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Bring Out Your Dead - UBS Quantifies Costs Of Euro Break Up, Warns Of Collapse Of Banking System And Civil War
Any time a major bank releases a report saying a given course of action is too costly, too prohibitive, too blonde, or simply too impossible, it is nearly guaranteed that that is precisely the course of action about to be undertaken. Which is why all non-euro skeptics are advised to shield their eyes and look away from the just released report by UBS (of surging 3 Month USD Libor rate fame) titled "Euro Break Up - The Consequences." UBS conveniently sets up the straw man as follows: "Under the current structure and with the current membership, the Euro does not work. Either the current structure will have to change, or the current membership will have to change." So far so good. Yet where it gets scary is when UBS quantifies the actual opportunity cost to one or more countries leaving the Euro. Notably Germany. "Were a stronger country such as Germany to leave the Euro, the consequences would include corporate default, recapitalisation of the banking system and collapse of international trade. If Germany were to leave, we believe the cost to be around EUR6,000 to EUR8,000 for every German adult and child in the first year, and a range of EUR3,500 to EUR4,500 per person per year thereafter. That is the equivalent of 20% to 25% of GDP in the first year. " It also would mean the end of UBS, but we digress. Where it gets even more scary is when UBS, like many other banks to come, succumbs to the Mutual Assured Destruction trope made so popular by ole' Hank Paulson : "The economic cost is, in many ways, the least of the concerns investors should have about a break-up. Fragmentation of the Euro would incur political costs. Europe’s “soft power” influence internationally would cease (as the concept of “Europe” as an integrated polity becomes meaningless). It is also worth observing that almost no modern fiat currency monetary unions have broken up without some form of authoritarian or military government, or civil war." So you see: save the euro for the children, so we can avoid all out war (and UBS can continue to exist). The scariest thing, however, by far, is that for this report to have been issued, it means that Germany is now actively considering dumping the euro.
Executive summary:
Fiscal confederation, not break-up
Our base case with an overwhelming probability is that the Euro moves slowly (and painfully) towards some kind of fiscal integration. The risk case, of break-up, is considerably more costly and close to zero probability. Countries can not be expelled, but sovereign states could choose to secede. However, popular discussion of the break-up option considerably underestimates the consequences of such a move.
The economic cost (part 1)
The cost of a weak country leaving the Euro is significant. Consequences include sovereign default, corporate default, collapse of the banking system and collapse of international trade. There is little prospect of devaluation offering much assistance. We estimate that a weak Euro country leaving the Euro would incur a cost of around EUR9,500 to EUR11,500 per person in the exiting country during the first year. That cost would then probably amount to EUR3,000 to EUR4,000 per person per year over subsequent years. That equates to a range of 40% to 50% of GDP in the first year.
The economic cost (part 2)
Were a stronger country such as Germany to leave the Euro, the consequences would include corporate default, recapitalisation of the banking system and collapse of international trade. If Germany were to leave, we believe the cost to be around EUR6,000 to EUR8,000 for every German adult and child in the first year, and a range of EUR3,500 to EUR4,500 per person per year thereafter. That is the equivalent of 20% to 25% of GDP in the first year. In comparison, the cost of bailing out Greece, Ireland and Portugal entirely in the wake of the default of those countries would be a little over EUR1,000 per person, in a single hit.
The political cost
The economic cost is, in many ways, the least of the concerns investors should have about a break-up. Fragmentation of the Euro would incur political costs. Europe’s “soft power” influence internationally would cease (as the concept of “Europe” as an integrated polity becomes meaningless). It is also worth observing that almost no modern fiat currency monetary unions have broken up without some form of authoritarian or military government, or civil war.
A little more on that particularly troubling last point:
Do monetary unions break up without civil wars?
The break-up of a monetary union is a very rare event. Moreover the break-up of a monetary union with a fiat currency system (ie, paper currency) is extremely unusual. Fixed exchange rate schemes break up all the time. Monetary unions that relied on specie payments did fragment – the Latin Monetary Union of the 19th century fragmented several times – but should be thought of as more of a fixed exchange rate adjustment. Countries went on and off the gold or silver or bimetal standards, and in doing so made or broke ties with other countries’ currencies.
