Is the European Monetary Crisis a Good Thing ?

[boatman61]

Originally Posted by Pete7

Love too, but where? Cuba could be an option, are Us citzens allowed in?

Sterling in free fall today after no clear majority to form the next Government, time to hope on a ship and visit Europe me thinks, $ will buy you anything. You can't fly though cuz them Icelandic vikings are poluting the atmosphere again

Pete

Why do 'Brits' always complain when the neighbors having a B-BQ.....
Superb train service from Paddington to Spain and Portugal...

[speakeasy]

The real worry is that the PIIGS (Portugal, Italy, Ireland, Greece, Spain) will begin defaulting on their debt and we get an updated version of the Asian Contagion. Greece is likely to do so first, but it won't be the last. The dollar and gold are both rising rapidly in a flight to (perceived) safety in some sort of stealth run on Greek banks. The rub is that the world markets are totally inter-linked in real time now and more vulnerable cascading dominoes. A bizarre example of same was the breakdown of US markets yesterday with bots controlling around 75% of all trading. Some technical lines were violated and the computers all went to sell with no buyers to be found. These High Frequency Trading computers can each put out 10,000 discrete orders in the time it takes you to snap your fingers. Like on sailboats, complexity leads to vulnerability. But, no worries for the big boys, they got together and called a Mulligan, cancelling trades. There's your free markets.

The dollar has been rallying for 6 months (15%) and will continue as long as the debt deleveraging continues from the worldwide debt bubble. All governments, including the US are technically bankrupt and must continue printing money to pay bills. ergo, gold as currency or insurance is prospering. I don't think we will get the runaway inflation tho' until another year or two of deleveraging = debt extinguish = money destroyed = deflation. Creating debt is creating money, extinguishing debt is destroying money. That's what allows the FED to keep interest rates near zero, which itself creates more bubbles. It is hard to believe this will not end badly. Hopefully, not in another world wide war.

[ViribusUnitis]

Every crisis is an opertunity for somebody. This one is no diffrent.

A couple of years ago, everyone was SURE the USD was going down the tubes, and it seemed to be going that way quickly. Everybody better abandon the USD for the Euro. Now, everyone is SURE it's the Euro thats going to be finished with. Better abandon the Euro for the USD. The USD and the Euro might both find themselves destoryed. Then again, they might not.

About the only think I can say for sure, is everything changes.

[speakeasy]

Well, Trichet has adopted the Bernanke playbook (keep printing money until deflation cannot be found) and caved in on all the notions of market discipline in favor of moral hazard, in capitalist lingo. Here is someone's rough idea of the situation. Perhaps we can just declare a debt extermination worldwide, a universal do-over and hold hands and sing We are the World. I'd come.

[muskoka]

Originally Posted by speakeasy

Well, Trichet has adopted the Bernanke playbook (keep printing money until deflation cannot be found) and caved in on all the notions of market discipline in favor of moral hazard, in capitalist lingo. Here is someone's rough idea of the situation. Perhaps we can just declare a debt extermination worldwide, a universal do-over and hold hands and sing We are the World. I'd come.

Of course that chart omits the UK, Iceland, the Baltic States and much of Eastern Europe outside of the EU zone. The latter two are heavily indebted to EU banks.

This is a rolling crisis which will take years to resolve. C'est la vie...