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  • The Money Printing Press Cannot Fix Europe [View article]
    Asbytec, great conclusion . "get to work Mr. Draghi.". The big question is whether he has viable options. In my mind, the cards are now stacked against him for the reasons given above.
    Aug 1 10:14 AM | Likes Like |Link to Comment
  • The Money Printing Press Cannot Fix Europe [View article]
    Reactionay1, My understanding is that at the formation of EMU they knew they did not have consensus for full integration. The use of one currency was viewed as an initial step towards full integration. But all the original problems still exist plus they now have the unexpected problem that the Southern nations are at the end of their economic rope. It is for this reason that the previously inconceivable scenario of collapse of large parts of EMU is now becoming a likely outcome .
    Aug 1 09:31 AM | 2 Likes Like |Link to Comment
  • An Economic Historian's Explanation Why You Should Move To Cash [View article]
    I stand corrected on this historical fact you point out. I did not know it. Thanks for informing me. As I mentioned to you in our private conversations, it does not affect the substance of the article.
    Jul 31 08:09 PM | Likes Like |Link to Comment
  • An Economic Historian's Explanation Why You Should Move To Cash [View article]
    Tack, I believe you will invest best for yourself if you look at real values, not nominal values. For example, I am largely out of the market because I expect a substantial reduction of the prices of things and there will be deflation. I fully expect to buy things at much lower prices down the road, say 5 years, than the much higher prices it will cost me today. I believe you put yourself at peril to invest on the nominal values you describe.
    Jul 31 08:07 PM | 1 Like Like |Link to Comment
  • Mario Draghi's Real Message: Some Euro Countries Will Collapse, And Soon [View article]
    T1243, A two tier system would imply exchange controls that do not work well in countries like Greece. Everyone would want to game the system. This is probably a pretty low probability.
    Jul 30 11:58 AM | Likes Like |Link to Comment
  • Mario Draghi's Real Message: Some Euro Countries Will Collapse, And Soon [View article]
    AIP, You raise an excellent question. If people really understand the answer to your excellent question, a lot of confusion would go away.

    Solvency is defined as the ability to pay your financial obligations. It has nothing to do with your worth, if that net worth can not be translated into money to pay your obligations.

    In a practical sense, the ability to get reasonable rates of interest on borrowed money from the market place defines the countries which are indicating an inability to pay their financial obligations. When interest rates get to the level of Spain, it typically means that they will not be able to pay their obligations and a bailout or formal insolvency will be the outcome.

    The biggest error happening in the market place is that printing money has something to do with solvency in the European context. Spain does not control the European printing press. If the rest of the countries agree, more money can be printed, but it still needs to be lent effectively from the Northern European countries to the Southern European countries. If the southern countries can not pay the bill, the northern countries go broke trying to save the southern countries.

    There is a widespread confusion about use of the printing press when there are numerous independently run countries in a monetary union. Your assertion that "it costs the EU nothing to do since it creates money out of thin air" is simply not true in Europe.
    Jul 30 10:49 AM | 2 Likes Like |Link to Comment
  • Mario Draghi's Real Message: Some Euro Countries Will Collapse, And Soon [View article]
    Buckan, thanks for providing lots of very interesting articles. I think most people will be surprised to see all the interesting articles coming out in Greece, which provides significant support for the positions I have been taking.
    Jul 30 01:03 AM | Likes Like |Link to Comment
  • Mario Draghi's Real Message: Some Euro Countries Will Collapse, And Soon [View article]
    mahoneyct, I believe the ECB may try to implement some variant of what you suggest. However, as I suggest in the article, I believe this is a solution for a liquidity problem, not a solvency problem which I believe to be true problem.
    Jul 30 12:35 AM | Likes Like |Link to Comment
  • Mario Draghi's Real Message: Some Euro Countries Will Collapse, And Soon [View article]
    Cutiger75, I think C & BAC are particularly vulnerable, especially in real estate loans and derivatives risk. MS also. JPM a little less so but they also have an enormous derivative exposure. If Europe blows up, as I expect, this can lead to a derivatives meltdown which takes out (nationalizes) numerous of the "too big to fail banks".
    Jul 30 12:29 AM | 1 Like Like |Link to Comment
  • Mario Draghi's Real Message: Some Euro Countries Will Collapse, And Soon [View article]
    The Recusant, Well said. QE is a short term solution to temporary problems, not a long term solution to fundamental imbalances. We have created an enormous financial bubble since 2001 that can not be cured by more QE.
    Jul 29 07:17 PM | 5 Likes Like |Link to Comment
  • Mario Draghi's Real Message: Some Euro Countries Will Collapse, And Soon [View article]
    Remurraymd, I am not talking about 2009. I am talking 2013. Let´s talk in a year and see what your opinion is. Economic fundamentals do matter and change trends.
    Jul 29 07:11 PM | 7 Likes Like |Link to Comment
  • Mario Draghi's Real Message: Some Euro Countries Will Collapse, And Soon [View article]
    Ricardo11, I retired in 1980. In my generation, you collected your loans or went broke. No government bailouts.

