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  • 3 Myths About The National Debt That Won't Die [View article]
    I've never said that Greece's problems started in the last couple of years. This is a country that has always had problem and has been bankrupt for 50% of the time since it became independent. The rest of the time it borrowed money so it could default later.
    Control of the currency and international demand are things that contradict each other. It is a privilege of course if there is such demand and is therefore likely to be abused by politicians. Again, these trends take time but at one point the GBP was the reserve currency of the world.
    My suggestion, if you want to understand these trends, is to look at history and yes history always repeats itself.
    Jun 25 08:02 PM | 2 Likes Like |Link to Comment
  • 3 Myths About The National Debt That Won't Die [View article]
    Zoellick mentioned that and I think that this is one of the reasons why he lost his job.
    Jun 25 07:22 PM | 1 Like Like |Link to Comment
  • Gold's Technical Picture Is Broken; Collapse Coming [View article]
    Cental Bank buying is mega bullish for gold. Which CB's were buying gold in 1980?
    The FED and the other Western CB's that talk gold down keep more than 70% of their FX reserves in gold. The buyers are the EM Central Banks and they need to do it as they try to get some gold in their FX reserves ... most have like 5% or less. These are the newly rich or at least cash rich countries of Asia and Latin America with trillions of cash and no idea what to do with that cash that is likely to be devalued and debased over time. This is why they are buying and they will be in the market for many years to come. They are not going to sell to anyone as they have plenty of cash anyway. It is gold that they don't have.
    Jun 25 07:18 PM | 4 Likes Like |Link to Comment
  • 3 Myths About The National Debt That Won't Die [View article]
    Have you seen the Greek current account? Greece and virtually all of the PIIGS have massively negative current accounts. Japan actually has an economy. They are doing their best to destroy it but that takes time. Greece has no economy to speak of and they don't really produce anything ... maybe only social protests.
    Inflating the debt away is not always the best option for politicians even when it can be done. For example, in 1998 Russian defaulted on its local currency debt and that debt was a lot less as a % of GDP than any of the debts that are out there now. Still, they chose to default. At the same time, companies like Gazprom kept current on their dollar obligations and Russia didn't default on its $ Eurobonds. For them the local currency debt was the bigger problem even though by today's standards it wasn't that big. I happen to think that even the US will default eventually. Of course, it doesn't make any sense to default now when you can actually borrow more. You only default when you can't borrow and the markets are closed for your debt. Then you start by screwing the foreigners first. This has been the formula for a long time and not likely to change any time soon.
    Many people think that the current debt problems and their deflationary/inflationary effects have never happened before but actually this is the history of humanity for the last 4000 years. Such debt crises even happened in ancient Babylon. You don't need that much technology to borrow a lot of money and then to be unable to pay it back. No i-phones or tablets are needed for that.
    Jun 25 07:10 PM | 4 Likes Like |Link to Comment
  • 3 Myths About The National Debt That Won't Die [View article]
    I thinking you are mixing issues. Debt is debt is debt and sovereign or not it is a problem. Japan cannot be compared to Greece as Japan produces and exports while Greece neither produces nor exports. Japan's debt is mostly held by locals as individuals there save (unlike their government). The JGB market will eventually collapse but not yet.
    Inflation is always the result of money printing and too much debt always results in money printing (inflation) or defaults with a combination of the two also possible.
    My suggestion to anyone who wants to understand how debt, budget deficits and current account deficits affect a great country is to study the history of the Roman Empire. This is a place that was in many ways similar to the US. The world is now a much more dynamic place and things happen a lot faster now.
    Jun 25 06:19 PM | 10 Likes Like |Link to Comment
  • Greece May Be Forced Out By Germany [View article]
    Euro Drachma is something that looks like a euro, smells like a euro but is worth 80% less. The best way to do it is if Greece starts paying salaries and pensions with IOU's denominated in EUR and they start trading at a nice discount of say 80% to face value. The debt of Greece is just a small detail as nobody would ever imagine paying any of it back. No need to do anything there ... just payments will stop. Default swaps were already triggered anyway. Actually there was an article here that said that new Greek default swaps were trading .... can you imagine? I sure cannot but here it is ... they'll be triggered soon as well.
