profitseeker16 May 2012 22:37
You serious ??
Greece cannot form a government so expect elections within a month. We have come to the point where the bad news is out -the markets are telling us that Greece will likely leave the Eurozone and possibly the euro as their 10-year debt continues to trade at 27%. They may not pay out €436 million to creditors and keep it, fearing they will not get the next bailout tranche. Reneging on the obligation also would constitute a default triggering derivatives contracts and clauses requiring the settlement of other un-swapped bonds. Meantime the country has no government to make the choice. The country may run out of money by early July. The standoff has reignited concern that Greece will renege on pledges to cut spending as required by the terms of its two bailouts negotiated since May 2010.
This blazes the trail for Spain to follow by asking, first, for a bailout. Portugal, Ireland, and potentially Italy are looking more and more each day like Greece. We're now looking at the worst possible scene.
The Eurozone banking system would suffer tremendous losses and would initially suffer the blows of lost confidence. Again, we're seeing this now. The overall Eurozone has entered a mild recession that could get worse, but the same could apply to the U.S., travelling some distance behind, in a financial structure more capable of weathering such storms.
The fiscal and political unity in the States is responsible for the current strength of the dollar; however, should the global debt situation worsen and there is a maturing of other major, U.S. problems, then the U.S. will follow Europe; before this happens, however, the emerging world will need to reach the point where it equals the financial world of the developed side of the globe. The Yuan going global would start the process.
We would have to see a rapid expansion of the money supply in Europe as toxic national debt values shrank and needed a fresh injection of capital to replace lost value. We're on the brink of another chapter of this right now. While this would undermine confidence in the euro and the dollar, the reality that these currencies are the only available means of exchange will continue to ensure their use and control over the developed world.
But the loss of confidence process would result in investors seeking to preserve the value of their wealth in gold and silver bullion even more than we have seen in the last few years. Many times we've discussed just how gold would be used to reinforce the current currency system and how that process would become reality. More importantly, the institutionalization of gold in an active role in the monetary system would become a reality.
This would start in Europe, but the U.S. would dovetail into the developments as a cautionary reinforcing of its own monetary system too.
Allegedely ;-)
Sign In
Follow the stocks