If we consider fiat currency monetary union fragmentation, it is fair to say that the economic circumstances that create a climate for a break-up and the economic consequences that follow from a break-up are very severe indeed. It takes enormous stress for a government to get to the point where it considers abandoning the lex monetae of a country. The disruption that would follow such a move is also going to be extreme. The costs are high – whether it is a strong or a weak country leaving – in purely monetary terms. When the unemployment consequences are factored in, it is virtually impossible to consider a break-up scenario without some serious social consequences.
With this degree of social dislocation, the historical parallels are unappealing. Past instances of monetary union break-ups have tended to produce one of two results. Either there was a more authoritarian government response to contain or repress the social disorder (a scenario that tended to require a change from democratic to authoritarian or military government), or alternatively, the social disorder worked with existing fault lines in society to divide the country, spilling over into civil war. These are not inevitable conclusions, but indicate that monetary union break-up is not something that can be treated as a casual issue of exchange rate policy.
Even with a paucity of case studies, what evidence we have does lend credence to the political cost argument. Clearly, not all parts of a fracturing monetary union necessarily collapse into chaos. The point is not that everyone suffers, but that some part of the former monetary union is highly likely to suffer.
The fracturing of the Czech and Slovak monetary union in 1993 led to an immediate sealing of the border, capital controls and limits on bank withdrawals. This was not so much secession as destruction and substitution (the Czechoslovak currency ceased to exist entirely). Although the Czech Republic that emerged from the crisis was considered to be a free country (using the Freedom House definition), with political rights improving relative to Czechoslovakia (also considered to be a free country), Slovakia saw a deterioration in the assessment of its political rights and civil liberties, and was designated “partially free” (again, using Freedom House criteria).
Similarly the break-up of the Soviet Union saw authoritarian regimes in the resulting states. Of course, this was not a change from the previous status quo, but that is not the point. The question is not how a liberal democracy develops, but whether a liberal democracy could withstand the social turmoil that surrounds a monetary union fracturing. We lack evidence to support the idea that it could.
Even the US monetary union break-up in 1932-33 was accompanied by something close to authoritarianism. Roosevelt’s inauguration was described by a contemporary journalist as being conducted in “a beleaguered capital in wartime”, with machine guns covering the Mall. State militia were called out to deal with the reactions of local populations, unhappy at what had happened to the monetary union (and specifically their access to their banks).
Older examples are less helpful, as they tend to be more akin to fixed exchange rate regimes under a gold standard or some other international monetary arrangement. Nevertheless, the Irish separation from the UK, or the convulsions of the Latin Monetary Union in Europe (particularly around the Franco-Prussian war in 1870 and its aftermath) saw monetary unions fragment with varying degrees of violence in some parts of the union.
Writing in 1997, the Harvard economist Martin Feldstein offered a view that seems to be somewhat chillingly precognitive. He said “Uniform monetary policy and inflexible exchange rates will create conflicts whenever cyclical conditions differ among the member countries... Although a sovereign country... could in principle withdraw from the EMU, the potential trade sanctions and other pressures on such a country are likely to make membership in the EMU irreversible unless there is widespread economic dislocation in Europe or, more generally, a collapse of the peaceful coexistence within Europe.” (emphasis added).
As for what happens if UBS, and the Euro Unionists lose the fight for the euro:
Our base case for the Euro is that the monetary union will hold together, with some kind of fiscal confederation (providing automatic stabilisers to economies, not transfers to governments). This is how the US monetary union was resurrected in the 1930s. It is how the UK monetary union, and indeed the German monetary union, have held together.
But what if the disaster scenario happens? How can investors invest if they believe in a break-up, however low the probability? The simple answer is that they cannot. Investing for a break-up scenario has not guaranteed winners within the Euro area. The growth consequences are awful in any break-up scenario. The risk of civil disorder questions the rule of law, and as such basic issues such as property rights. Even those countries that avoid internal strife and divisions will likely have to use administrative controls to avoid extreme positions in their markets.
