European banks hold much Greek debt, that will be sure to go bad. Till this issue unwinds, American banks will be under pressure to reduce their exposures to European lenders, stifling attempts by euro-zone banks to borrow directly from them. It means that the process of infection that has spread from Greece to contaminate other indebted countries in the single currency is now threatening to go a stage further and make any mention of the word "Europe" seem toxic.I have to decide if (1) to sell everything and take refuge in dollar bonds, or (2) to wait out the storm that will clean the air and allow the stock market to regain its former level. With the American suprime crisis I waited out and it was OK in the end, what to do now? The world financial system seems to me wrong when a default that has not yet happened, like those subprime loans to American underclass or the Greek loans, can paralyze with fear the whole world. It seems to me absurd, excessive and irrational panic behaviour. Yet that is how it is and I cannot do a thing but wait till all the anxious people around calms down.
First Japan and now the whole White race - America and Europe - have been seized by a deep fear and pessimism about the future. They behave like hysterical old men. Every small cloud in the horizon makes them run for protection... where? in gold, in US bonds. I think it is time to leave this decadent part of the world and move to an optimist, confident, growing universe. Maybe it is China where I should be moving my savings.
12 comments:
Why aren't you reading http://www.zerohedge.com/ ? A lot of the assumptions upon which you base your analysis is simply wrong. The market was fueled by excess optimism and excessive debt accumulation on the way up; it is fueled by excess pessimism on the way down - people hoard goods/savings, don't hire, etc, which fuels the cycle. I believe Soros calls this understanding of human nature syncronicity.
We never "came out" of the 2008 depression - we instead pushed the problems into the future and exascerbated them, exchanging massive bank defaults for sovereign country defaults, which are going to hatch sooner rather than later.
I face the same dilemma. Probably, I will sit it out, get rid of debt, pay my taxes, and try to buy on the lows, which now seem to occur about every six hours.
White people are pessimistic because they correctly appreciate they are no longer in control of their own countries, or destiny.
No one will be able to retire; the main thing is to keep physically healthy, avoid panic, but without being so sedated that one loses track of developments or genuine buying opportunities.
I actually think there is nowhere to hide, but I might be wrong.
Anon.
The whole Greek debt is no more than a few billion dollars, which will be paid in part or in installments, so the real loss may be in the hundreds of million dollars.
But the F E A R of that default has caused till this moment trillions of dollars of losses to banks, to private investors, to the world. It is absurd, it is revolting, it is wrong.
And the camel's back was broken when one last straw was piled onto it. A mere straw.
The Greek debt is just the exposed tip of the iceberg. The much larger Spanish, Italian, Portuguese, etc. debt is just as bad. All the banks in Europe are dead men walking - they are carrying unreal assets on their books and are really insolvent.
K
What's even worse is that there is nothing to show for all the wasted billions (unless you count all the Mercedes parked in Greek driveways but they will soon grow old and lose their value). All that borrowing was supposed to modernize Greece and turn it into a competitive economy but it's really just the same corrupt lethargic Ottoman outpost that it always was - no well known products (except for agricultural goods), no high tech sector, no decent educational system (unless you could training your students to riot as valuable training). I can't wait for them to get rid of the Euro so that I can sit in the cafe and sip cheap tsipouro (Greek grappa).
K
K, be careful what you wish for.
It is possible to at least make a case that one of the few things keeping Turkey out of EU membership is Greece. If Greece has to abandon the Euro, it does not necessarily have to leave the EU, but its role becomes diminished.
The Turkish economy is in better shape, and the banks are not insolvent. It is a more attractive economic proposition than Greece, and the pimps and globalists in the EU do not need much of an excuse.
Anon.
"All the banks in Europe are dead men walking"
Those assets are not unreal if Italy, Spain, etc. succeed in rolling over their debt. And that depends on the sentiment of the investing population. If a large minority thinks like you, that the Ponzi has to end soon, then the whole system collapses.
What Bernanke and Merkel are trying to do is to keep the debt ball rolling on into the future. That Prussian fanatic, Wolfgang Schauble, is intent on puncturing the illusion. I hope optimism will return.
So is a Ponzi not a Ponzi as long as you keep the Ponzi going?
K
Exactly. You got my meaning. A ponzi is a wonderful thing while everybody believes in it. Like Will E. Coyote, it is possible to walk in the air if you dont look down.
Even Wile E. Coyote can hang suspended in air for only so long before he notices that there's no ground beneath his feet and he plunges to the bottom of the canyon.
K
I believe European debt can be rolled on and repaid with inflated currency. I dont feel inflation and dont know how it is being done, but somehow it must be happening.
Inflation is just (unilateral) rescheduling of debt by another name. Either way the debt holders are not going to get back the value of what they originally lent. At least in a bankruptcy the creditors have input in the negotiations.
The Germans had a wonderful currency and why they gave it up to be part of "Europe" the gods only know. Maybe residual guilt over what they did in the war.
K
K
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