Greek officials visited with President Barack Obama and Treasury Secretary Tim Geithner Tuesday afternoon. While not asking for a bailout, the Greek delegation warned that America can't afford to ignore the situation in Greece and, more broadly, the threat it poses to Europe's financial stability.
The recent wobble in the financial markets highlights the fragile state of the economic recovery. One minute risky assets looked like they will perform strongly, and the next investors were rushing to safe-havens. What investors look for in this environment is a safe-haven asset with risk-like characteristics.
Sprott Asset Management's Chief Investment Strategist believes gold could gain another 30% this year this year as a greater proportion of the public realizes the degree of difficulty that sovereign debt is in. Interview with the Gold Report.
If you want to see the real consequence of smash mouth economics, forget about Greece and take a look at Latvia. Its 25.5 per cent plunge in GDP over just the past two years (almost 20 per cent in this past year alone) is already the worst two-year drop on record. The country recently reported a 12% decline in annual wages in Q4 2009 versus Q4 2008. The IMF projects another 4 percent drop this year, and predicts that the total loss of output from peak to bottom will reach 30 percent. To put this in a broader context, the magnitude of this loss of output in Latvia is more than that of the U.S. Great Depression downturn of 1929-1933.
Brian Coulton, the agency's head of sovereign ratings, said the UK has seen "the most rapid rise in the ratio of public debt to GDP of any AAA-rated country" and is courting fate with its leisurely plan to halve the deficit by the middle of the decade.
"It is frankly too slow, a pedestrian pace. Why the UK thinks it has more time than other countries , we're not sure. This needs to be reoriented," he told the Fitch forum on sovereign hotspots.
Lost in the headlines over the dollar's resurgence in 2010 is the fact gold is still rising in most worldwide currencies. It is also still faring well in dollar terms. Gold is trading at around $1,120 per ounce, up about $60 in the last month.
Frank Holmes, CEO and CIO of U.S. Global Investors, a long time gold bull sees no reason for this trend to end.
Jonathan Pierce, from Credit Suisse, believes UK banks will have to reduce the size of their balance sheets by as much as £530bn over the next three to four years to meet new regulations.
According to his analysis, British banks need to issue £420bn-£750bn of long-term wholesale funds. "We don't think this is plausible and hence we expect balance sheet footings to fall by 6pc-18pc to compensate," he said. He predicts a minimum reduction in credit of £200bn.
"One of the disturbing facts of history is that so many civilizations collapse," warns anthropologist Jared Diamond in "Collapse: How Societies Choose to Fail or Succeed." Many "civilizations share a sharp curve of decline. Indeed, a society's demise may begin only a decade or two after it reaches its peak population, wealth and power."
In December I noted that if Greece was left to default on its bonds (without a bailout) this would lead to skyrocketing interest rates on Irish, Italian, Spanish and Portuguese debt followed by a nightmare domino-effect sovereign debt collapse/national bankruptcies across the entire eurozone.
Carl Heinz Daube, the head of German's debt agency Finanzagentur told the Euromoney bond congress in London that "if one member of the eurozone were to step out for any reason, this would be a collapse of the entire system."
Gentlemen, please check your tinfoil hats at the door. Later this month, America’s commodities markets regulator will hold what should prove to be one of its more colourful hearings to address the gripes of an enthusiastic group of precious metals owners. Not content with having trounced most other investors over the past decade, they claim they have been deprived of far larger gains in, among other things, a “gold price suppression” conspiracy co-ordinated by the federal government and large banks.
If you want to unnerve a European, the revelation of a secret dinner of New York-based hedge funds conspiring against the euro is hard to beat. Europeans are right to worry – but not about the collusion itself. They should be much more concerned that some of the world’s smartest investors are convinced the euro has only one way to go: deep down.
At first sight, this flies in the face of a previous consensus. In Europe, in particular, the predominant view has been that the infidels at the Federal Reserve and the Bank of England will ultimately inflate themselves out of their debt, while the European Central Bank will hold firm. That scenario would be consistent with an overvalued euro.