The only way to hedge against a Euro break-up scenario is to own no Euro assets at all.
Alas, this will be the final outcome. Unfortunately trillions more in taxpayer capital will be lost before we get there.
In the meantime, enjoy as UBS just unwittingly announced the final countdown for the EUR.
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The dollar?
Think PPT type shit; you know, the ECB, etc., etc., etc.....
For Christ's sakes, the EU and Euro will not make it.
Their "leaders" are effectively bankrupting the populace trying desparately to keep some fantasy alive. Their actions, resulting in immense social-political-economic disloctions and costs are Criminal!
Let the damned thing go and get back to some semblance of reality.
If you are German and read ZH get this out to your fellow countrymen. You have a chance if they are considering it. LEAVE the EURO NOW! Escape the Central Banking debt currency system and start over with sound money.
Here are the two problems. One, we have all of their physical gold and they won't be getting it back anytime soon to back a currency. Two, So much money would plow into the German Mark and they would have massive inflation due to currency strength and their exports would slow to stand still speed-kind of like what we are seeing with the Swiss right now...
gold, schmold, they can back it with Benzs.
Currency controls... get ready for them...coming to a currency near you.
a strong currrency results in low inflation but screws your exporters, but god is it good to travel with a strong currency. here in norway i'm dirt poor but every time i travel to europe i can lord it over all the peasents
slow motion train wreck proceeding inexorably forward.
Tip of the Cow catchers just now touching...
It'll look something like this...
http://www.youtube.com/watch?v=9LpCIiwarOk
Just the slighest "shit" out of the guy, just before impact!
mooooooooo....
The Party is OVAH!
RE
Things just keep ramping up exponentially. I'm ready for the friggin re-set already!
"Warns Of Collapse Of Banking System And Civil War "
I'm thinking how far people can actually go to make money?
What collapse? what crisis? where are you living?
In USA retail stores are f*cking packed.
I should say Biz. are booming,
that's almost right terminology.. Where you, f* outer space
aliens came from? I guess any story to make your hit counter
spin is good???..
It's not wise to make money off the sick people. :)
Doom heads! Check your local Shopping mall.. Crisis my A$$!!!
Thats not enough for a system that needs more and more growth to survive..This monster likes to eat..
you'll like this better...jimcramer Jim Cramer
RT No need to panic. But no need to buy. If you have good yielders you are safe. But banks and tech will be terrible....Cyclicals, too...
Talk about space aliens!
Ha, yes, what better evidence is there of a productive economy than full shopping malls. We produce debt laden shoppers better than anybody!!
You are aware that in all the finest zombie movies, the risen dead congregate at retail establishments, right?
I can only give you one green. You deserve many for that. Zombie banks indeed. "Just don't go near the damn mall and you will be OK."
Prom... I believe that the zombies in 'Night of the Living Dead' congregated in a farm house...
For a change of pace someone should make a vegan zombie movie.
I am thinking of an asian zombie movie
Or maybe islamozombie film
Yeah what would a Hindu undead zombie crave?
A little curry liver tartare served at 98.6 degrees F mignt be a nice start.. maybe with a side of humus.
One retail zombie movie please, put it on my zombie bank credit card, thanks
Checked mine, it was empty, and there are lots of vacant stores. Are you blind? Maybe you live in Connecticut.
No fucking kidding I was thinking the same thing. He must live eyeball deep amongst the parasite class.
@moneywise---all of a sudden the malls are an accurate gauge of an impending global default based on massive govt debt and banking liquidity issues????
Didn't you know that debt defaults can't happen in Europe if the malls in America are packed?
This is one of the most ignorant comments I've seen on this site. Go pitch the blue pill elsewhere shill and/or denialphillic asshole.
Money Wise,@20:26,
Where do you live in US?, I am in Texas and a well offf area,and the local malls are almost like Zombie Towns.
Only on weekends are there any cstomers where they were packed every day.
People here are buying only what they need, not wants.Like I said this one of the top 3 counties in Texas................income wise and business wise.