    90% of people assume there is a solution to the problem. Either lend more money or stop spending to bring the national accounts back into balance. Yet, the reality is there are points when the level of indebtedness goes too far and there is no solution other than a fundamental reset with major adjustments. We are at one of those points. Reading "This Time is Different" by Rogoff and Rinehardt is required reading to understand this.

    Several of my articles talk about the best strategy. Be ready to go to cash, as a minimum or short the market as we get the signal the downturn is beginning. Banks will be hurt the most and will be the best short if you are so adventuresome. 5 or so years down the road will probably be the investment opportunity of the century as we come out of the down turn.
    Jul 29 07:05 PM | 11 Likes Like |Link to Comment
  • An Economic Historian's Explanation Why You Should Move To Cash [View article]
    Tack, your reply has you treating the value of things in national currency terms. However, the value of things is really in terms of international marker values such as the dollar or gold. It is in this sense you see clearly the deflation.

    Argentina suffered horrendous deflation in dollar terms. In late 70s I could buy gold and silver items in Argentina for a fraction of the dollar value because people had gone broke as a result of the hyperinflation in local currency terms.

    When discussing inflation and deflation, you can not talk meaningfully in nominal terms. You must speak in real purchasing power terms. When there is disregard for real value, you can typically get hyperinflation which leads to destruction of real value which leads to a country with real prices often lower than when they began the hyperinflation.

    I also have new article coming out in a couple days which will explain further why the eurozone can not in the moment to truth inflate their way out of the problem. You may be interested.
    Jul 28 02:39 PM | Likes Like |Link to Comment
  • An Economic Historian's Explanation Why You Should Move To Cash [View article]
    TAck and Freddy, You both speak eloquently that deflation is impossible (i.e. an oxymoron). I will grant you that the majority of people are (erroneously) still in agreement with your position. But I urge to look at these considerations.

    1) History does not support your position that deflation is impossible. As I commercial banker, I lived the cases of these excessive monetary printing of Argentina and Brazil in recent decades. I always urge reading "This Time Is Different" to see how many countries believed and went bankrupt with runaway inflation and excessive use of the printing press.

    2) You do not comment on my explanations of why this is going to happen. There is a very explicit path laid out how this is all going to happen. Impartial third parties will say why are the Wood arguments impossible. Trillions of dollars are going to be lost in the next few years, in my judgment. Do you deny this is possible?

    I can assure you that I am on very sound grounds historically. It certainly is always a question of it will play out just the way described. But to arbitrarily say it is impossible is to simply ignore history, something I do not think is a smart thing to do.
    Jul 27 01:44 PM | Likes Like |Link to Comment
  • An Economic Historian's Explanation Why You Should Move To Cash [View article]
    Yes, you and another person both pointed out this fact I did not know. However, in the context of the article, my point was no bombs fell on our factories and reduced manufacturing capacity.
    Jul 27 01:16 PM | 1 Like Like |Link to Comment
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