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Wednesday, September 5, 2012

NCRenegade: Europe


David has been watching Europe and particularly her economy - which without German productivity, implodes.

Well, German productivity is declining under the weight of carrying the rest of Europe. What is Merkel's game? Is she merely an amateur trying to save the Euro? Is she a clever politician making a move to bring most if Europe under her fist with bonds instead of bombs?

I suspect the latter, but I also suspect she will fail at the attempt, because of simple arithmetic. Socialism must implode at some point.

When Europe implodes, there will be major fallout here, and it will probably be made exponentially worse by foolish or deliberately destructive measures by our politicians.

Here's David's piece at NC Renegade.

Kerodin
III

2 comments:

  1. When Europe collapses, it could possibly shore up the US economy (for a time). Smart people with money will move there money to a "safe haven" upon collapse. Could buy us some more borrowed time, we shall see.

    http://www.zerohedge.com/news/guest-post-resilience-and-fragility-status-quo

    The amount of money pouring into the U.S. from overseas is looking like it might be a major factor in supporting the Status Quo. Four years ago we were all looking at China’s purchases of U.S. Treasuries as something that couldn’t last. It hasn’t, but with cracks forming in Europe and China, billions of dollars of paper wealth are flowing out of those regions and into the “safe haven” of the U.S. and Canada. This is supporting real estate prices in Vancouver, Los Angeles, Manhattan (NYC) other desirable (to overseas investors) cities.

    This vast inflow of safe-haven money is enabling the U.S. to sell its Treasury debt with ease. It seems we can run $1.3 trillion deficits with little pushback from the market as long as the U.S. continues to offer a relatively safe haven for wealthy Chinese and Europeans fleeing their own unstable economies.

    A recent survey claimed 44% of wealthy Chinese are in the midst of moving their wealth (and offspring) out of China. I suspect this understates reality; it is probably closer to 95% who are shifting wealth and getting foreign passports for themselves and their children. Many people have made staggering sums of paper wealth in China, and there are trillions of euros of “old money” in Europe seeking an alternative to the euro. Gold is good but somewhat illiquid and it doesn’t earn any interest, while smaller currencies lack the liquidity and size to facilitate this enormous transfer of financial wealth. Hence the USD and U.S. Treasuries have emerged as easily accessible places to stash wealth.

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  2. When the Euro collapses, we have 3-5 business days before our banks collapse. Our banks have over $700 trillion in EU credit derivatives. This will dwarf MF Global's theft of private property. Before this happens, the government will declare a bank holiday and we know where that will lead.

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