Michael Stipe had an authorative piece on this scenario some time ago:
http://www.youtube.com/watch?v=Z0GFRcFm-aY
Wait, UBS admits that breaking up the EU would kill UBS? I'm in ... as long as the US can get its money back. But I doubt that's the case. Even so, I'm in because that would mean UBS wouldn't exist to steal our money in the future.
wtf do u mean, "... as long as the US can get its money back." Stay quiet fool.
correction - "as long as US taxpayers can get their money back ..."
Still sooo wrong. Your correction is again incorrect because it infers that UBS stole taxpayers money. That's what our government does, UBS prevents the theft in the first place.
The UBS brief is remarkable. Consider that UBS is primarily a Swiss bank, and that Switzerland, alone among its neighbors, refused to join the EU and Euro. Now UBS is essentially fear-mongering to try and coerce Germany to join a fiscal union and bear the cost of propping up the profligates to whom UBS has lent vastly more money than Switzerland is worth. The stunning hypocricy of the UBS commentary is deeply repulsive.
You mean the Swiss wouldn't join a trading bloc set up by France and Germany for their countries to profit off of less economically viable countries (PIIGS). Curse them!
Fear mongering.... Damned right!
They want to attract additional new meat, er, clients, from the other EU nations about to be the departed. Playing to the olde traditional Swiss saftey, security and silence.
New meat ripe for Skullfucking!
Gold backing of the Swissie is going to tumble hard...
They must save the European Union, it's for the children. Benjamin Sholom Bernanke will bear the burden of the world if he must.
Just kidding, get some real money while you can!
Stop lying bastards..
But don't stop laying bastards..
They're trying, but you just won't shut up.
Well, looking at some lesser looked at parameters:
This moment the 10 year bond futures say 1.91% (!!!). Behold the flight to somewhere, anywhere, not gold that isn't equities.
The 6 and 12 month paper is slightly down, as people know damned well QE3 is not truly QE because it won't be a net increase in bond buying. Rather, the Fed will punish anyone looking for safety and force them at gunpoint out to the long end.
The Brent spread is moving towards $27 friggin dollars with Brent at $110.
The proof of the pudding will be when no one will lend Greece money, they have to drive their deficit to zero overnight, and then somehow find an oil provider to sell them oil for . . . drachmas? When they can't get oil, that's when the Red Cross arrives with refugee biscuits.
oil for islands?
And it's actually deeper than this.
You see, if Greece defaults and suffers no particular pain due to a rushing in of aid agencies, and life re-orients itself there with not a single death, then they are going to very rapidly have company in defaultville.
Only if they have mass murders and sniping of bankers and politicians will Spain, Italy, Portugal and whoever find some way not to default.
"and it's actually deeper than this"
If that is true, which seems logical, then TPTB will make certain that Greece suffers
severely when they default.
Yup. And every minute of it will be on the 6 o'clock news every night.
It's a very tough read. Do they have mass killings on the 6 o'clock news every night, or do they have everyone default.
Will they label these killings a "civil war"?
"Kinetic Military Action" is more likely to get swift funding, throw in peacekeeping and humanitarian in the front, middle or back of it
The house is on fire and the sheeple are running from one room to the one next to it cause there isn't as much smoke. Damn people are really gonna get hurt when Treasuries implode, then gonna chase gold with what they have left. It will not be pretty.
Gold getting pretty frisky now... over $1910 and showing strength.
http://finviz.com/forex.ashx
Germany should dump the Euro before it totally detonates. If they don't want to leave then they should boot the PIIGS out. The Euro with Germany, France, and the other non-clown cars has a better chance of success than the clown car we have now.
If France and Germany had no one to sell to, there wouldn't be a point to the EU.
The reason they don't is their banks collapse when the PIIGS sovereign's are written down. Still - I think what you propose is going to happen, because the decision is being taken away from the politicial class.
Germany can choose to a) attempt bail out all of Europe, b) launch a new Deutchmark, bail out their own banks, and quite possibly have the world's new reserve currency coming off their printing presses.
Either dumping the Euro, or rejecting eurobonds, I know, I know ... same thing ...
