Denny - If this post is out of line, please PM me and I will delete and self moderate myself in the future. I have posted on economic issues many times over “at the other board” over the last two years and while most have ran their course for a few days eventually they all got deleted. I do not know if this forum is friendly to economic talks, or if this post is welcome. If this line of discussion is not disired just let me know I and I wont do it anymore.
I work in the financial industry and have been watching the ups and downs for many years and sometimes post my thoughts on what I see and what concerns me. Right now, as in tonight, there is an absolute disaster in the making over in Europe going on. Tonight there are some huge fireworks underway, and the net affect is a clear reversal in the us dollar.
Basically the story is relatively simple, Greece is about to default on its’ sovereign debt. But along with Greece is Ireland, Spain, Portugal, and Italy in the same boat. They all share a common currency in the euro and all of them are running out of options. Today some 1.47trillion in ECB/Bankof England covered bonds were also downgraded which questions the cashflow of ECB banks. The dollar in turn has been rocketing - absoutely shot north tonight. The front month futures being at 77.66 last I saw.
This is a key reversal, well, anything north of mid 76 was key, but this is on heavy volume and strong. When Europe opens in a few hours I expect it to continue the watershed.
In a few decades, we will read about this in history books, but for the observant - tonight is the start of the death of the Euro. Think of revisiting 1930s world to watch the CreditAnsctatz collapse if you had a time machine. A key moment in history. If you are short us dollars tonights futures markets would be the place to get out of such a thing. Expect fireworks. I do.
There seems to be a lot of people who don’t really understand the basic “boom and bust” nature of the economic cycle. Right now we are in a really bad “bust” but it will “boom” again. Things will change but it may not be doom and gloom. Look at history:
Late 2000s - Sub prime mortgage crisis - We will probably live
Early 2000s Dot com bubble - We lived
1990’s - Oil price fluctuation - We lived
1980’s - S & L crisis - We lived
1979 - Iran crisis - We lived
1970’s - Stagflation and other bad stuff - We lived
etc
Seems like we should prepare for a world ending financial crisis every 10 years or so :o
glitter, I think you misunderstood the context I was posting in. I never said we were all going to die. I assure you I have absolutely no plans or intentions of dieing anytime soon.
What I am saying is that this is a key moment in history, and that those who believe the us dollar is trash and doomed to failure are in for a huge surprise. The gold to 2000 crowd, the were all going to push wheelbarrows of money around to buy a loaf of bread and the like. The case for any of that hogwash is out the window right now.
As for preparing for world ending financial crises every ten years? not likely, although that was exactly the case during the 1700s and 1800s here in the United States. Luckily some controls were put in place to have the business cycle you spoke about and general boom bust instead of hypergrowth-utterdevastation. Some of those controls were removed in the last decade, others were simply criminally and fraudulently ignored. The net afect being where we are now, you cannot be serious if you are trying to complare the events of the past 2 years with the dotcom or s&l events.
I dont recall the dotcom bubble blowing up currencies and countries. And none of those “crises” you mentioned destroyed the private credit markets. That is the real issue here. Money and credit are generally interchangable. While people talk about the “printing presses” - the reality is that far more has been destroyed than can be printed. And to note, they dont print money; they print debt. The point at which additional debt can be created has reached saturation, which is why we see the soverign debt defaults in Europe, Middle East and Latin America on the horizon. Yes the US is in bad shape, but they are far far worse in this regard and the reversal is a key part of history as that unwinds.
Credit contraction - look at the past decades you noted above.
Great info Loopy. But, as I stated several time over “there”, all his stuff is way over my head. Would you mind posting your pie chart again for me, so I feel at least a little intelligent while reading this thread? ;D
The EEU is an artificial construct that really never got off the ground. England never gave up their currency, the poorer nations constantly fiight the well of nations and always will because they don’t share common goals and capabilities. Europe tried to forge a “one size fits all” economy and government and it’s doomed. The EEU has really stifled small business-if you think the US is over-regulated spend some time in Europe and see how they struggle.
My wife is French and we spend a month over there in her village every other summer. The village cheese maker had to shut down because she made cheese in traditional methods, but the EEU requires all cheese to be made from pasteurized milk in gov’t inspected stainless steel facilities. My BIL the caterer is going to give it up after 40 years cooking because suddenly his kitchen doesn’t meet gov’t specs. The French are pissed that somebody in England or Germany writes a regulation that clashes with centuries of their traditions, everybody’s sick of carrying the Italians, and I think the EEU is doomed.
I must admit though that I love not having to change money every tiome we cross a border.
Qualifying statement: In spite of all the stupid post Tubercle makes about beer, he his actually a learned man, with all of his uppity business degrees and such. Paper hanging on the wall don’t mean much in a lot of ways but experience can lead to insight, on an abstract level at least, and we have a lot to learn from those before us that really had the smarts. I’m personally a disciple of Adam Smith who could not in any way perceived what is going on in the world today but his principles remain sound as long as mankind has a desire to succeed.
Loopy is saying that a change is coming but it is not necessary all doom and destruction. A change can be a real shake up and folks are dazed and confused for a while but things work out in the end, for the best believe it or not. Economics is a creature that moves like cold molasses ( think decades - not years) with short term bumps and wiggles that get us excited but the old “invisible hand” has a way of gently moving things in the right direction when a slight correction is needed or it smacks the Hell out of the really bad decisions. The Euro (which is strictly a fiat currency due to the vast variability of the several economies of contributing regions) and the EU in general violates certain principles; mainly that man is going to take action that benefits him, regardless of of fiscal policy of governing bodies. This experiment is doomed to fail so don’t worry. Unless you are long on the Euro and plan to retire next year :
[This post reflects Tubercles understanding of certain principles and sciences and is no way meant to be political or offensive in any way. This post reflects Tubercles opinions, and they are only that and his alone, and has his most gracious wish that he has contributed to the discussion and no offense is taken or any interpretation is seen as political, religious, or otherwise and as a result Tubercle’s post will not result in the dreaded locking or revocation or rebuke of any kind so this post may continue and the free flow of ideas and opinions, within reason, can continue without the dreaded PM from Denny the Great or other moderators not name herein. Pre-spanking plea: I worked 3rd shift last night and have been drinking a steam ale kicked up with an additional 1.5 lbs of sugar since 7:00am.]