The Japanese have always been fascinated with Europe. They modelled their system of government on Britains, as well as their health care system and roads; their railways owe something to France; their banks are being remodelled in German fashion. But right now it is another less familiar nook of Europe that is provoking the most attention: Greece.
First the dollar took a battering in 2009 when the return of risk appetite, and the ability to borrow the currency at very low rates, sent money flowing out of America for use in speculative “carry trade” transactions. Then the euro got pummelled because of concerns about the euro zone’s exposure to sovereign-debt problems in southern Europe. Finally sterling hit the canvas this week because of concerns about the British government’s deficit and the policy gridlock that may result from a hung parliament after a general election expected in May.
Last week, gold made history, if you don't just think in U.S. dollars. The metal made all-time highs in euros, Swiss francs and British pounds.
Gold bugs argue that even extreme dollar-centric investors should take notice, because of the possibility of momentum buying from European traders influencing U.S. dollar pricing. Could the foreigners know something?
Looking ahead, as many Asian economies are likely to become less dependent on U.S. growth, the U.S. dollar should "decline in value versus commodities--and especially against the quasi currency that is gold," said Mark O’Byrne, a director at GoldCore.
Gold has proved to be the best value investment over the last 10 years, new research has disclosed. The price of the precious metal rose 277 per cent during the past decade, with investors particularly attracted to gold during the recession as they sought a safe haven for their money.
Overall, gold, silver and platinum increased in value by 242 per cent between December 1999 and December 2009, the equivalent of an average annual return of 13.1 per cent.
Barack Obama's home state of Illinois is near the point of fiscal disintegration. "The state is in utter crisis," said Representative Suzie Bassi. "We are next to bankruptcy. We have a $13bn hole in a $28bn budget."
If you like to have your investments close at hand — say, buried 12 paces northeast of the old apple tree — then gold bullion is the kind of investment you'd like. But even if you're not worried that the dollar will plunge, owning gold isn't a bad idea.
You hear many people pushing gold these days, citing our nation's $12.4 trillion debt. Gold is the classic hedge against inflation. If the U.S. resorts to printing money to repay our debts, the value of paper dollars will fall, and gold prices will skyrocket.
There’s a well-known bookmaker who, when asked how he is, likes to reply: “Sound as a pound, old boy, sound as a pound.”
As Britain’s financial woes mount, one suspects that he will soon need a fresh line in chirpiness because, far from being sound, the pound is looking softer than Mr Whippy in a heatwave.
Sterling’s exchange rate is, in crude terms, a 24/7 opinion poll of what the markets think about Britain’s economic prospects. As currency traders fret over how honest the Government is being in its pledge to slow the growth of state debt, their enthusiasm for holding pounds is dwindling.
And who can blame them? Britain’s budget deficit, as a percentage of GDP, is the worst in the G20, with total debt expected to go beyond £1 trillion and reach 100 per cent of GD
America Isn't Greece, But "The Wolf Could Be at Our Door Sooner Than We Think," Reinhart Says
Mar, 11, 2010 Yahoo News
Greek officials visited with President Barack Obama and Treasury Secretary Tim Geithner Tuesday afternoon. While not asking for a bailout, the Greek delegation warned that America can't afford to ignore the situation in Greece and, more broadly, the threat it poses to Europe's financial stability.
Continue Reading >
Gold isn’t the only metal to shine this year
Mar, 11, 2010 City AM
The recent wobble in the financial markets highlights the fragile state of the economic recovery. One minute risky assets looked like they will perform strongly, and the next investors were rushing to safe-havens. What investors look for in this environment is a safe-haven asset with risk-like characteristics.
Continue Reading >
As Confidence Returns, Gold Will Rise - John Embry
Mar, 11, 2010 Mineweb
Sprott Asset Management's Chief Investment Strategist believes gold could gain another 30% this year this year as a greater proportion of the public realizes the degree of difficulty that sovereign debt is in. Interview with the Gold Report.
Continue Reading >
Coming to a Country Near You - Let a Dozen Latvias Bloom?
