Blood in the streets

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BLADEMDA

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Europe could melt down nex month. Greece may leave the Euro in a disorderly fashion creating chaos for European banks. Spain and Italy are in trouble.

A recession in the USA looks likely this summer. The question is just how bad will it get

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Europe May Be Unprepared for Greece Exit: Official



Published: Sunday, 27 May 2012 | 11:07 AM ET


http://www.cnbc.com/id/47582075



Central banks and companies risk making a grave error if they do not brace for a possible Greek exit from the euro zone, Belgium's foreign minister said on Friday, rattling markets already alarmed by Spain's deteriorating finances.
Greece%20Image%20Three.jpg
Bloomberg / Bloomberg via Getty Images​
Red paint removed from the central bank of Greece sign following demonstrations in Athens in February 2012.


Greek elections are scheduled for June 17 and could hasten the country's departure from the currency club should a government intent on ripping up the country's bailout program result.

Contrasting findings of opinion polls on Friday showed the outcome is too tight to call.

Greece accounts for little more than 2 percent of the euro zone economy but could pose a profound contagion threat if it quit the currency area, throwing the spotlight on Portugal, Spain and even Italy.

"There is no organized discussion at the European level along the lines of: what do we do (if Greece leaves)," Didier Reynders, who is both Belgium's foreign minister and deputy prime minister, told the European American Press Club in Paris. "Now, if central banks and companies are not preparing for the scenario, that would be a grave professional error."

Spain is in plenty of trouble even disregarding any backwash from Greece.

Its wealthiest autonomous region, Catalonia, on Friday said it needed help from the central government because it was running out of options for refinancing debt this year.
 
For investors looking to navigate what could be a serious economic storm, Faber said the best thing to do is keep the portfolio in US dollars and own gold, "knowing that sentiment is negative and in the near-term it could trade down to the Dec 29 low of $1522."


http://www.cnbc.com/id/47566735
 
In 2011, the Federal Reserve purchased 61% of the total treasury debt issuance. So our government is subsidizing its own spending and borrowing by expanding its balance sheet and making it look like everyone wants to purchase a piece of U.S. debt. This keeps Treasury interest rates abnormally low, camouflaging the true size of the budget deficit. In fact, interest in U.S. debt is lessening. According to a recent article in the Wall Street Journal, interest is waning. The opinion columnist writes:

"…in recent years foreigners and the U.S. private sector have grown less willing to fund the U.S. government. As the nearby chart shows, foreign purchases of U.S. Treasury debt plunged to 1.9% of GDP in 2011 from nearly 6% of GDP in 2009. Similarly, the U.S. private sector-namely banks, mutual funds, corporations and individuals-have reduced their purchases of U.S. government debt to a scant 0.9% of GDP in 2011 from a peak of more than 6% in 2009."
What is going to happen to the rates if the Feds stop cloaking the real debt picture? That's when inflation will hit hard. It is a smoke-and-mirror play in an election year.
 
Europe could melt down nex month. Greece may leave the Euro in a disorderly fashion creating chaos for European banks. Spain and Italy are in trouble.

A recession in the USA looks likely this summer. The question is just how bad will it get

The Euro actually rose because the population in Greece is supporting parties who agree with the EU bailout, minimizing concern about the country leaving the Euro.
 
I always think if this is a worldwide recession, which countries are prospering? Or is it just the ones that are not so bad off? Just a random thought.

Naturally I'm no economist but I have an opinion anyway. :D


The stock market, or a local economy, or the global economy aren't zero-sum games. Real wealth can be created, which also means it can be destroyed. There's some destruction coming.

Who's going to be least bad off? I'd put my money on a well-armed non-OPEC energy exporter ... Russia.

Everybody's darling, China, is screwed IMO, for lots of reasons I've gone into before. Short version: looming demographic disaster, pollution, 1 billion people living in mud huts, communism.
 
The Euro actually rose because the population in Greece is supporting parties who agree with the EU bailout, minimizing concern about the country leaving the Euro.

Deck chairs on the Titanic. The EU experiment was flawed from day one, minus a strong central government. I guess they could still go that way, but I don't see it happening. Greece won't be staying.

The United States of Europe could've worked, but that's not what they tried. They half-assed a pseudo-union from day one and here they are.


I have this argument with states-righters all the time. The US became a superpower because of a strong federal government, not in spite of it.
 
A European bond would fix this problem, the question is are the europeans ready to give up national sovereignty to form a European nation?
 
Europe could melt down nex month. Greece may leave the Euro in a disorderly fashion creating chaos for European banks. Spain and Italy are in trouble.