    Jun 25 06:07 PM | 1 Like Like |Link to Comment
  • The measly $12B in global investment banking revenues collected this quarter is the lowest 3-month amount since the dark days of 2009 Q1. For the year's first 6 months, global revenues are off 31% Y/Y. The banks are better-capitalized, now what about profits?  [View news story]
    ... is slow and getting slower. The rest of the year is likely to be much worse than the first half.
    Jun 25 05:26 PM | 1 Like Like |Link to Comment
  • "NOT just Euroland problem folks," tweets Bill Gross. "All global economies (are) delevering with insufficient central bank response." Presumably, Bernanke and the others follow the news. Is it not just a matter of time before the response becomes sufficient?  [View news story]
    Well, he is long a lot of MBS's betting on QE3 so for sure he would like more Central Bank action ... but not to worry QE3 is coming soon to the regional Central Bank near you.
    Jun 25 05:21 PM | Likes Like |Link to Comment
  • The new Greek finance minister - Vassilis Rapanos - has resigned from office. The former non-executive chairman of National Bank of Greece, Rapanos had already backed out of attending this week's EU summit due to health issues.  [View news story]
    The new and better Prime Minister got sick immediately after the elections as well ... looks like it is a national sport.
    Jun 25 05:19 PM | 1 Like Like |Link to Comment
  • Zillow notes the near-unanimity with which its surveyed "leading economists" feel the housing market bottoms this year. As a group, the economists see prices falling only slightly this year, and then beginning a multi-year run higher. Is the unanimity supposed to be comforting?  [View news story]
    Also, all these so called experts have been wrong for years now ... but not to worry maybe this time they'll be right!
    Jun 25 05:16 PM | 1 Like Like |Link to Comment
  • Trying to arrest a steep slide in the currency, India increases from $5B to $20B the amount of rupee-denominated debt overseas investors may own. This comes on top of the RBI's estimated $250M-300M dollar for rupee sale on Friday. The currency jumped higher in earlier action, but has since pared most of those gains.  [View news story]
    Come on stupid foreigners ... buy this crap ... how kind of them. By the way, when is India going to stop printing money like there is no tomorrow? Check their money supply. It has exploded.
    Then they are shocked that inflation is high ... madness.
    Jun 25 05:15 PM | Likes Like |Link to Comment
  • Cheap or value trap? The market cap of the entire European financial sector ($360B) drops below that of Canada ($377B). Total EU GDP is about 8.5X greater than Canada's.  [View news story]
    When that happened in Sweden, the rest of the world was growing and managed to pull the small economies of the few countries that were in trouble out of their recessions/depressions, etc. Who is going to pull the much bigger and badder economies of Europe, Japan and the US out of their current troubles .... aliens anyone?
    Jun 25 05:06 PM | 1 Like Like |Link to Comment
  • Cheap or value trap? The market cap of the entire European financial sector ($360B) drops below that of Canada ($377B). Total EU GDP is about 8.5X greater than Canada's.  [View news story]
    haha ... this is the most likely thing actually as the European financial sector is not cheap.
    Jun 25 05:03 PM | Likes Like |Link to Comment
  • Treasurys are trouble is among the 5 big worries coming from the Morningstar Investment Conference of money management pros. Treasurys aren't thought of as an investment, but are instead "an insurance policy" against bad outcomes, says Steve Walsh, summing it up. (a completely different consensus here)  [View news story]
    It is clear that the so called safe haven bond markets - US govies, JGB's and BUNDs are in a bubble. I don't expect this bubble to collapse soon but don't hope to make any profits medium term as yields are well below inflation and you will just lose purchasing power over time.
    Jun 25 05:02 PM | Likes Like |Link to Comment
  • Doubling down on austerity, Brussels will be given the power to rewrite national budgets for eurozone countries that breach debt and deficit rules, according to a draft report for Thursday's summit (seen by the FT). The proposals are part of a broader effort to form a closer fiscal union and also include steps towards at least the study of issuing common debt.  [View news story]
    It is hard to imagine that the EU will be able to get something like that done but that is the right way to save the EUR. Deficit spending and more debt to supposedly grow out of debt is an insane strategy. The only good things is that Germany understands all that.
    Jun 25 04:51 PM | Likes Like |Link to Comment