of first, last and ONLY resort and is able to impose his will
on the entire economy, distorting markets and sectors as he sees fit.

Sheesh, just look at the hiring boom in D.C. and the continued
housing bubble there for all you need to know regarding Uncle's ability
to spend our way out of this little recession.

Bernanke says "any minute now...we're gonna raise rates and also hand back all that toxic trash to Wall Street".

Here's the link to his testimony:

http://federalreserve.gov/newsevents/testimony/bernanke20100210a.htm

So, if the Fed isserious, and follows through, then it's right back to "Great Disintegration I".

But as Mike Tyson used to say:

"Everybody's gotta plan, until they get hit in the face".

Let's see how tough Big Boy Bernanke is when he gets smacked with
the upper-cut of McStucco prices crashing another twenty-percent
because no one will touch a Fannie/Freddie MBS.

Or when he takes a right-cross on the chin from the
liquidity-driven stock market dead cat bounce ending and everyone's
401(k)/IRA/mutual fund re-collapses.

Or, when he feels the pressure of Congress telling him to take a dive and implement "QuantSleaze 2.0".

Then we'll see who's woofin' and who came to fight.


LOL...

Wed, 02/10/2010 - 20:43 | 225938 Shameful
Shameful's picture

Really like when you post Rasputin's stuff here but I don't think Zimbabwe Ben will hit the brakes. He might make a few light taps on them but no way he hits the breaks, so no need to worry what happens if/when he does. He'll be to busy fueling up his helicopter.

Wed, 02/10/2010 - 23:57 | 226172 Anonymous
Anonymous's picture

Yea I heard that specially for Ben, Toyota designed a special software for the Lexus 430's brakes, which would ignore all taps on brake pedal and instead continue to accelerate on gas.

But some clowns thought what was good for Heli Ben was good for america. The rest is history.

Wed, 02/10/2010 - 21:41 | 226029 Dark Helmet
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"and Ireland is running an unbelievable 1267%."

Goddamn. Just. Goddamn. Holy shit. Goddamn.

 

Wed, 02/10/2010 - 23:07 | 226130 Brindle702
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+1267

Thu, 02/11/2010 - 01:30 | 226305 DoChenRollingBearing
DoChenRollingBearing's picture

+1267^1267.

Just unbelieveable what they have done to themselves over there in Europe.

Oh, wait, you mean it's happening to us too?  Uh oh.

Thu, 02/11/2010 - 08:26 | 226427 THE DORK OF CORK
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Some of the external debt anomaly is due to the presence of one third of the worlds hedge funds being based in the IFSC building in Dublin ( open to correction) - this explains the large amounts of US treasuries flowing through this State last year , Zero hedge reported recently that Ireland had more US dollars then France.

The Irish Sate has no liability with these funds , there must be a policey of see no evil hear no evil I guess.

Luxembourg a even smaller EU country has a higher per capita  external debt because of other strange financial engineering.

Never the less these funds that have a supranational power are a major problem for the EU as a whole 

en.wikipedia.org/wiki/List_of_countries_by_external_debt

Thu, 02/11/2010 - 11:40 | 226652 Anonymous
Anonymous's picture

Forget the helicopters, we are going to need C130s before this is all over.

Thu, 02/11/2010 - 01:15 | 226292 Anonymous
Anonymous's picture

As the Dork http://www.zerohedge.com/article/deconstructing-europe-how-%E2%82%AC20-b...
and others have suggested, that figure may be significantly inflated by the magic that happens in the
IFSC. (What's the IFSC, you say? Good question. This will give you a flavour: http://www.independent.ie/business/irish/depfa-demise-could-have-been-ir... ) Also, while taking the sum of public and private indebtedness is a good idea, only looking at the external component of that total debt may give a
misleading impression of Ireland's relative position: it's a small, open economy. (I'd guess that Cali's external debt-to-GDP is much higher than NY state's; I'm not sure how much it matters.)

