The Coming Pan-European Soverign Debt Crisis

Reggie Middleton's picture

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Anonymous's picture

The Euro-zone should not be looked at as an isolated case. As others have said, the same excess-leverage applies to numerous other banks in other countries, e.g the US and China.

This isn't a case of the Euro-ship sinking because it was torpedo-ed by more fiscally responsible countries. This is a case of global excess-leverage, where all irresponsible sovereigns sink together...and that includes the US, Japan, Canada and China.

Currency devaluation is relative. If all currencies devalue, there is no net loss, although they must take it in turns...

Anonymous's picture


I have read hundreds if not thousands of reserach reports in the last 20 years, imho, you beat them all.

Impressive all the way.

Thanks for Sharing

Kevekev's picture

Hey Reggie,  off subject but any thoughts on DDR's 37.3 million new share offering?

DaveyJones's picture

excellent, frightening article Reggie, thanks.

Anonymous's picture

The D in STUPID should be Denmark, not Dubai.
We have a bankbailout that includes that if banks fail, EVERY depositor gets bailed out by the danish taxpayer.

(danish citizen here, our politicians are morons)

MarketWizard's picture

Why Greece? Why Now?

New Europe
For the winds to set sail for the troops of the Greek coalition and battle against Troy in the world of Ancient Empires, the Gods wanted the leader of the expedition Agamemnon, to sacrifice his daughter Iphigenia. And, so he did according to the last play by Euripides, written around 408 BC.

Twenty five centuries later, Europe is in deep trouble facing the worst economic crisis ever. Catastrophe is imminent and an Iphigenia is badly needed. The Euro, the common European currency, officially launched on 16 December 1995 was at the time given a life expectancy of 15 years by Milton Friedman. We are now in 2010 and facts prove that Friedman was correct.

Now, Europe needs its scapegoat and this was chosen to be Greece. Not because the Greeks are more corrupt than the Germans or the British neither because Greece has committed any sacrilege. We can give you many examples of British or German corruption cases having occurred with the blessing of the European Commission. Greece is too small to be dishonest by European administration standards. Greece was simply chosen to be, because it has a new government, all honest people acting in good faith with little experience and certainly unaware of how corporate gangs operate in the “civilized” world.

Greece also has a big public deficit accumulated over the last 30 years. Those mainly responsible for the accumulation of this huge deficit are the European Central Bank and the European Commission who allowed the debt to accumulate. The Commission and the ECB were responsible all these years for auditing Greece and all other European economies. The argument that the Greeks were cheating in their statistics all this time is beyond a joke. Indeed, if Greek civil servants at a salary of 800 Euro per month were capable of 30 years of cheating in the face of the auditing “super-brains” of Brussels and Frankfurt who enjoy salaries of 15.000 and 20.000 Euro per month, then Jose Barroso and his colleagues in the College, should turn to something stronger and perhaps more illicit to avoid reality...

In this context, I have to add that the Greek government and the Greek administration claim that Greece is suffering an across-the-board unethical offense by financial speculators. Although it looks to be true, I think that the Greek authorities, in defending their case, have a very limited view of the issue, and therefore are missing the real target of the speculators. That is the European currency itself – The Euro is under fire. The Euro is the target of the speculators where there is real profit.

Why else would two of the world’s leading financial newspapers attack Greece on their front pages every single day?

What is it worth?

No, Greece is not worth that much bad publicity.

The Euro is the target and the target hides political and speculative reasons. The end of the Euro is coming and it is coming soon, as since its introduction, Europe although it had a common currency, did not manage to get a common budget.

Indeed, the common budget would signify the political unification of Europe, foreign and defense policies would have come under, and the combination of a common currency and a common budget, would have brought political unification.

Last but not least, we reprint here above last Friday’s front page of one of the leading financial papers of the world which speaks of the so-called (in Brussels) “the four PIGS” (Portugal, Italy, Greece and Spain). Indeed, what I as a journalist with common sense do not understand is why, among the four PIGS, “Ailing Greece infects market,” when it is the smallest of the four, and from the published table, Greece seems to have the best performance than any the other three.

Anonymous's picture

Lengthy but poor argumentation. And vastly untrue.

The person has an extremely limited understanding of what one is talking about. No need to comment or argue. Which does not mean I support the Euro construction.

Anonymous's picture

He has a point. Why Greece? Because Greece is a safe bet to make easy money for any speculator. It is known that Greece can be bailed out and will be bailed out. Vital piece of information.

The same for California is not possible. Because no one knows if California can be bailed out.

Eternal Student's picture

Amazing. And I haven't seen this information elsewhere.

Thanks once again, Reggie.

One minor typo nit:

"for now we have effective increased the"

Should be:

"for now we have effectively increased the"

Reggie Middleton's picture

There's a lot more to come. I am effectively short much of the developed world. This banking/debt situation is much worse than the media is making it out to be. By using the term "contagion", they are negating the actual cause of the problem which is the inherent acceptance of boom/bust cycle economics by both the public and the private sector - with each boom and bust getting progressively worse and more correlated across national boundaries. The next time around (which is now, with global risk asset markets skyrocketing) will probably be the straw that breaks the debt camel's back. There are no issues that are contagious, the problems facing Greece are already inherent in almost all of the Eurozone, Japan, China, and the UK.

RossInvestor's picture

Reggie, is there a reason why you left the USA off your list?  IMHO it remains the epicenter of the crisis.

Reggie Middleton's picture

I am always harping on the US and this is a Euro post. Although the US is the epicenter, I do believe that we are better off than much of Europe and the big Asian economies, though.

I also want to make it clear that the rally on the Greek bailout rumors are basically traders chasing movement, or fools. A Greek bailout will simply have every other deficit laden company jump to the front of the line. At that point, they are damned if they do or damned if they don't. Then we have the larger countries, ex., the UK et. al.