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Remain Calm! All is Well!
As we discussed in our Q4-09 Broyhill
Letter, it appears that the EU’s initial plan of action (see
illustration below) was not exactly a robust plan after all. At the
time, we suggested that Mr. Almunnia consult his history books, when he
claimed that “There is no bailout problem. In the euro area, default
does not exist.” Actually, European nations have defaulted on their
debt a stunning 73 times since 1800, with Greece in default more than
50% of the time!
It appears that we will soon add a few
more defaults to that running total. PIMCO CEO, Mohamed El-Erian,
summed up the bottom line as simple yet consequential, “The Greek
debt crisis has morphed into something that is potentially more sinister
for Europe and the global economy. What started out as a public finance
issue is quickly turning into a banking problem too; and what started
out as a Greek issue has become a full-blown crisis for Europe.”
Plainly, we agree. In addition to our
year-end letter, we shared our thoughts on Europe’s struggles here,
here,
here
and here.
We’d also recommend investors take a look at the Economist’s
interactive guide to Europe’s economic woes, The
PIIGS That Won’t Fly. With interest rates exploding higher and
excessive fiscal spending likely to be reined in, the currency appears
to be the only release valve. According to the Economist’s most recent
“Burger Index,” the Euro still has a ways to go before reaching fair
value on a purchasing-power-parity basis. Given the prospects for an
extended deflationary period ahead, we think the odds of a downside
overshoot are “strong to very strong.”
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Sensationalism at best.
If M.Almunia refered at something else than the Eurozone, he could have said Europe(easten, western, northern, southern, central, who knows)
So how long before the Heads of State Inc. go AWOL on their speech writers?
Telepromters beware!
"Fuck it, we'll do it live!"
Europe should foreclose on the US and make EURO denominated contracts with the Arabs, Russia and China.
Problem solved for Europe and the world without a US banking cabal that is trying to subdue another people.
You cant foreclose on the USD.
Buying USD is buying an entry pass to the commodity world market, to the US ganglord's turf.
Europeans are in a weak position: their natural back yard(middle east) is eaten away by the US which wants to empty it while it can drive in tanks to there.
Europeans still have a turf in Africa but with Chinese cutting through it like a hot knife into butter, this through gentle manners (the worst in the story as a military occupation could easily be reviled), the US ganglord cannot let a serious rival get its hands on resources and is stepping in.
No more turf for the faithful european lieutnants.
No turfs, no squeezing of them.
Yeah, that would really show those evil Rothschilds. Damn Americans.
“There is no bailout problem. In the euro area, default does not exist.”
(Joaquin Almunia, 2010)
"Faltering forces of infidels cannot just enter a country of 26 million people and lay besiege to them! They are the ones who will find themselves under siege ... God will roast their stomachs in hell at the hands of Iraqis ... We have them surrounded in their tanks ... There are no American infidels in Baghdad. Never! ... Their infidels are committing suicide by the hundreds on the gates of Baghdad. Be assured, Baghdad is safe, protected."
(Iraqi Minister of Information "Baghdad Bob", 2003)
I actually have that text on a mug
Beware the Greeks bearing Happy Meals!