Wed, 02/10/2010 - 20:36 | 225927 Landrew
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Tyler, I do not understand your Keynes reference to all of the debt expenditures. I have never read where Keynes thought bailing out banks, ins, autos, etc. was a good thing. In fact reading his work points more towards tax cuts with a combination of work programs like the WPA. Can you point me to what you mean buy Keynes bailout spending?

Wed, 02/10/2010 - 20:53 | 225959 Catullus
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To be fair, The General Theory by JM Keynes is one of the worst written books in the history of humanity.  Good luck making sense of it, but this chapter will provide some clues. 

http://www.marxists.org/reference/subject/economics/keynes/general-theor...

If you ask me, there's no such thing as keynesianism.  There are just economists who get paid by the government to proclaim that every amount of government spending "stimulates" the economy.

Wed, 02/10/2010 - 21:12 | 225988 Landrew
Landrew's picture

Thanks Catullus,

However I don't think I can argue with Keynes statement, "The authoritarian state systems of today seem to solve the problem of unemployment at the expense of efficiency and of freedom. It is certain that the world will not much longer tolerate the unemployment which, apart from brief intervals of excitement, is associated and in my opinion, inevitably associated with present-day capitalistic individualism. But it may be possible by a right analysis of the problem to cure the disease whilst preserving efficiency and freedom."

In your link, Keynes never states continued deficit spending during prosperous times. However, he does recommend some taxation of higher incomes and inheritance as a funding solution. Obscene debt markets of today I doubt Keynes would have approved of or even believed possible.

Wed, 02/10/2010 - 21:50 | 226044 Catullus
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I think Keynes is referring to the national socialism in "authoritarian state systems of today (1936)".  It was no secret that Keynes was a great admirer of the Hitler regime before 1939 and believed that the Nazis were executing his general theory quite well.  Even if you read the above, you can clearly see that while Keynes recognizes that such regimes encroach individual freedom, he also believed that his system of government substituting "effective demand" via government spending could achieve the same thing as the national socialists.  The problem as F.A. Hayek pointed out in a very famous book called "The Road to Serfdom" (and not so famous, but just as important books responding to Keynes' book) was that even a middle road to achieve the same ends led to the same enslavement. 

You'll be hard-pressed to find Keynes saying anything outright of what you're looking for.  You could read chapters 3, 4, & 6.  But again, this is pure drivel.  It's best to read Keynes through the eyes of Keynesians like Paul Samuelson and Paul Krugman to understand what they've interpreted this all to mean.  They basic interpretation of Keynes is to say that the government (through less authoritarian measures of a command economy) can manipulate the amount of money to create a marginal utility of savings to become less than the margin utility of spending.  By doing this, people will be less encouraged to save and more encouraged to spend.  The spending leads to "full-employment" of resources and prevents "underconsumption". 

Wed, 02/10/2010 - 22:56 | 226118 Anonymous
Anonymous's picture

A lot of the problem with Keynes is a complete failure to deal with “human nature” – as in reality. While he never proposed continued deficit spending during “normal” economic times, anyone who doesn’t understand that no government at any time in history ever willingly “cut” spending is already creating a theory in fantasy land. Think about how the Government figures “cuts” to spending – if it only goes up 3% instead of the planned 5%, we are “cutting” that agencies budget... Real, honest cutting are simply never part of the discussion.

As Catullus says, if you actually read Keynes and can make any sense of it you’re doing better than most. It is rather obvious why Governments love it though – it basically encourages everything about controlling an economy they love, and really hates the idea of the citizens controlling such things by ownership and use of “the barbaric relic”... Have to study a bit to understand why that matters (as in does the Government need to ask its citizens for $$’s to do things, or do they just do things and hand us all the bill...).

Thu, 02/11/2010 - 00:28 | 226228 Stevm30
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Great analysis of Keynes the man:

http://www.youtube.com/watch?v=xPXJAEpaBcU

Wed, 02/10/2010 - 20:42 | 225937 Kreditanstalt
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Niall Ferguson is excellent again!  A Ferrari head-to-head with the Pintos and Mazdas.  And this does tie in nicely with Marc Faber's latest tit-for-tat with the CNN bubbleheads and Dennis Kneale. 