Mar, 11, 2010 Counterpunch
If you want to see the real consequence of smash mouth economics, forget about Greece and take a look at Latvia. Its 25.5 per cent plunge in GDP over just the past two years (almost 20 per cent in this past year alone) is already the worst two-year drop on record. The country recently reported a 12% decline in annual wages in Q4 2009 versus Q4 2008. The IMF projects another 4 percent drop this year, and predicts that the total loss of output from peak to bottom will reach 30 percent. To put this in a broader context, the magnitude of this loss of output in Latvia is more than that of the U.S. Great Depression downturn of 1929-1933.
Continue Reading >
Roubini's Recent Catch – Global Inflation Coming
Mar, 11, 2010 Yahoo News
Please click on the link below to view the video.
Continue Reading >
Fitch warns Britain and questions Greek rescue as sovereign risks grow
Mar, 10, 2010 The Telegraph
Brian Coulton, the agency's head of sovereign ratings, said the UK has seen "the most rapid rise in the ratio of public debt to GDP of any AAA-rated country" and is courting fate with its leisurely plan to halve the deficit by the middle of the decade. "It is frankly too slow, a pedestrian pace. Why the UK thinks it has more time than other countries , we're not sure. This needs to be reoriented," he told the Fitch forum on sovereign hotspots.
Continue Reading >
Buy Gold While Supplies Last, Says Fund Manager
Mar, 10, 2010 Yahoo News
Lost in the headlines over the dollar's resurgence in 2010 is the fact gold is still rising in most worldwide currencies. It is also still faring well in dollar terms. Gold is trading at around $1,120 per ounce, up about $60 in the last month. Frank Holmes, CEO and CIO of U.S. Global Investors, a long time gold bull sees no reason for this trend to end.
Continue Reading >
New credit crunch risk as banks face funding crisis
Mar, 10, 2010 The Telegraph
Jonathan Pierce, from Credit Suisse, believes UK banks will have to reduce the size of their balance sheets by as much as £530bn over the next three to four years to meet new regulations. According to his analysis, British banks need to issue £420bn-£750bn of long-term wholesale funds. "We don't think this is plausible and hence we expect balance sheet footings to fall by 6pc-18pc to compensate," he said. He predicts a minimum reduction in credit of £200bn.
Continue Reading >
Collapse of the American Empire: swift, silent, certain
Mar, 10, 2010 MarketWatch
"One of the disturbing facts of history is that so many civilizations collapse," warns anthropologist Jared Diamond in "Collapse: How Societies Choose to Fail or Succeed." Many "civilizations share a sharp curve of decline. Indeed, a society's demise may begin only a decade or two after it reaches its peak population, wealth and power."
Continue Reading >
Greek tragedy may be dress rehearsal for bigger crisis
Mar, 09, 2010 The Standard
In December I noted that if Greece was left to default on its bonds (without a bailout) this would lead to skyrocketing interest rates on Irish, Italian, Spanish and Portuguese debt followed by a nightmare domino-effect sovereign debt collapse/national bankruptcies across the entire eurozone. Carl Heinz Daube, the head of German's debt agency Finanzagentur told the Euromoney bond congress in London that "if one member of the eurozone were to step out for any reason, this would be a collapse of the entire system."
Continue Reading >
Lex: Gold
Mar, 09, 2010 The Financial Times
Gentlemen, please check your tinfoil hats at the door. Later this month, America’s commodities markets regulator will hold what should prove to be one of its more colourful hearings to address the gripes of an enthusiastic group of precious metals owners. Not content with having trounced most other investors over the past decade, they claim they have been deprived of far larger gains in, among other things, a “gold price suppression” conspiracy co-ordinated by the federal government and large banks.
Continue Reading >
Why the euro will continue to weaken
Mar, 09, 2010 The Financial Times
If you want to unnerve a European, the revelation of a secret dinner of New York-based hedge funds conspiring against the euro is hard to beat. Europeans are right to worry – but not about the collusion itself. They should be much more concerned that some of the world’s smartest investors are convinced the euro has only one way to go: deep down. At first sight, this flies in the face of a previous consensus. In Europe, in particular, the predominant view has been that the infidels at the Federal Reserve and the Bank of England will ultimately inflate themselves out of their debt, while the European Central Bank will hold firm. That scenario would be consistent with an overvalued euro.