A recession in the USA looks likely this summer. The question is just how bad will it get

Half of Greece's debt has already been forfeited a lot of these factors have already been factored into the market (look at the euro/dollar). If they decide to leave the euro, which none of the political party wants, they'll go back to where they came from aka the stone age.

Spain is nowhere near as bad as Greece: it does have strong agricultural and manufacturing sectors and it's debt is not as bad.
When are we going to hear about the US states that are brooke?
 
The United States of Europe could've worked, but that's not what they tried. They half-assed a pseudo-union from day one and here they are.

I don't think this is the reason for the economic problems that are the same worldwide.
 
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In 2011, the Federal Reserve purchased 61% of the total treasury debt issuance. So our government is subsidizing its own spending and borrowing by expanding its balance sheet and making it look like everyone wants to purchase a piece of U.S. debt. This keeps Treasury interest rates abnormally low, camouflaging the true size of the budget deficit. In fact, interest in U.S. debt is lessening. According to a recent article in the Wall Street Journal, interest is waning. The opinion columnist writes:
"…in recent years foreigners and the U.S. private sector have grown less willing to fund the U.S. government. As the nearby chart shows, foreign purchases of U.S. Treasury debt plunged to 1.9% of GDP in 2011 from nearly 6% of GDP in 2009. Similarly, the U.S. private sector-namely banks, mutual funds, corporations and individuals-have reduced their purchases of U.S. government debt to a scant 0.9% of GDP in 2011 from a peak of more than 6% in 2009."
What is going to happen to the rates if the Feds stop cloaking the real debt picture? That's when inflation will hit hard. It is a smoke-and-mirror play in an election year.

My numbers may be off here. But the ultimate goal of the government is to keep the interest on the debt as LOW AS POSSIBLE! They will do whatever they have to do to keep it that way, whether it is operation twist or having the Fed Reserve purchase some.

Total tax revenue last year was about 2 Trillion dollars. The government spent a total of 3 Trillion or so on stuff. Of that 3 trillion, 400 billion was interest of the debt which stands at 15 trillion total. Now, imagaine if the interest rate were over 13%. That would mean all the tax revenue would be used to pay interest on the debt. That would be game over.

I find it funny how elderly think they always get social security. I mean, there is always inflation every year, which they lie about the real number, and the social security check stays practically the same. We are already defaulting on our obligations and people don't even realize it.

The people who get rich are the bankers. The Federal Reservce, created in 1913, is legally allowed to print counterfeit money for the bankers benefit. Once people realize what is going on, there will be heads rolling in the streets.


Even though most people I meet are highly undeducated, I think this will come to fruition.
 
This whole thing of Keynsian Economics being used to stimulate the economy is all wrong. FDR wasn't as great as people make him out to be.
 
First. We all know Germany contributes the most to the EU. Germans work their butts off while other lazy countries "demand 35 hour work weeks with 5-6 weeks of holiday pay"

Second. Greece debt is overblown. GM got more aid than entire country of Greece to put things in perspective. The total GM aid when it's all said and done will be north of 200 billion.

It's just funny math the us govt and GM does when they said GM has paid their debt back.
 
I don't think this is the reason for the economic problems that are the same worldwide.

The EU and its common currency allowed weak southern economies to live large on debt financed by strong northern economies. Benefits and privileges without accountability or responsibility. It certainly was a big part of the economic problems and debt strangling Greece and troubling Spain and Italy.

The arrangement also impairs recovery and meaningful reform. Germans are reluctant to help out Greeks in a way that people in New Jersey AREN'T reluctant to help out people in Alabama. Blue states, on the whole, pay more in federal taxes than they receive in benefits, while red states receive more than they pay - but most people in this country identify themselves as Americans first, we all speak the same language, we're all very mobile ... many of us have lived and worked in a half-dozen states and don't even consider ourselves to be residents of a particular state.

Europe is the polar opposite of that, different languages, different customs, not-too-distant history of hating and killing each other, practically no geographic mobility or ability for people to follow jobs and industries across borders, and you guys thought adopting a common currency would change all that? Again - the EU half-assed this unity thing and it's not surprising in the least that there's serious talk of breakup at the very first sign of strain or hardship.


dhb said:
When are we going to hear about the US states that are brooke?

We hear about it every day in the Greece of North America, aka California.
 
For investors looking to navigate what could be a serious economic storm, Faber said the best thing to do is keep the portfolio in US dollars and own gold, “knowing that sentiment is negative and in the near-term it could trade down to the Dec 29 low of $1522.”


http://www.cnbc.com/id/47566735

Holding Dollars and Gold represent fear trades. To many people (not the same people) each represents safety. The price of safety is about as high as it has ever been.
Historically this has been when risk has been rewarded.