It is now a GIVEN that we will see massive erosion of most currencies' purchasing power manifesting itself in PRICE INFLATION in essentials: food, energy, metals...  How else can the stresses inherent in a worldwide system of fiat currencies being printed to excess reveal themselves?  The pressure has to be released somewhere: it is simply not credible to expect one or more such currencies to enjoy lasting, rising value while others sink.  Thus, the denouement will be seen in the rising value of just about anything in short supply: commodities, hard and soft and GOLD.

In markets, we are seeing wild swings in both long and short positions this month.  Witness AIG, above, or SRS last night.  Great intraday volatility.  Probably great desperation on the part of professional computer-terminal traders too, as profit opportunities diminish. 

 

Ironically, now is perhaps time to end stock speculation, as returns are getting ever more meagre.  Buy-and-hold ~ in commodities ~ is back, is my prediction.

Wed, 02/10/2010 - 22:03 | 226063 ghostfaceinvestah
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Agree, well said.  the current pure-fiat currency system is going to fail, and soon, of that I have no doubt.

Wed, 02/10/2010 - 20:44 | 225942 Anonymous
Anonymous's picture

I'd like to integrate "those curves"
Massive fiat collapse on the way..

Wed, 02/10/2010 - 20:47 | 225950 Kayman
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Keynes never suggested running deficits at times when the economy was growing and unemployment was low. But Dubya did.

Keynes proposed a way out of the Great Depression, after we were in it up to our eyeballs.

So, let's not do the book burning thing. Let's find new leadership and a new economic theory- one that doesn't load the financing of current consumption of short term Chinese crap into long term debt payable by our children and grand children.

Can we really continue to maintain this country on Chinese Wallmart and (so-called) investment bankers ??

Insource American jobs and outsource Jack Welch and his ilk.

Wed, 02/10/2010 - 21:17 | 225996 Landrew
Landrew's picture

Here! Here! I have to agree. I ask this question, how long can this country survive with over 20% unemployment? One in six are now on food stamps. People need to work rather than take handouts that you can't live on.

Wed, 02/10/2010 - 22:11 | 226069 Mrmojorisin515
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you'd be surprised, beer and video games my friend, beer and video games

Wed, 02/10/2010 - 22:43 | 226105 Anonymous
Anonymous's picture

> Insource American jobs and outsource Jack Welch and his ilk.

How'd that work for '80s Japan?

Thu, 02/11/2010 - 01:08 | 226282 jeff montanye
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do you mean '90s japan, the bust not the bubble?

Thu, 02/11/2010 - 02:46 | 226347 Anonymous
Anonymous's picture

Same difference; the one led to the other. Having an deliberately export-tilted economy that suppressed domestic demand in favour of Making Real Stuff TM didn't seem
to prevent a colossal credit bubble and the ensuing bust.

Wed, 02/10/2010 - 20:50 | 225954 Anonymous
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I think the best things to be investing in right now are seeds, soil, and garden tools. Chickens are good too.

Thu, 02/11/2010 - 02:51 | 226349 Anonymous
Anonymous's picture

I have converted all my money to toilet papter and whiskey.

Wed, 02/10/2010 - 20:54 | 225962 Going Down
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"We're Doomed."

 

The worst part of all is that Obama is totally clueless.

 

http://krugman.blogs.nytimes.com/2010/02/10/clueless/

 

 

Wed, 02/10/2010 - 22:47 | 226109 carbonmutant
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Great piece.

I loved some of the comments..

Wed, 02/10/2010 - 21:05 | 225974 glenlloyd
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That's always been the kicker though, they will never reverse course on the present policy until it implodes. Thing is, now with the contagion spreading in Europe that day is approaching ever more quickly.

Wed, 02/10/2010 - 21:11 | 225987 Anonymous
Anonymous's picture

There is no incentive to fix the problem now. It has to run its course. A total collapse gives the "leader" a upper hand to set things right. More the contagion, the better. You thought herd mentality is only with the surfs.

Thu, 02/11/2010 - 01:11 | 226287 jeff montanye
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sounds a bit like naomi klein's "shock doctrine".