Continue Reading >
Why the sun looks poised to set on Japan's era of cheap government debt
Mar, 09, 2010 Yahoo News
The Japanese have always been fascinated with Europe. They modelled their system of government on Britains, as well as their health care system and roads; their railways owe something to France; their banks are being remodelled in German fashion. But right now it is another less familiar nook of Europe that is provoking the most attention: Greece.
Continue Reading >
Race to the bottom - Countries compete to weaken their currencies
Mar, 09, 2010 The Economist
First the dollar took a battering in 2009 when the return of risk appetite, and the ability to borrow the currency at very low rates, sent money flowing out of America for use in speculative “carry trade” transactions. Then the euro got pummelled because of concerns about the euro zone’s exposure to sovereign-debt problems in southern Europe. Finally sterling hit the canvas this week because of concerns about the British government’s deficit and the policy gridlock that may result from a hung parliament after a general election expected in May.
Continue Reading >
Gold on the move again?
Mar, 08, 2010 MarketWatch
Last week, gold made history, if you don't just think in U.S. dollars. The metal made all-time highs in euros, Swiss francs and British pounds. Gold bugs argue that even extreme dollar-centric investors should take notice, because of the possibility of momentum buying from European traders influencing U.S. dollar pricing. Could the foreigners know something?
Continue Reading >
Altered Landscape Riles Commodity Boom-And-Bust Cycle (GC in WSJ)
Mar, 08, 2010 Wall Street Journal
Looking ahead, as many Asian economies are likely to become less dependent on U.S. growth, the U.S. dollar should "decline in value versus commodities--and especially against the quasi currency that is gold," said Mark O’Byrne, a director at GoldCore.
Continue Reading >
Gold is decade's best performing investment
Mar, 08, 2010 The Telegraph
Gold has proved to be the best value investment over the last 10 years, new research has disclosed. The price of the precious metal rose 277 per cent during the past decade, with investors particularly attracted to gold during the recession as they sought a safe haven for their money. Overall, gold, silver and platinum increased in value by 242 per cent between December 1999 and December 2009, the equivalent of an average annual return of 13.1 per cent.
Continue Reading >
Don't go wobbly on us now, Ben Bernanke
Mar, 08, 2010 The Telegraph
Barack Obama's home state of Illinois is near the point of fiscal disintegration. "The state is in utter crisis," said Representative Suzie Bassi. "We are next to bankruptcy. We have a $13bn hole in a $28bn budget."
Continue Reading >
Keeping 5% of portfolio in gold isn't a bad idea as a hedge
Mar, 08, 2010 USA Today
If you like to have your investments close at hand — say, buried 12 paces northeast of the old apple tree — then gold bullion is the kind of investment you'd like. But even if you're not worried that the dollar will plunge, owning gold isn't a bad idea. You hear many people pushing gold these days, citing our nation's $12.4 trillion debt. Gold is the classic hedge against inflation. If the U.S. resorts to printing money to repay our debts, the value of paper dollars will fall, and gold prices will skyrocket.
Continue Reading >
A claim of patriotism is the last refuge of a busted government
Mar, 05, 2010 The Daily Telegraph
There’s a well-known bookmaker who, when asked how he is, likes to reply: “Sound as a pound, old boy, sound as a pound.” As Britain’s financial woes mount, one suspects that he will soon need a fresh line in chirpiness because, far from being sound, the pound is looking softer than Mr Whippy in a heatwave. Sterling’s exchange rate is, in crude terms, a 24/7 opinion poll of what the markets think about Britain’s economic prospects. As currency traders fret over how honest the Government is being in its pledge to slow the growth of state debt, their enthusiasm for holding pounds is dwindling. And who can blame them? Britain’s budget deficit, as a percentage of GDP, is the worst in the G20, with total debt expected to go beyond £1 trillion and reach 100 per cent of GD
Continue Reading >