Civil war in Europe = WW3.
How do you figure?
They don't have the reach to fight across the globe anymore.
It will be pretty anti-climactic after the last two.
And this would be WW4 if you count the Cold War.
Reach might practically be limited to say, tossing cheese and beer bottles across the Rhine. Or short sheeting beds in competitors hotels. And stuffing sardines down bidet drains. Or the Italians marching about on the French border with their hands on their heads yelling shit about imitating French soldiers. Or making each other show their passports at the borders. Or a serious tussle inside a pate shoppe.... Yikes! Or the barbusiqe Bedienung in her drindel refusing to serve any other than Good Germanic Stock. Or refusing to serve on internatinal committees with one another. Or refusing to speak any foreign languages!!!!
Lotta scary shit could happen. Like finding out that their militaries are comprised exclusively of administion and parade brigades.
Fear mongering, my ass.
Don't forget strongly worded letters. They could write them, you know.
In pen!
And dont forget the spanish jugglers.
You know the spainiards are about to open a can of whip ass when the jugglers show up at a protest.
ROTFL
HaHa yes Knukles this could get ugly
The fear mongering is about fear of poverty or increased debt, not fear of war. No country in Western Europe is capable of war or inclined to seek it. Life is about money now. War is so third world.
America is a third world country then.
You have to check you head and make appointment
with the Doctor right away, sooner is better.
Go to you "hosts" file in drivers/etc and add
this line 127.0.0.1 zerohedge.com
That will save you from further financial and mental loss.
WW3.... Whooooaaahhhhh will it be before or after the impending alien attacks planned to prop the economy....
They need an infastructure bank..
That was funny!
TIMBER....
An excellent choice for diversification of real assets.
There's only one way that this whole sovereign debt fiasco is going to end. And that is with the default of multiple sovereign nations. In the end, debt will be wiped off the books and the underlying currencies will be replaced. And the only items that will retain value are commodities and other tangible assets. Waves of sovereign defaults are on their way ... it's only a matter of time.
Exactly. Future bailouts will only prolong the inevitable.
NO. The Bernank will keep printing money to Deny the inevitable
The inevitable will outlive Bernank. Some other criminal would have to keep the scheme going permanently. This will not fix itself.
Wait, we can help! As soon as the 50% of us that pay taxes fork over $493,000 each...no wait that's not right. As soon as all 300 million of us fork over $493,000 each to pay off the US deficit then we, I mean the Fed, can loan the ECB the amout they need, they can default and then we can work to pay off their debt too.
There, I fixed it.
US debt isn't 148 trillion, Einstein (and the 5 Fields Medal winners who gave Einstein a thumbs-up)
By the time you factor in the derivatives and other backdoor bullshit, I wouldn't be surprised to find that it is.
Uhh, just a rounding error.
"Very Bullish for the EU GDP," ...I'm sure GS and DB will predict after reading them write the devastation in Japan was "Bullish for Japan's GDP."
How warped is Wall Street?
"Why steal less when you can steal more," they testified to Congress.
That the inevitable destruction of the EMU and the US monetary system is known, the most important question now is when? And if one does have cash, gold, silver, set aside how does one deploy it effectively.
As for cash - put it into tangible assets. Jim Rogers has plenty of good advice on specifically what type of physical assets.
As for gold and silver - Hold it and don't be deceived by the skyrocketing "price" in USD or any other existing currency. Wait for the currency transition which is sure to take place. Once the currency transition is complete, convert the gold and silver to cash. But that's, of course, assuming that governments don't confiscate gold and silver bullion in the intervening years (as they have done in the past). If governments do begin confiscating gold and silver, I'd say go ahead and convert PM holdings to other physical commodites (...again, see Jim Rogers' advice).
"But that's, of course, assuming that governments don't confiscate gold and silver bullion in the intervening years (as they have done in the past). If governments do begin confiscating gold and silver, I'd say go ahead and convert PM holdings to other physical commodites (...again, see Jim Rogers' advice)."
Or you could hide your assets from the fascist state that is rigging the economy for the wealthy.