Thu, 02/11/2010 - 11:15 | 226613 velobabe
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exactly

Wed, 02/10/2010 - 22:49 | 226110 carbonmutant
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All they need to do is kick the can as far as the next administration and they can blame them for what happens next.

Thu, 02/11/2010 - 01:14 | 226290 jeff montanye
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but obama is only one year in to a four year contract the historical correlative of which is the the hoover administration.

Thu, 02/11/2010 - 15:03 | 227142 carbonmutant
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Well, things are happening a little faster than the experts in this administration predicted... which seems to be par for the course.

Wed, 02/10/2010 - 21:07 | 225981 velobabe
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uhm, i am movin higher up and further back

Wed, 02/10/2010 - 21:12 | 225989 Anonymous
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I'm physically heading into my bunker now and locking the door behind me.

Knock when it's all over.

Wed, 02/10/2010 - 21:15 | 225994 Realist
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Gold is only valuable in your hands, but it's also a security risk if people know you have it. 

Land is valuable for farming, not for rent. What will they pay you rent in if money is worthless?

I would say the best things to invest in are seeds, soil, tools, and livestock. Friends are also invaluable, and books that have information about things that are actually productive, unlike finance.

I wouldn't burn the Keynes for fun just yet. You might need them to keep warm in the winter.

 

I think Jesus saw this all coming when he turned over the tables of the money changers. 

"Forgive us our debts, as we forgive our debtors" might be the only way out.

Wed, 02/10/2010 - 23:29 | 226148 seadragonconquerer
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Lots of "friends"...excellent idea, esp. if they are - like oneself, hopefully - well armed and know small unit tactics. Best part of return to small feudal domains led by alpha males is this: boys are going to be boys and girls, like or not, are going to be girls.  

Thu, 02/11/2010 - 01:20 | 226295 jeff montanye
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or, alternatively, mad max remains a motion picture and the financial markets, as j.p. morgan observed, will fluctuate.  and those girls increase their majority in higher education and the job market.

Thu, 02/11/2010 - 04:55 | 226398 lewy14
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What will they pay you rent in if money is worthless?

Arugula, bitches!

Thu, 02/11/2010 - 09:50 | 226518 Anonymous Hand
Anonymous Hand's picture

+1

Wed, 02/10/2010 - 21:54 | 226014 john_connor
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In this environment, the goal of the NY banking cartel led by "the Fed", is to confiscate assets for pennies on the dollar while everyone goes broke.  The Fed's current overnight rate is currently 150% higher than the 3 month T-Bill.  In light of this, the only thing keeping banks from going broke right now is interest paid on excess reserves.  The usual suspects are making money by betting the farm every day with taxpayer backed funds of course.  Hilarious. 

In the end it doesn't matter how much cash the fed prints because there are no willing borrowers.  So, until the debt is purged to a manageable level and there is price discovery, we will have the "Great Disintegration I" as Rasputin says.

Cash flow is disappearing, day by day.  Very soon it will matter. 

Thu, 02/11/2010 - 12:31 | 226772 Assetman
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Very succinct and very well put, John.

The Neo-classical economists (please don't debase Keynes) like Uncle Ben are seeing the real enemy appear right before their eyes.  That enemy is debt.

Because cash flows are going "poof", debt service cannot be maintained on existing debt.  Little wonder there are no willing borrowers.

All the Fed has done over the past 2 years is transfer bad liabilities from the private sector into public sector hands.  Oh... and it has "provided liquidity".  The Fed could money print as much as it wanted, but it just creates more debt (via FRNs) that eventually cannot be serviced.  I think even Ben realizes he cannot create a dollar crisis.

The ugly solution has been staring at us for years-- yet no one seems to want to take the bitter medicine.  Debts must be purged and there must be price discovery on the collateral that supports that debt.  If central banks and governments won't clear the books, market forces will-- and it will be ruthless.

Meanwhile, the Fed and the NY Banksters are secretly finding dubious ways to confiscate capital to pay for all their debt-creating sins.  The more money they print, the more capital they will eventually need to confiscate. 

