It
would appear that we are just a few hours away from some form of Irish
bailout. Portugal is a sideshow, but in worse shape than Ireland. So two
fixes are due by Friday. While not a total surprise this is happening
at lightening speed. I want to make an obvious but very important point:
A week ago spreads on Irish debt got pushed to levels where a bailout is
required. On paper they do not need a bailout this week. They have
minimal borrowing requirements and technically could just ride out the
storm. But Irish yields could not stay at 9% for long. It just adds to
the cost of the next guy in line. The next up in the domino chain is
Spain, behind that is (incredibly) Italy and should those tiles fall
even France becomes suspect.
That chain of events simply can’t be allowed to happen. I will make a prediction: Should Italy fall prey to the markets in a similar fashion as Ireland the dominoes will be falling on every continent.
Italy does not deserve a loss of confidence, but that is irrelevant.
Once money starts moving it is very hard to stop. I think every finance
minister is aware of this. But I see a big speed bump in the process
ahead. That bump is the USA.
When Greece went tapioca last May the EU responded with a $145B
(equivalent) support package. Of that, $40 came from the IMF. The US is
17% of the IMF but because there are dirt bags like Venezuela who don’t
pony up their share the US is on the hook for ~20% of the Greek deal.
Back in May this was sort of a ho-hummer. Some minor opposition:
"It is
simply unfair—as a matter of principle—to force American taxpayers to
use their hard-earned money to prop up failed policies in relatively
wealthy nations," Rep. Todd Tiahrt, a Kansas Republican.
A lot has changed since last May. The opposition to US involvement will
not be muted in November. Geithner and Obama are well aware of that
fact.
The talk is for a EUR ~100b deal for Ireland. Throw in Portugal and you
get EUR 120b or a total deal not so far from that for Greece
(total=$160b). The US share of the deal could come as high as $15b if
the IMF plays a similar role as in Greece.
This is a rounding error and should not be considered. But it will. The
IMF involvement in an Ireland/Portugal bailout will not go over so well
with the Tea Party set. But I fear it will get much worse. I
think there is a case for the Fed to get involved at some point. They
may be forced to open up swap lines to EU Central Banks as part of a
broader restructuring of EU debt. Consider this info from the CIA on
total external debt.
Note that Ireland has a mountain of external debt that is not Public
Sector debt. This is largely the domestic banks. There are cross border
assets on the books of these banks. Therefore on a net basis the
external debt is not as large as it appears. However in order to address
the Irish problem this mountain of assets has to be reshuffled. That
will prove to be far more difficult than a narrow bailout of the Irish
government bond market. For it to be accomplished in an orderly fashion
it will require that large amounts of liquidity be made available. In the past that has always brought the US Fed into the picture.
If a US role is required it will come at a great cost to the
Administration. If the Fed gets involved there will be hell to pay. If
the USA balks at a critical moment, the EU effort will fail in the
market eyes. At that point the market will go into full predator mode. A
lot is riding on what should not be such a big deal. But that is the
way of things.
ALL PONZI SCHEMES DIE. The only question is who the bag-holders are in the end.
this one is well on its way.
http://www.zerohedge.com/forum/how-do-we-arrive-eve-our-collapse-1
So ze United States of Amerkia is simply looking for some financial lebensraum...Veree IN-terest-ing...
If economist Steve Keen is correct, the system now requires massive issuance of new debt as the old debt becomes non-performing or paid off. New debt is exactly the process by which new dollars are created. If the existing pool of debtors -- the American sheeple -- are being exhausted at a rate greater than the creation of new debtors, the pool of potential debtors must be aggressively expanded.
We will enter the world of a single currency, but in a fashion not yet understood: that single currency will be the dollar.
So Darwin - you of all should know that evolution works for all constructs in this particular universe. Therefore currencies will be subject to the same forces, and no one currency will 'win'.
Possible, but that would suggest that we maintain our level of debt. It seems that the US would welcome a chance to restructure its debt. If so, the single currency must be new, so haircuts can be established and more easily sold to the US and world citizens.
