Monday, May 10, 2010

Bailout Planet

The bailouts of Greece, EU debtors and European banks will be financed by European savers, especially in Germany (and to a lesser degree by U.S. savers). While the short term benefits are obvious, it's incredible that German leaders in particular have put their country in this position despite the history that's deeply ingrained in the national consciousness -- though I suppose some will argue that Germany and France are acting with that history specifically in mind.

I've written a lot about "protection" and I get asked sometimes what that means. As the theft from savers goes global, this becomes harder but even more important. Regular readers know I don't give specific advice here, but I can't find much to disagree with in this interview (though the "hyper" part is too breathless for the near term).

8 Comments:

Anonymous KAIMU said...

ALOHA!!

The world is in a huge LIABILITY BUBBLE. Counterparties have clearly taken on too much risk in the forms of debt and derivatives. Somehow now CDS has replaced the rating agencies. Corporations and countries fret less about "downgrades" than "spreads".

We arrived at this place because we trusted politicians and bankers could replace the gold standard. It was a bold "social experiment" that failed. Money must have a "store of value" or else it is valueless. When money is backed by the "faith and credit" of the US Treasury(aka: US Taxpayers)it is really backed by nothing other than the "human condition". Give a human a blank check and see what happens. That is essentially what Nixon did in 1971.

As of last week the US Treasury is sitting on $7TRIL USD of outlays(spending) in a seven month period. At this rate the US Treasury could "spend our entire GDP" in FY 2010. In terms of marketable US DEBT, Treasuries, the US Treasury has issued $4.8TRIL in seven months, yet the US Treasury has barely collected net tax revenues of $1TRIL. We live way beyond our means. We are Greece. But the entire World speaks Greek ... very fluently.

On Mothers Day, at 9:15PM no less, the US FED announced, with no fanfare, it was bringing back its currency swaps of 2008, due to the European "liquidity crisis". What else will the US FED bring back?

In order to survive the collapse of the LIABILITY BUBBLE, globally people will look for assets with the least liabilities. It is that simple.

5/10/2010 12:18 PM  
Anonymous Goldhorder said...

http://www.lewrockwell.com/blog/lewrw/archives/57371.html

speaking of bailouts...grayson was able to shed a bit of light on a small part of the Feds recent activities...sheesh!!! Ahhh the "free market" economy. Free for the feds to steal from you and give to their crony friends!

5/10/2010 5:20 PM  
Anonymous NeilS said...

I think it is important to remember that much of the debt is held by German banks.

5/10/2010 6:59 PM  
Anonymous Inthon said...

Good thing Elena Kagan supports Fed Secrecy and fought to protect the secrets of our beloved banks!

Go ahead, D's and R's, try and reason your way out of this one...

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aSab0xkcV8jc

5/11/2010 12:10 AM  
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