Stocks are about averagely priced based on historic valuation metrics. Stocks are cheap when compared with Bonds. Gold is slightly cheap compared with Stocks.

There is plenty of risk out there. Roll the dice move your mice.
 
The EU and its common currency allowed weak southern economies to live large on debt financed by strong northern economies. Benefits and privileges without accountability or responsibility. It certainly was a big part of the economic problems and debt strangling Greece and troubling Spain and Italy.

Yes

Europe is the polar opposite of that, different languages, different customs, not-too-distant history of hating and killing each other, practically no geographic mobility or ability for people to follow jobs and industries across borders, and you guys thought adopting a common currency would change all that? Again - the EU half-assed this unity thing


I think you are confusing things here the euro was not meant to negate the differences you speak of: 80% of EU trade happens within the EU and yes it has made mobility much much easier than before.
The goal at the beginning was not to create a United States of Europe right of the bat so you might call it half-assed but I think in general terms it has gone as planned.

IMHO blaming the EU for current problems is negating the fact that fiscal responsibility has been absent from government planning in most countries for 30+ years.
 
I think you are confusing things here the euro was not meant to negate the differences you speak of: 80% of EU trade happens within the EU and yes it has made mobility much much easier than before.
The goal at the beginning was not to create a United States of Europe right of the bat so you might call it half-assed but I think in general terms it has gone as planned.

Well I'll defer to you here since you're there and I'm not. My impression from the beginning was that the intent and purpose of the Euro was merely a part of a greater vision of making the EU a cohesive economic, political, and military bloc that could compete with and influence other major world powers. In that context there's a long way to go, and the lack of a strong central government and capacity to make or execute a plan is really hurting Europe now.
 
DHB,

There are issues with the whole Euro zone and one currency:

1. No centralized govt or planning
2. Each country still responsible for a budget
3. Each country must raise bonds individually
4. Debt/GDP can exceed 100 percent
5. No ability to print money when needed like the UK or USA
6. Nobody running the show. Who exactly runs the EU and/or monetary policy
7. Each country gets a say in whether to bail out other countries.


The Euro is a disaster because there are no rules and each nation does as it pleases. Yes, they must accept terms for bailout money but they can also say no and literally ruin the entire economy of the Eurozone.

The Euro needs Germany to exist as a viable currency. But, the Germans don't want to foot the bill for Italy, Spain and of course, Greece.
 
Yes




I think you are confusing things here the euro was not meant to negate the differences you speak of: 80% of EU trade happens within the EU and yes it has made mobility much much easier than before.
The goal at the beginning was not to create a United States of Europe right of the bat so you might call it half-assed but I think in general terms it has gone as planned.

IMHO blaming the EU for current problems is negating the fact that fiscal responsibility has been absent from government planning in most countries for 30+ years.


You are correct which is why Greece must leave the Euro. Let them have the Drachma again. If Spain and Italy want to say in the EUro then they must get their house in order.

Right now my bet is Germany will cave in and agree to a trillion Euro stimulus bill. Essentially, devalue the Euro to about 1.10 from 1.25 compared to the US dollar.
 
Issuing more debt to pay off current debt; that's a sure fix. :rolleyes: In fact, it works so well here why don't we export Bush, Obama, Bernanke, Geithner, Krugman, and a few other whizkids to help set it up for them.

Do you realize your post was so bad that your screenname has now been banned? :laugh::laugh::laugh:

So none of the individual countries issue bonds now? They all do. The problem is creditors don't believe certain countries credibility, hence the high interest rates for Spain/Greece, etc.

The Euro Zone countries combined actually have a lower debt/GDP ratio than the US. The US stays ahead by selling it's Treasury bonds, which have such a low interest rate because the investors know(believe) that they will be repaid.

Bonds exist, it's just a question of who/what is supporting them. If you could have a well organized/integrated central treasury in Europe supporting a Euro Bond, it would create a market similar in size to the U.S treasuries.

I doubt a European Bond will happen, because it would mean too much integration between the countries that I find hard to believe they would all accept.
 
Well I'll defer to you here since you're there and I'm not. My impression from the beginning was that the intent and purpose of the Euro was merely a part of a greater vision of making the EU a cohesive economic, political, and military bloc that could compete with and influence other major world powers. In that context there's a long way to go, and the lack of a strong central government and capacity to make or execute a plan is really hurting Europe now.