The silver lining right now, is that the rest of the world is willing to migrate to US Tresuries as Dubai, Greece, and EU are dealing with thier own sovereign debt issues.  The US would be best served issuing as much long duration, low coupon debt as possible while the window is still open (the liabilities are already there).  At some point, interest rates will be going much higher in most of the developed world... and that is when it's time to duck and cover.

Wed, 02/10/2010 - 21:34 | 226019 IveBeenHad
IveBeenHad's picture

love the fire and brimstone it makes for great fodder but in reality just as people were yelling about the end of the world in Sept 2008 and again in Feb 2009 it didn't happen. please people have some faith in this system. it taketh and giveth but there will be another day to trade. sovereign debt crisis is so dramatic. watch how the funding in europe takes care of it self.

how exactly? well the largest purchaser of their debts is again their welfare trusts. they owe themselves.  just like america and they will continue to owe themselves. now there will be short term pain but in the end the larger able countries will absorb the losses and they will all survive to fight another day.  

obviously i drank the kool aid

Wed, 02/10/2010 - 21:44 | 226035 velobabe
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leo?

Wed, 02/10/2010 - 21:57 | 226054 Anonymous
Anonymous's picture

Keynesianism still serves TPTB so it's not going anywhere. The current crisis doesn't invalidate it any more than the stagflation 70's did and that certainly didn't kill it off. It's a religion and therefore unfalsifiable. Stop holding your breath before you hurt yourself.

Wed, 02/10/2010 - 21:59 | 226059 ghostfaceinvestah
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This is a good op piece from Bloomberg.

http://www.bloomberg.com/apps/news?pid=20601039&sid=a_l2qpfPWwAQ

Feb. 11 (Bloomberg) -- “The worst possible signal which we could send out is one calling for outside help,” Greek Finance Minister George Papaconstantinou told Bloomberg Television this week. He may be the only policy maker in the European Union who understands how disastrous a bailout would be.

Welcome to “Credit Crunch II.” By stuffing billions of dollars of taxpayers’ money into the balance-sheet holes of the banking industry, governments have transmogrified private risk into public liabilities. The “too-big-to-fail” label just reattaches itself to governments from financial companies.

The sequel, if the European Union or its members are suckered into some kind of Greek rescue package by buying, guaranteeing or even repaying its bonds, could end up featuring Portugal as Lehman Brothers Holdings Inc. and Spain as American International Group Inc.

 

 

 

Wed, 02/10/2010 - 22:19 | 226080 exportbank
exportbank's picture

OK ... we're now 100% cash - let it hit the fan... Anyone know how much rice I need to feed 10-people for 6-months?

Wed, 02/10/2010 - 23:20 | 226141 Eally Ucked
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Be informed that diet like that may cause beriberi, but anyway, if you decided for that you need around 1 ton, go for high quality and not some cheap shit, brother! As one of respondents advised gardening tools are recommended, with some training and time you can make your diet richer and more satisfying. If you want to produce some feel good drinks also double the amount of rice.

Wed, 02/10/2010 - 23:59 | 226182 Anonymous
Anonymous's picture

I'm going long Campbells Chunky .99 cents this week at Fry's grocery.

Wed, 02/10/2010 - 22:38 | 226097 Anonymous
Anonymous's picture

Ah I got nothin, bupkis. Sorry

Wed, 02/10/2010 - 22:39 | 226100 Instant Karma
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On the other hand, the "money" that already has been spent that led to the enormous debt, has already been spent, and, one could argue, has already driven up prices to unsustainable levels. In other words, we've already seen inflation Part I (see stock charts for the past 20 years, commodities, etc.)

Now, the system is imploding, debt has exploded, and money is becoming more scarce because the debt needs to be serviced (America 2007-2009, Eurozone 2010). This debt implosion actually results in a drain of liquidity, with stocks, real estate, commodities sinking and the value of money increasing, temporarily.

Meanwhile, consumer demand sinks, employment sinks, and it's Japan--high debt, deflation, declining demand, aging demographics.

