Thursday, January 27, 2011

Japan Downgraded, Japan/China Bail out EU, Irish, house of Cards

Asian investors lead massive demand for first Euro bail-out bond

The Asian's are export driven economies, and by buying this EU Debt, they want to support their export market in Europe, the same reason the Chinese and Japanese are not dumping their U.S. Treasury Debt en masse, but diversifying out of them. 

Even though the Japanese Government is broke (200% Debt to GDP) (and recently downgraded by Debt Rating agencies ) they are willing to delay the day of reckoning by helping the EU bail out member nations. China stands on the edge of political change if there is financial and economic pain in losing their EU and US export markets, so they support the EU bail outs as well.

It’s a house of paper cards, acting reactively to the problems, playing defense when there are so many little things that could bring the house down.

For example the Irish people have voted out the government, that accepted the EU ‘Bail out’ and the demanded ‘Austerity’, I believe they will (and should) vote to leave the EURO, following Iceland. Their currency will be worth little, but they will be able to start with a clean slate (without crushingly high interest rates on massive loans), this future Irish government won’t be able to borrow from world markets so they’ll live within their means. –and all that ‘Irish debt’ that sits on world banks balance books (Mainly EU Banks --the real reason they ‘bailed out’ the Irish) will then be worthless. –developing.

Bank of England chief Mervyn King: standard of living to plunge at fastest rate since 1920s

Households face the most dramatic squeeze in living standards since the 1920s, the Governor of the Bank of England warned, as he reacted to the shock disclosure that the economy was shrinking again.

Billionaire Eric Sprott ---Silver is the investment of the Decade!

View the interview;

Monday, January 24, 2011

NPR's Planet Money #229 Why Gold?

This is a good listen, explaining why other elements don't come close to being used for money except Gold & Silver;

What would an additional $100 Trillion do for you? –Dilution that’s what it’ll be!

The world's expected economic growth will have to be supported by an extra $100 trillion (£63 trillion) in credit over the next decade, according to the World Economic Forum.

Cities and then States ---BANKRUPT!

Municipalities & States going bankrupt, it begins in earnest this year.

With falling tax revenue (sales, business, real estate), higher interest rates debt (re-issuing maturing debt, and newly issued debt), with citizens moving to other areas that have lower tax regimes, and better economy’s and future prospects, now that most have run out of the Federal bailout money, cities are going to go bankrupt, and legally they can. –as the Vellejo article described, States have a more complicated situation.

Bankrupt Vallejo May Repay Its Creditors as Little as 5 Percent of Claims

A Path Is Sought for States to Escape Their Debt Burdens

When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.- Napoleon Bonaparte