Cry Havoc, and let slip the BKs of war!!!
Very good sir. Dogs of war. http://www.youtube.com/watch?v=1tRwD5YfmF8&feature=related
Banks panicking the muzzled free market will be cut loose on them...not to mention in some countries the populace will come after them too.
Europe’s “soft power” - LOL - what world do they live in...
Hadn't that been revised to "make believe power"?
Doesnt that prick Phil Gramm work for UBS? Send his ass to GITMO
I knew we were in trouble when the bridge ordered full reverse on the port shaft as the rudders heaved over to starboard and hit the stops even before the collision alarm sounded.
that collision alarm was money - i'll be waking up hearing that tonight
i watched titanic on this rainy labour day.about the 6th time. at the end it still sank
Funny thing is everyone i know expects this crisis to be papered over. Like everything else since LEH. There does not seem to be a broad understand of the EU/ECB in North America.
That is the defination of moral hazard, relying on inept politicians to manage their way through this.
Dow Jones futures -50, creepy doomsters!
Right, -30 actually as of now..
try 1.90 10s, -300 Dow, -35 s&P, and that just for starters Hopium Addict
I think you are looking at spoo futes. not dow futes.
Your credibility just got flushed chump. WTF?
My bloomberg app says (253). Where are you getting -50?
CNBS says down -270
http://www.cnbc.com/id/17689937
Your Bloomberg is sh*t...
Here: http://www.sgxniftydowfutureslive.com/index_files/DOWFUTURES.htm
real time futures for everything
DOW now -25
Keep smoking that shit bra, it has got to be pretty f'n good.
the daily chart said down 250 from your link you pillock
nice use of "pillock"
Sounds to me like a lot of academic BS, coming from a financial institution...
a half blind pariot
could see it coming...
long silver..
Nov. 2008
burn baby burn ..
I saw it way before Obama got elected. When someone calculated that the US debt was $150K for every TAX PAYING citizen, I knew we were going to monetize.
So if Germany couldn't win the continent through two wars, how about the threat of one war buried within a crises possibly orchestrated to assert and highlight its supremacy?
Just sayin'.
you might need to revisit a de-propagandized account of the world wars, especially the first.
I only hope that civil war comes here to America.
Right, I hope they come to your house first, make you a women
and take your GOLD, so you don't have a hope anymore, sick head..
I suppose you got a better idea... right? Let's hear it... Let me guess, it goes something like this...
"We just have to win the hearts and minds of all those ignorant people who don't know any better. Get out there and educate!"
Fat chance. You'd have better luck fighting.
Who is this buffoon? He doesn't read like a regurgitation of one of the standard trolls. He sounds more like a Chinese psy-ops troll instead of the typical JPM troll. ??? Maybe it is just a bad bunch of mushrooms and he can't help it.
I'd rather have a coup d'etat.
I'd rather have a coup d'etat.
Say it again, DickWeed.
Looks like I did.
Hey asshole have you ever been shot at? I did. When I was a sophmore in high school five years ago I was at a party in flatbush Brooklyn. The gunman had some beef with a freind of mine and shot at us when we were about to leave the party. Lucklily no got hurt. When I went home I walking and shaking like a man with Parkinsons. You are insane! Who wants Civil War?! If Civil war comes to America it will not be like Gettysburg or Antietam. It will be like Grozny,Sarajevo,Fallujah,Sadr City. It will bloody and intense. Do you think you can take artillery barrages day in and day out? Can you take the fact your whole family could get wiped out in a bomb saturation run?!! You are just another internet warrior. The milita movement does not want war,they want to prevent it. You are the reason why people thing gunowners are insane paranoid freaks!!
Considering the fact that more Americans died in one day at Antietam than died in the entire Viet Nam conflict, I'd say your comparisons need a little work.
Sooooooo, UBS threatens to indirectly raise the Black Flag of Anarchy over Europe eh? How many times have bankers threatened to crap in the sandbox if they don't get their way throughout all human history? HA
They should be careful what they predict as a 'bad' scenario. People may just want it.
