AI
FICTION: The Greek drama is behind us.?
FACT: It’s just getting started.
On hearing of the Greek downgrade, following email…
Greece collapses. Well not quite yet, but the downgrade to junk
BB+ and the recovery rating by S&P of 4 which means that only 30%
to 50% of the invested money will be recovered, is ugly.
Portugal was cut to A- and their spreads widened so they are
waiting in the wings.
As far as "What next," in order for Greece to get its desperately
needed loans in the face of strong negative sentiment in Germany,
and the slow handling of the crisis, it will have to make
promises it can't keep.
Credit Default Swaps on 5-year Greek sovereign bonds are being priced
at 698, which translates into a 7% cost for insurance.
That is unacceptably high.
With spreads to German bonds at 600 points, the increased cost of
paying the interest on the debt would completely erase the
benefits promised of austerity measures that were supposed to cut
the deficit by 3% of GDP.
Even if the Greeks are able to secure the loans from the EU and
the IMF loans, I fear that as their economy continues to collapse,
they will burn through these new loans and then present the same
problem again in a year or two.
According to reports, Greeks are pulling money out of their own banks.
This is a good example of the point of no return we’ve have been
warned about.
Meanwhile, the stock market is off hard, again.
And the CBOE Volatility Index (VIX) is up about 20% on the day. Interestingly, while the euro is down, and the dollar up,
so is gold – and quite strongly.
Meanwhile, back in the U.S., doing his part to avoid a wipeout
of the Democrats’ legislative majority this November, President
Obama has announced he won’t be commenting on the U.S. debt
problem until hearing back from a special debt commission in
December… in other words, not until after the mid-term elections.
How convenient.
The fact of the matter is, the sovereign debt problem is out of
control and completely intractable at this point.
While the world’s debtor nations would love to have the time needed
to let a creeping inflation work down the value of said debt –
their current obligations and the pile of debt are simply too big.
And the global economy is just too weak.
The odds that we’ll see a spate of outright sovereign debt defaults
and currency revaluations are growing by the day.
Is it any wonder that gold is showing so much spine?
E.g.,dd....
INCLUDING 22.97 G/T AU ACROSS 24.8 METRES - GOLDSTONE REPORTS
EXPANSION OF NN ZONE MINERALIZATION AT HARDROCK -
http://www.grcmines.com/news.php
http://www.grcmines.com/hardrock.php
http://www.grcmines.com/history.php
http://investorshub.advfn.com/boards/board.aspx?board_id=1499
FACT: It’s just getting started.
On hearing of the Greek downgrade, following email…
Greece collapses. Well not quite yet, but the downgrade to junk
BB+ and the recovery rating by S&P of 4 which means that only 30%
to 50% of the invested money will be recovered, is ugly.
Portugal was cut to A- and their spreads widened so they are
waiting in the wings.
As far as "What next," in order for Greece to get its desperately
needed loans in the face of strong negative sentiment in Germany,
and the slow handling of the crisis, it will have to make
promises it can't keep.
Credit Default Swaps on 5-year Greek sovereign bonds are being priced
at 698, which translates into a 7% cost for insurance.
That is unacceptably high.
With spreads to German bonds at 600 points, the increased cost of
paying the interest on the debt would completely erase the
benefits promised of austerity measures that were supposed to cut
the deficit by 3% of GDP.
Even if the Greeks are able to secure the loans from the EU and
the IMF loans, I fear that as their economy continues to collapse,
they will burn through these new loans and then present the same
problem again in a year or two.
According to reports, Greeks are pulling money out of their own banks.
This is a good example of the point of no return we’ve have been
warned about.
Meanwhile, the stock market is off hard, again.
And the CBOE Volatility Index (VIX) is up about 20% on the day. Interestingly, while the euro is down, and the dollar up,
so is gold – and quite strongly.
Meanwhile, back in the U.S., doing his part to avoid a wipeout
of the Democrats’ legislative majority this November, President
Obama has announced he won’t be commenting on the U.S. debt
problem until hearing back from a special debt commission in
December… in other words, not until after the mid-term elections.
How convenient.
The fact of the matter is, the sovereign debt problem is out of
control and completely intractable at this point.
While the world’s debtor nations would love to have the time needed
to let a creeping inflation work down the value of said debt –
their current obligations and the pile of debt are simply too big.
And the global economy is just too weak.
The odds that we’ll see a spate of outright sovereign debt defaults
and currency revaluations are growing by the day.
Is it any wonder that gold is showing so much spine?
E.g.,dd....
INCLUDING 22.97 G/T AU ACROSS 24.8 METRES - GOLDSTONE REPORTS
EXPANSION OF NN ZONE MINERALIZATION AT HARDROCK -
http://www.grcmines.com/news.php
http://www.grcmines.com/hardrock.php
http://www.grcmines.com/history.php
http://investorshub.advfn.com/boards/board.aspx?board_id=1499
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