greece starts to undermine the euro, page-20

RB

There are all kinds of sources , the reality is a country like the UK is much worse shape than the US, the net position is also important, Japan for instance funds a lot of itself, borrowing in your own currency is much better than borrowing in say USD. The Japanese tried to inflate their way out of a lost decade of deflation and triple their debt in the process.

Here is an interesting article

http://www.businessinsider.com/henry-blodget-our-de-2009-4

the problem is there are equivelant sectors in the European and Asian economies, basically we are in trouble, the central banks have all opted to ignore debt levels, in neo classical economics, the predominant economic theory of the last 3 decades, equilibrium is supposed to naturally guard against to much debt.

Keynes had an interesting illustration of this type of thinking, he suggested if folks buried bank notes in coal mines it would stimulate the economy, folks would buy mining equipment, hire workers and invest heavily to obtain the notes, this would stimulate the economy by creating demand,

http://krugman.blogs.nytimes.com/2009/04/14/time-for-bottles-in-coal-mines/


these modern theories totally dismiss the risk that this type of stimulus will result in massive mal investment because folks will be hiring and buying mining equipment to dig up bottles with banknotes in them

so the Japanese have been at this debt based expansion much longer thank the Americans, they had their asset hyperinflation in the early 90s and for 20 years they have been borrowing to keep the whole charade going, the same with the British, who basically have never recovered after WW 2, take away debt expansion from the UK economy its been in recession for more than 50 years

This focus on the US economy is partly media driven, we listen to US commentators and covet the dominate culture of our time, folks listen to Ben Bernanke but hardly think about the other 13 central bank leaders.

Lets be clear this is about where the contagion will begin, its not a debate about whether it will. A reserve currency has enormous advantages over other sovereign countries in a meltdown. there is no doubt California is in deep , same with Arizona, New York and a host fo other American states, the difference though in Europe is that its set up differently, if Greece, Ireland, Italy, Spain want to stay within the Euro they need to enact draconian austerity measures , they will need to balance their budgets or leave, Greece is just thr first one, its the first falling domino...........these countries have no where to go if the EU deserts them, the y wont be able to raise more debt, even Japan wont be able to raise more debt, and folks will run toward what they perceive to be safe

Saturn why its important is investment timing, gold you can average into and it doenst much matter if you have a set back or few along the way, equities thought need to be timed, IMO gold equities will get thrashed in a USD stengthening, gold correcting, AUD falling, Sovereign debt default, domino viral meltdown

It matters because if you wait you can buy then much cheaper