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Economy
by
Alasdair Macleod
Executive Summary
- Why the U.S. and the IMF won't act soon enough to avoid a German exit
- Why Finland will bolt from the Eurozone the moment Germany does (and how many others may soon follow?)
- What a German exit (and a new mark) would really mean
- When will Germany likely announce its departure from the Eurozone?
If you have not yet read Part I, available free to all readers, please click here to read it first.
In Part I, we covered the background to what now appears to be inevitable: Germany has to leave the Eurozone. She, along with the Netherlands and Finland, simply cannot afford to bail out the rest of the Eurozone, so she is standing in the way of a resolution to the crisis. It is therefore only a matter of time before the political classes have to face this reality.
Time is running out, and the longer Germany delays, the worse her position will be. The yields on Spanish and Italian debt will inevitably head towards and through the 7% "point-of-no-return" threshold and beyond, and Germany will get all the blame. Germany will be seen as a thorn in the side of the ECB, restricting its scope for monetary action and obstructing a solution, partly because of the Bundesbank’s stubborn conservatism and partly because Germany’s Constitutional Court frowns on monetising government debt. She will be unfairly condemned by everyone.
Let’s look at some back-of-the-envelope figures…
The Implications of a German Exit from the Eurozone
PREVIEW by Alasdair MacleodExecutive Summary
- Why the U.S. and the IMF won't act soon enough to avoid a German exit
- Why Finland will bolt from the Eurozone the moment Germany does (and how many others may soon follow?)
- What a German exit (and a new mark) would really mean
- When will Germany likely announce its departure from the Eurozone?
If you have not yet read Part I, available free to all readers, please click here to read it first.
In Part I, we covered the background to what now appears to be inevitable: Germany has to leave the Eurozone. She, along with the Netherlands and Finland, simply cannot afford to bail out the rest of the Eurozone, so she is standing in the way of a resolution to the crisis. It is therefore only a matter of time before the political classes have to face this reality.
Time is running out, and the longer Germany delays, the worse her position will be. The yields on Spanish and Italian debt will inevitably head towards and through the 7% "point-of-no-return" threshold and beyond, and Germany will get all the blame. Germany will be seen as a thorn in the side of the ECB, restricting its scope for monetary action and obstructing a solution, partly because of the Bundesbank’s stubborn conservatism and partly because Germany’s Constitutional Court frowns on monetising government debt. She will be unfairly condemned by everyone.
Let’s look at some back-of-the-envelope figures…
by
Chris Martenson
Executive Summary
- We've now entered a new era of economic and fiscal descent; expect the next stage to be prolonged and bumpy
- Why only two possible economic outcomes remain at this point (and one of them has a 90%+ chance of occurring)
- How the recent liquidity measures announced by the world's largest central banks will impact:
- stocks
- bonds
- gold & silver
- other commodities
- real estate
- Why adopting a wealth preservation strategy is critical right now (and why so many will fail to do so)
- Why this is not (yet) the moment to go "all in" in exchanging paper assets for hard ones (but do get started if you haven't already!)
If you have not yet read Part I: The Trouble with Printing Money, available free to all readers, please click here to read it first.
A Process, Not an Event
Okay, the ECB and the Fed are now in the game with unlimited, open-ended commitments to print as much money as necessary to get back to the same rates of GDP growth we had in prior decades. I should note that the ECB actions, at least, will be fully sterilized, meaning that they won't boost the money supply – at least that's the plan right now. Soon enough, Japan is going to have to join the fray simply because it cannot afford a stronger yen here; it will have to print because it is first, second, and last an export economy…
After that, it is anybody's guess as to how long China will put up with its massive $3.2 trillion in foreign exchange reserves being debased willy-nilly, but my vote is 'not long.'
These latest rounds of QE are certainly unnerving and may prompt many of you to want to accelerate your own private efforts at financial, emotional, and physical resilience. By all means, use these moments to focus your attention and efforts. But also be aware that we are experiencing what is certain to be a very long process rather than some dramatic event.
Understanding the Implications of QE3
PREVIEW by Chris MartensonExecutive Summary
- We've now entered a new era of economic and fiscal descent; expect the next stage to be prolonged and bumpy
- Why only two possible economic outcomes remain at this point (and one of them has a 90%+ chance of occurring)
- How the recent liquidity measures announced by the world's largest central banks will impact:
- stocks
- bonds
- gold & silver
- other commodities
- real estate
- Why adopting a wealth preservation strategy is critical right now (and why so many will fail to do so)
- Why this is not (yet) the moment to go "all in" in exchanging paper assets for hard ones (but do get started if you haven't already!)
If you have not yet read Part I: The Trouble with Printing Money, available free to all readers, please click here to read it first.
A Process, Not an Event
Okay, the ECB and the Fed are now in the game with unlimited, open-ended commitments to print as much money as necessary to get back to the same rates of GDP growth we had in prior decades. I should note that the ECB actions, at least, will be fully sterilized, meaning that they won't boost the money supply – at least that's the plan right now. Soon enough, Japan is going to have to join the fray simply because it cannot afford a stronger yen here; it will have to print because it is first, second, and last an export economy…
After that, it is anybody's guess as to how long China will put up with its massive $3.2 trillion in foreign exchange reserves being debased willy-nilly, but my vote is 'not long.'
These latest rounds of QE are certainly unnerving and may prompt many of you to want to accelerate your own private efforts at financial, emotional, and physical resilience. By all means, use these moments to focus your attention and efforts. But also be aware that we are experiencing what is certain to be a very long process rather than some dramatic event.
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