Dallas,
I think you are missing the point here: the US dollar is worthless; there is no haircut that gets as small as worthless.
Ben can create dollars crap in any quantity necessary. The dollar amount of US debt is a distractor for the feeble-minded who cannot stop staring at pretty pictures of dead presidents. Do you really think the Bernanke bankster mafia krewe thinks in terms of dollars -- the very thing they can create in unlimited quantities?
This is not about valueless dancing electrons; it is about the survival of the empire.
As long as we can trade 'em, I don't care what their relative value is. Just don't give me the one-world currency, please.
What's wrong with a one world currency?
It's exactly what we need...
one world currency? are you insane, W-Roach? how do you think we have arrived at this mess in America? That right, a debt-based one nation currency!!!
Peaceful free trade is what happens when parasites get out of the way.
We should urge our Congress to immediately utilize Executive Order 11110 which gives the U.S. the ability to create its own money backed by silver. Repeal the Federal Reserve Act of 1913. Introduce gold and palladium backed currencies as well. We should immediately allow regional economies to create their own paper currencies backed by trusting local business people.
http://en.wikipedia.org/wiki/BerkShares
Further, allow competing payments for Federal taxes in order to combat counterfeiting with the forces of decentralized free market trading.
Importantly, the solution is NOT a one world currency, but rather competing sovereign currencies, including gold and silver. Of course, this is exactly what takes place at the international level right now!
My suggestion is that this should take place INTRAnationally as well. As I pointed out above, regional economies are already trading their own "faith-based" paper currencies amongst businesses and individuals in certain areas of the United States.
http://en.wikipedia.org/wiki/BerkShares
These are local folks trusting local folks as it relates to the supply of money.
http://www.zerohedge.com/forum/how-do-we-arrive-eve-our-collapse-1
Yeah!
What he said!
The big picture is definitely "What will replace the USD as world reserve currency?" and like you said, it HAS to be the market, various (intra)nationally issued, commodity-backed currencies competing against one another, but obviously the key is transparency and honesty.
All the fiat currencies currently in existence are on their last legs. The last one standing will be just as debased as the fallen ones, but this is when the Globalists (call them what you will) will try to bring in their system, a continuation of the current fiat system, under a new name.
We are doing a series on the Currency Wars on PsychoNews, and just released our latest PsychoNews story, The Currency Wars, Part 4 "The Return of the Dollar"
http://psychonews.site90.net
http://psychonews.site90.net
Who do you trust with that type of monopolistic and dictatorial power? would it be a debt system administered by uber powerful banks and ultra-rich, ultra-elite embezzling bankers, deciding who they like and who gets money and power. At least now, there is no ultimately powerful central authority that can deny money to entire nations of the world on a whim (we have more subtle discrimination, although discrimination nonetheless). Individual countries can have their own currency and be free of debt slavery ... if they so choose (apparently not the US or Europe though).
Unfortunately only the self-serving want the job as the uber-banker/dictator and therefore it would be bad for the people of the world.
By virtue of the fact that money power is superior to political power, it assumes one world government and a global economy. Why is this superior? Would all militaries be disassembled and all military businesses die? There is wealth in the war business... The elitists certainly would not tolerate an egalitarian society, built on strong morals and ethics.
My guess is any level of centralization would fall apart eventually as elitists battle each other for self serving control of portions of the pie. (and maybe that is why there would still be a military, to quash any freedoms and uprisings. It does not present itself as an attractive world to me.
Sorry, roach, but I couldn't care less about the rest of the world. A one-world currency would put me squarely out of a job.
If you listen to Mikla on ZH, he claims all that matters is that the US/Fed defaults last.
Please see this quite informative video:
http://www.youtube.com/watch?v=n0NYBTkE1yQ
Thanks Orly, I keep telling people. We, taxpayers, will bail out the bankers of Ireland. They just don't believe me.
Amazing. Bernanke has got to go !!
Ben: I don't know the details !! I have traders that do that stuff.