European and US authorities are making noise that a bunch of hedge funds were strategizing, over “a dinner,” to destroy the Euro by exploiting the Greek financial crisis. So here we are again the victims of phony finance based capitalism, phony financial instruments of mass destruction “derivatives,” and a race to the bottom on the part of national-sovereign entities. Nothing is being done that could be considered constructive to the long term prospects of society. People wanting to build for a future don’t have the stability needed to do so, they don’t have the credit, they don’t have access to money or capital. As small-investors, we have huge risk in supposedly risk-less assets; and risk of total loss in speculative yield producing assets. People are chasing yield a very dangerous thing to do. Governments are either going to have to peg currencies near parity, negotiate down debt, and concurrently move to a settlement system or we will face total chaos.
Tags: budget, commerical, Credit, defaults, dollar, economics, etf, euro, Finance, gld, gold, Greece, inflation, money, mortgaes, politics, Real Estate, refinance, Stocks, taxes, wepollock
March 10th, 2010 at 8:08 pm
Very interesting, although I have different views on currencies since the overall budget deficit of the Euro-zone is lower than the budget deficit of the US and the trade balance is only slightly negative (with some positive quarters) in Europe.
March 10th, 2010 at 8:08 pm
@wepollock I do get how cheap goods generally are, given the amount of work and effort we put out for them in today’s economy: 1$ hamburgers, 2$ tee-shirts, used RV for 800$ that I can live in (cheap shelter). This you have mentioned before also, including even valuable industrial metals prices!! And this is all based on cheap imports, cheap oil, open trading, and easy credit which keeps prices lower (higher demand). Thanks.
BTW What do you think of Runtogold’s ideas?
March 10th, 2010 at 8:08 pm
In the POSSIBLE scenario I paint dollars will have local purchasing power. Credit going bad, loss of jobs, and lack of true productivity are all creating a shortage of dollars locally. At the same time our access to imported goods will come under pressure. Perhaps thinking about purchasing power will help.
March 10th, 2010 at 8:08 pm
Great video as usual. I don’t quite why there will be a shortage of dollars. Unless it is along the lines of “RuntoGold” thinking: that everything evaporates down to most liquid, less counterparty risk assets with general deflation.
Can you explain why dollars will be scarce? And if so, will they have value?
March 10th, 2010 at 8:08 pm
You might want some precision metals as well. Availability of imported goods and the cost of those goods might be a real issue.
March 10th, 2010 at 8:08 pm
and if that’s the case isn’t zero debt and cash king and not commidities/precious metals. Considering that the standard currency doesn’t completely disappear that is.
March 10th, 2010 at 8:08 pm
I understand that increasing credit and money supply causes inflation and that even if the reserve currency status ends and money flows back into the country that hyper-inflation is very possible, but even with the printing presses smoking won’t the money supply still decrease when the market housing/stock crashes again. What I am? trying to say is won’t in nominal terms money disappear faster than being created causing deflation ? not inflation ?
March 10th, 2010 at 8:08 pm
I suspect the elite may want a phased managed collapse which will allow incremental introduction of the solutions that will form the basis of their new world system?
I completely agree that FinCap is parasitic on the real physical economy and ought to be dismantled.
I also agree we have the technology and the means to provide for all; but capitalism is incapable of delivering that.
Capitalism will destroy our civilisation if let.
We need a new global system of production and distribution.
March 10th, 2010 at 8:08 pm
very interesting
March 10th, 2010 at 8:08 pm
Gosh I really need to focus,five views and I am still in the dark-perhaps a more mathematical approach from me is needed!
As to government getting together and solving this or any other problem-well with the level of cronyism it ain’t gonna happen!So chaos here we come!
March 10th, 2010 at 8:08 pm
Great presentation.
March 10th, 2010 at 8:08 pm
@wepollock
LBMA can get away free like Morgan Stanley?
March 10th, 2010 at 8:08 pm
Tons of paper gold. Much of it is hot! in that it can liquidate in a second.
March 10th, 2010 at 8:08 pm
@wepollock
By Adrian Douglas
Monday, March 1, 2010
Recently I have written several articles that have discussed how much “paper gold” has been sold, principally through the unallocated accounts of the London Bullion Market Association, though there are other vehicles that achieve the same end, such as pool accounts, unbacked exchange-traded funds, futures, and derivatives, etc., but the LBMA dwarfs them all.
What say, wepollack?
March 10th, 2010 at 8:08 pm
If it is imported it might be hard to get later. If they are made here, wait.
March 10th, 2010 at 8:08 pm
Should I buy a new water heater now?
March 10th, 2010 at 8:08 pm
@wepollock So we’ll have to take a wait and see approach. My guess would be that Gold and Silver or at least Gold would stabilize as currencies would not be in flux. Just a guess.
March 10th, 2010 at 8:08 pm
Nobody knows. 1) Deflation from a shortage of USD in the local US economy 2) Price inflation due to the inability to source imports; imports being a large source of price deflation at present.
March 10th, 2010 at 8:08 pm
If I understand you correctly we would have price inflation without an inflation in the amount of currency in circulation. My question I suppose is, in such a scenario what would expect to happen to gold and silver prices?
March 10th, 2010 at 8:08 pm
When governments mess up bigtime, they ALWAYS blame speculators when the end is near. Nothing new!
March 10th, 2010 at 8:08 pm
…for each dollar they get one grain of sand.
March 10th, 2010 at 8:08 pm
don’t those contracts have a “force majeure” clause?
March 10th, 2010 at 8:08 pm
I haven’t researched this much, but doesn’t Europe, as a whole, produce and manufacture much more than the US? If that’s so, isn’t that one of the foundational supports of a currency? I realize it also depends on other factors such as monetary policy, including interest rates and money supply, but the Euro still seems to be on more solid footing. The US dollar seems to be held up mostly by its status as the world reserve currency. I do agree that they are both structurally flawed currencies.
March 10th, 2010 at 8:08 pm
There is “netting” or clearing going on now under the supervision of offices such as the comptroller of the currency. However more synthetic instruments are being generated than retired, also the ones that cannot be netted contain hyper-toxins. That is the case with AIG. They just cannot unwind the positions.
March 10th, 2010 at 8:08 pm
If they fail to agree we might find tariffs. The current China US pegs are an inverse tariff if you think abou it.