It is certain part of the plan but on a very long term because of all the differences you talk about. It's a slow moving train but when you look at how many people define themselves as Europeans the progress is quite amazing.


ps i'm on the train now from Brussels to Paris 1h20min, no currency change no border check :thumbup:
 
DHB,

There are issues with the whole Euro zone and one currency:

1. No centralized govt or planning
2. Each country still responsible for a budget
3. Each country must raise bonds individually
4. Debt/GDP can exceed 100 percent
5. No ability to print money when needed like the UK or USA
6. Nobody running the show. Who exactly runs the EU and/or monetary policy
7. Each country gets a say in whether to bail out other countries.


The Euro is a disaster because there are no rules and each nation does as it pleases. Yes, they must accept terms for bailout money but they can also say no and literally ruin the entire economy of the Eurozone.

The Euro needs Germany to exist as a viable currency. But, the Germans don't want to foot the bill for Italy, Spain and of course, Greece.

1. Moving very slowly in that direction but yes there are major hurdles
2. Just like every US state
3. Every city raises bonds individually (municipal bonds are a mess aren't they?)
4. I don't believe the Maastrich treaty allows this but clearly the EU lacks power to enforce certain rules
5. Don't this is a bad thing
6. The ECB runs the monetary policy
7. They're not choosing who to bail out but the terms of the bailout which is legitimate

Not every nation does as it pleases but as i mentioned earlier the EU doesn't do a good job of enforcing the rules it has set. This has lead to the debt problems we have today.
Greece won't ruin the entire EU economy.
 
1. Moving very slowly in that direction but yes there are major hurdles
2. Just like every US state
3. Every city raises bonds individually (municipal bonds are a mess aren't they?)
4. I don't believe the Maastrich treaty allows this but clearly the EU lacks power to enforce certain rules
5. Don't this is a bad thing
6. The ECB runs the monetary policy
7. They're not choosing who to bail out but the terms of the bailout which is legitimate

Not every nation does as it pleases but as i mentioned earlier the EU doesn't do a good job of enforcing the rules it has set. This has lead to the debt problems we have today.
Greece won't ruin the entire EU economy.

Every state in the USA issues bonds but at different yields. But, the states can raise taxes and seek help from the Federal govt.

What good are the EU debt/GDP rules when they aren't enforced? That's sort of a like a speed limit of 100 but the police won't ever give you a ticket.

ECB runs the monetary policy; but, who runs the ECB?

Greece will never be solvent. The Drachma must return so the socialists in Greece can enjoy that retirement at age 50 and avoid paying taxes by utilizing the illegal economy (25% of the economy or more).
 
Every state in the USA issues bonds but at different yields. But, the states can raise taxes and seek help from the Federal govt.

What good are the EU debt/GDP rules when they aren't enforced? That's sort of a like a speed limit of 100 but the police won't ever give you a ticket.

ECB runs the monetary policy; but, who runs the ECB?

Greece will never be solvent. The Drachma must return so the socialists in Greece can enjoy that retirement at age 50 and avoid paying taxes by utilizing the illegal economy (25% of the economy or more).

They won't be able to buy foreign goods, those that haven't taken their money out of Greek banks will be screw ed when their Euro deposits will be converted to new drachmas, There will be massive emigration, except the new immigrants will be unwelcome (except for the most educated and talented). The money that the government pays its citizens will be crap and not be able to buy foreign goods. Barter networks will be set up, Labor Strikes on essential services, etc., etc.
 
They won't be able to buy foreign goods, those that haven't taken their money out of Greek banks will be screw ed when their Euro deposits will be converted to new drachmas, There will be massive emigration, except the new immigrants will be unwelcome (except for the most educated and talented). The money that the government pays its citizens will be crap and not be able to buy foreign goods. Barter networks will be set up, Labor Strikes on essential services, etc., etc.


Perfect. Spain, Italy and Portugal will learn a valuable lesson.
 
First. We all know Germany contributes the most to the EU. Germans work their butts off while other lazy countries "demand 35 hour work weeks with 5-6 weeks of holiday pay"

Second. Greece debt is overblown. GM got more aid than entire country of Greece to put things in perspective. The total GM aid when it's all said and done will be north of 200 billion.

It's just funny math the us govt and GM does when they said GM has paid their debt back.

Well, but it was Germany which bulldozed every other small European country to join the euro zone - even if their referendums had shown people's reluctance to do it. And for many the prices skyrocketed overnight - and those weren't the prices of luxuries, just everyday groceries...

I wouldn't be very surprised if the extended rolls of Greek retirees or other handicapped only on paper were just a mere response of their governments to plain poverty the people landed in overnight.
 
Dang, did they really have it that Posh? 35 hr work week with weeks of vacation?
 
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