Over the long haul, like Japan, and Brittan, and the US, so-called quantitative easing will have to continue. That is the Fed will have to buy up some corporate and public debt to manage interest rates. They will in truth be printing money to pay for things the Treasury pays for, including interest on the debt.

The tricky part, and Japan can attest to this, is what happens in the forex market. No question the Fed, like Japan, can control interest rates by buying up Treasurys with newly minted money in the computer system. But, since everyone is in the same boat, it's not clear the US Dollar, or the Euro, or the Yen, or, whatever, will change all that much over the years.

The only way the dollar really goes confetti, or the Euro, or the Yen, is if a viable alternative reserve currency emerges. If one does, then of course the value of the the fiat currencies now the most dominant, will decline relative to the new reserve currency. Maybe that will be the Yuan some day.

But right now there's only a few markets capable of serving some sort of reserve status, and they all suck. I'm partial to the Yuan, and the Aussie, but the former is pegged and the latter trades somewhat oddly.

So, yes, we will continue dealing with debt bombs again and again as we work our way through this depression, and debt will be created and destroyed and currencies will move relative to each other. But if you really think that, in the short term, any of the larger currencies like the Yen, US Dollar, or Euro is going to blow up, well, it won't be allowed to happen.

I mean, the hedgies can throw a few billion at the Euro and drive it down, but, the central banks can throw tens of billions back and drive it back up and blow them out. Just like you can bet the ranch on rising US bonds yields, but, do you really think Uncle Ben isn't going to step in one way or another? I mean, if our economy goes full out into depression, the rest of the world follows. At least for now.

If the Republicans can take up the mantle of fiscal sanity, and slow the debt explosion in the US, we might just be better off than the EuroZone, and, contrary to most opinion, the US dollar may just rise, relatively.

So I'm all about precious metals and commodities but I'm not ready to cash in my Benjamins for a survival seed bank. Not just yet.

Wed, 02/10/2010 - 22:54 | 226116 Kreditanstalt
Kreditanstalt's picture

Your "viable reserve currency" is already here - commodities and GOLD.  No more upside speculating for me.  We really are approaching "buy-and-hold" time in those areas.

Wed, 02/10/2010 - 23:01 | 226121 waterdog
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Robo, how many more miles you gonna put on that bitch?

 

Wed, 02/10/2010 - 23:03 | 226127 cantstopselling (not verified)
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anyone see: http://www.iamned.com ?

Wed, 02/10/2010 - 23:07 | 226129 Anonymous
Anonymous's picture

You guys need to study some more history. When there is a large default and debts are huge you get one thing....

France 1780's
Germany 1920's
Spain 16th Century
Britain 1820's and China 1820's

Its WAR. You cancel all the debts and reset to zero. Its a balls to the wall play, but really the only choice left.

I hope I am wrong.

Thu, 02/11/2010 - 15:23 | 227184 IveBeenHad
IveBeenHad's picture

step into the 21 century you know post WWII. 

lets look at previous defaults argentina, russia, turkey , and just about every country in latin american has defaulted in last 30 years. very rarely has war resulted.

 

Wed, 02/10/2010 - 23:16 | 226138 Instant Karma
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>>Your "viable reserve currency" is already here - commodities and GOLD.  No more upside speculating for me.<<

Not enough size or liquidity in commodities or gold to function as money, anymore. There's too much money and not enough gold. That's why the paper is no longer backed by the metals. They were saying oil was the new currency in 2007 as it crossed $100 per barrel. Problem is, no one could afford it at that price. So, unless there is a real shortage, THEY will not let essentials to run up that high that fast. If gold went to $5000 per ounce it wouldn't hurt anyone but the shorts, but, demand would dry up except investment. That's more a psychological game.

Thu, 02/11/2010 - 10:50 | 226584 Anonymous
Anonymous's picture

"There's too much money and not enough gold."

This statement is so stupid, I don't even know where to begin.

Wed, 02/10/2010 - 23:33 | 226152 Argos
Argos's picture

Ok, just stop it with the 'farm land' investment.  When push comes to shove, there's no fuel for the tractors.  I guess you better invest in some mules too.  Oh, and by the way, owner or not, you'll NOT be welcome in the village.

