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what we were afraid would happen in 2008: debt-deflation and a wave of sovereign defaults.The financial crisis of 2008 is about to be dwarfed.
hope you're wrong, but it does look bad.
(edit)I love going doom and gloom (edit), but things are looking bad, in other words:
Europe is well and truly ed. Its politicians are going to be unable to stop it at this point, I believe. That has some VERY serious repercussions.
Most likely chain of events, in my opinion:
We are seeing the beginning of an old-fashioned bank run in Greece.
http://www.bloomberg.com/news/2012-0...ts-pulled.html
This domino will tip and start runs in other vulnerable countries, with Greece exiting the Euro by the end of the year, possibly dragging Portugal with it, if not other weak countries.
The bank runs will cause the collapse of large European banks, and the interlinking of large financial ins utions in the US and Asia will cause them to come under a new round of stress. From what I hear from the investment classes who monitor this all, a lot of financial ins utions have tried to limit their direct exposure. My gut says they have very deep vulnerabilities that most probably aren't fully incorporated into their risk models.
I think we will see more US bank bailouts next year, and a US recession, further reinforcing a global downturn.
China, whose largest export market is the EU, will see its growth shudder to a halt, bursting its property bubble, making them unable to help Europe. India will muddle along.
My gleeful predictions of golds demise will not be borne out, as people go to gold as a store of value with the decline of the Euro and introduction of the old national currencies that will quickly devalue. I expect gold and silver will get astronomically expensive. Good news for these schmucks:
http://dsc.discovery.com/tv/gold-rush-alaska/
On the upside, gas prices will go down. Mixed blessing as we may very well see actual deflation.
The financial crisis of 2008 is about to be dwarfed.
Again, my take on it. I hope I am wrong, but the only way to avoid this is for European politicians to do things that they have demonstrated that they will not do. I don't see a sudden change of heart/charactor.
Last edited by RandomGuy; 05-16-2012 at 10:53 AM. Reason: ok, Wild Cobra had a good point. There I said it.
what we were afraid would happen in 2008: debt-deflation and a wave of sovereign defaults.The financial crisis of 2008 is about to be dwarfed.
hope you're wrong, but it does look bad.
Time for a front end QE and let the TBTF save their own skins. The stock market corrects as the artificial investment market resets leaving behind the derivative laden investment "banks".
I don't believe you RG...
You seem to love Doom and Gloom topics.
Feel free to pose a counter scenario.
(edit) snark redacted (/edit)
Time will tell.
I think I may tap a CFO/CIO or two for their thoughts.
Last edited by RandomGuy; 05-16-2012 at 10:54 AM.
I was making the point that it appears RG's nature is liking such topics. I wasn't saying he was right or wrong.
His first like:
I hate going doom and gloom, but things are looking bad, in other words:
I think the European Union will survive losing Greece and Portugal. they clearly don't have the political will to get their together. Yeah, funds will flee Greece but they will land in Germany and the UK. It's not the end of the world.
naw. we'll save em again.
And looking on the bright side, Greece is about to be the poster child on what happens when a country lets it's debts and promises to it's populace get out of whack with it's revenues.
The wealthy will flee and the lower classes will riot. Greece is ed.
Hopefully some people including our politicians and Blue teamers in here will realize that we can't keep racking up astronomical debt forever.
Oh Chumpie...
Why this silly diversion?
I was saying he was right or wrong about the article. I was disagreeing with his "I don't like" start of the "doom and gloom."
My God...
Teysha...
Chumpie...
Why are you guys making this about me?
if they flee Italy and Spain for Germany it could be the end of the Euro and possibly the Eurozone as currently cons uted.
danger is real. not inevitable, but very real.
We can only pray.
Hmm. You may have a point.
Gloom and doom is much more interesting.
We can't.
I am all for spending cuts, if coupled by tax increases.
I am willing to comprimise, if met halfway.
We don't need tax increases, we need more tax payers. We have too many deductions that keep people from paying their fair share, both at the bottom and top. Us middle class are the ones being screwed.
Hopefully, some people will realize we can't keep propping up asinine strawmen forever...
I have said before I would support tax increases targeted at reducing the deficit IF they were coupled with multiples of that increase in real spending cuts and ended when the deficit was brought back under control.
lol Republican crocodile tears over the national debt after hitting the snooze bar for 30 years
Who said it was a Republican or Democrat issue? There is plenty of blame to go around. Pull your head out of the blue sand.
That's kind of what I'm thinking too. Greece and Portugal get sacrificed with the wagons getting re-circled around everyone else.
Yeah, the EU will use the funds they were going to give them to their own banks to cover losses incurred on the sovereign defaults
Hoh...
How is that a strawman when the math shows it isn't sustainable?
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