Well put HL
I do so much love the smell of napalm in the morning.
What you really love is . . .
. . . . the smell of your asshole in the morning.
Hey, a man's farts smell sweet to him. Make others gag.
Yours was but a small fart in the wind.
Tanks in the streets bitchez.
Yeah, exactly WHICH streets are you referring to?
The ones outside the trailer park where you live?
wow, another retard attack. two in one night. it was a 2008 hank paulson reference bitchez.
Good ole' Hank "rocket jump" Paulson. There is a wildly popular FPS game called Team fortress 2. The bazoka wielding character can shoot at his own feet, jump at the same time and let the explosion thrust him. To flee or advance. orders of magnitude faster than running.
I think old hank used the tax payers bazooka to let him get to the top of some ivory tower in a chicago university. It sure did not help the economy.
from wiki
Crisismode, I can see you're really upset about this...I honestly think you ought to sit down calmly, take a stress pill and think things over.
Troll Fail ...
obvious troll is obvious
Thick cranial plate. A robust nuchal crest. Yup, he passes troll muster.
Damn son; you are en fuego amigo... my mofo, settle down for goodness sake.
"...."Were a stronger country such as Germany to leave the Euro, the consequences would include corporate default, recapitalisation of the banking system and collapse of international trade...."
is that you, hank? fuck you.....international trade will not collapse....fuck all of you fear mongers, liars, and banksters....trade may suffer in the short term but it would rebound....fuck all of you lying assholes to hell....
Short term I think international trade would collapse but to not start to take the medicine for your "disease" now before the consequences get much worse would be horribly pointless.
What is staggering, and what has caused the two most recent drops in the global markets, are indications that for all of the bail-outs and hand-outs to corporations and banks there still is no real sign of a recovery. Nothing is moving. It's like the patient has been given all the medicine and all the procedures and yet there is no sign of the illness subsiding.
Likewise, it is worth recalling that all the dominos began dropping because the credit markets--the repos--began to seize up in 2008(then on account of shit CDOs), and we have a very similar scenerio right now(on account of shit sovereign bonds). Only now there is practically nothing that can be done. I would love to take this as simple hysteria, but I DO read 15 other sources and most of those sources look at the same data, and do so honestly. There has been no recovery. In fact, each year the situation gets worse, this being the worst year so far. And I don't mean the "markets". I mean the economic health of the nation and the global situation overall.
You go to 15 other sources and tell me what YOU think.
Bailouts and hand outs aren't medicine for the economy. They're part of the disease. Medicine to me is to stop putting off the inevitable (QE, bailouts, handouts, etc.) and allow the market time to fix itself. It gets worse every year, because they continue the same failed economic policies as in the past.
I stand rebuked. I seem to have misrepresented your perpsective. My apologies.
They didn't say cats sleeping with dogs, so how bad could it really get?
http://www.youtube.com/watch?v=O3ZOKDmorj0
ZH you are right. What could happen is the rich nations (Germany) actually leave the EU, thus the EURO. That is a HUGE doomsday trade (EUR) right there.
I don't believe this report at all. The estimates of loss are what would happen if all countries paid off their bank loans. In this case, the banks are out of the money, and each country, like Iceland, will need only a few months before they can return, using their own currency, to where they want to be. French and German banks are screwed, and will go bankrupt, and smaller banks will pick up the pieces. Lehman style, any vacuum will soon be filled.
There is a mennonite community in my area, they haven't succombed to violence or civil war in fact they're very peaceful. I should take them a copy of the UBS report, get them up to speed, tell them to get with the program, they need more printed fiat or else their community may fall apart.
You might be better off growing a beard in thier style, getting a horsecart and joining them.
they have a farmer's market on Saturdays, remarkable people, I'm convinced they'll still be going strong long after the Euro collapses (or in our case the Loony).
Given that they've had several hundred years to prove it, I'd be inclined to agree.
you know, I grew up amongst several amish communities and i've often said "you know who doesn't give a shit about the financial crisis - the amish". i really think there's something there. chickens, goats, canned bacon and a sense of community....
In other news, invest in ammo.