Thu, 02/11/2010 - 00:17 | 226214 Anonymous
Anonymous's picture

Study the Amish Argos and learn
Horses have babies, tractors do not
It is quite doable and if one uses one brain,
does have to be back breaking drudgery
Study the Amish, they have been doing it for centuries

Wed, 02/10/2010 - 23:54 | 226169 Anonymous
Anonymous's picture

I was in the real estate investment banking biz for 20 years until last Feb, when I had to resign because I could not take it anymore. Could not sell the story anymore to equity sources and lenders on the next "great real estate deal". Today I visited my old company and was told that the CMBS business is back with a fury. Pricing has come in 150 bps in the last 30 days on 70%+ LTV non-recourse perm debt on most property types. Was told that many of the old sources or conduits are back taking the principal risk on balance sheet ( for the most part of 2009 it the conduits would take on loan prospects on a best efforts basis and nothing got done, of course). Was told that Goldman had $1
Billion in balance sheet capacity for new loans on commercial properties. Loans being shopped by brokers that could not get a quote 3 months ago are now getting a dozen quotes, and the competitive environment is fostering tighter spreads, more lax underwriting and other concessions to win the deal... I could not believe it! Truly back to 2007 type environment. Another bubble begins.....

Thu, 02/11/2010 - 00:13 | 226211 Actionpoint (not verified)
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Good articles: http://www.iamned.com

I think we're headed for phase 2 of this crisis

Thu, 02/11/2010 - 00:29 | 226230 Anonymous
Anonymous's picture

Can they confiscate farmland and produce as well? Hitler made the farms sell to the state under pretext of war.

Thu, 02/11/2010 - 01:39 | 226312 carbonmutant
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 If there was a Greek bailout who would get the money? aside from the kalamári...

 

Thu, 02/11/2010 - 02:52 | 226350 Anonymous
Anonymous's picture

"So. Say you're watching /Pirates of the Aegean/..."

Thu, 02/11/2010 - 04:12 | 226390 lewy14
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but at this point nobody wants to pretend that Greece’s yawning deficit was an act of God.

If ever there was a "man caused disaster"...

Thu, 02/11/2010 - 06:52 | 226419 Anonymous
Anonymous's picture

"Indeed, we now live in a world where whole developed countries are being bailed out."

Greece is a developed country? I wasn't impressed when I visited.

Thu, 02/11/2010 - 07:43 | 226431 Anonymous
Anonymous's picture

Niall is right that debt is a problem but does get carried away at times. Where does the 300 billion in extra interest payments come from? Presumably he is talking about a 10 year period and 15 trillion rather than 1,500 billion of debt at 2% per annum. That means extra yearly payments of 30 billion. Still a large number but less intimidating than 300 billion.

Thu, 02/11/2010 - 14:45 | 227101 Anonymous
Anonymous's picture

The Greek situation should be a warning to the intransigent public unions in California and elsewhere in the US. It can and will happen here. If politicians raise taxes instead of cutting bloated government payrolls and pensions, there'll be hell to pay.

Mon, 02/15/2010 - 12:50 | 231501 Anonymous
Anonymous's picture

Predatory Lending is a major contributor to the economic turmoil we are currently experiencing.

Here is an example of what I am talking about:
Scott Veerkamp / Predatory Lending (Franklin Township School Board Member.)

Please review this information from U.S. Senator Jeff Merkley regarding deceptive lending practices:
"Steering payments were made to brokers who enticed unsuspecting homeowners into deceptive and expensive mortgages. These secret bonus payments, often called Yield Spread Premiums, turned home mortgages into a SCAM."

The Center for Responsible Lending says YSP "steals equity from struggling families."
1. Scott collected nearly $10,000 on two separate mortgages using YSP and junk fees. 2. This is an average of $5,000 per loan. 3. The median value of the properties was $135,000. 4. Clearly, this type of lending represents a major ripoff for consumers.

http://merkley.senate.gov/newsroom/press/release/?id=A09C6A80-537A-4EB1-...

Mon, 04/19/2010 - 10:24 | 307861 Tom123456
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