Wednesday, April 28, 2010
Financial Panic in Europe
The debts Greece was hiding are becoming public. Germany's unwillingness to pay Greece debts has caused the creditors trying to sell Greek debt at any price - and its worth collapsed to junk. (Addenda: The German public is boiling with anger because Greece was enjoying a high standard of living without working while tricking creditors to give it easy loans and hiding the fact that it will never be able to pay back its debts). The panic is spreading - the spread on Italy’s debt yesterday rose 30 basis points to 217 points.
European countries are indebted over their heads, their debt can become worthless in a few days. The number would be huge: Ninety billion euros for Greece, 40 billion for Portugal and 350 billion for Spain.
The European MOnetary Union may unravel and a second economic depression may happen. It is not good for America either - panic is an irrational contagion. I am worried. Suddenly, bonds were worth trillions are becoming worthless. Everyone will suddenly become poorer and everything will be worth less. Including my portfolio. I am worried.