- Joined
- 9/25/10
- Messages
- 285
- Points
- 38
After, Greece, Portugal, and Ireland which have been hammered by bond vigilantes and downgraded to junk status by Moody's (rightly so), the next targets seem to be Spain and Italy, and looking at fast rate rate at which their spreads are widening , they probably too will need a bailout.
Further, it also remains to be seen when the bond vigilantes will attack the bond markets of UK and US ( the two most financially integrated countries in the world).
Now the focus is :
How will the massive bailouts of Spain and Italy will be funded. ( I do not count the possibility of second bailouts for Ireland and Portugal which are immaterial to Spain and Italy)
Will this result in the situation in which Germany says enough is enough, and it aborts the Euro ( as result of which, ex Germany, the entire financial system of Europe, hence the world, will come into jeopardy.
After Germany aborts, will the bond vigilantes then attack and bankrupt US and UK, by driving yields to 10%+. Even if they were to print money, the effects would be profound, especially in the already battered housing markets.
Now the final question: What will be the safe haven currency, with US/UK/Europe bankrupt? I predicted the Swiss Franc, or at-least observed ( in an another article on the site). Could it be Gold? (Though I doubt that it will hold as strongly as the CHF)
I think that if any of the above materializes, the world economy will be in a much much worse recession than that in 2008.
Further, it also remains to be seen when the bond vigilantes will attack the bond markets of UK and US ( the two most financially integrated countries in the world).
Now the focus is :
How will the massive bailouts of Spain and Italy will be funded. ( I do not count the possibility of second bailouts for Ireland and Portugal which are immaterial to Spain and Italy)
Will this result in the situation in which Germany says enough is enough, and it aborts the Euro ( as result of which, ex Germany, the entire financial system of Europe, hence the world, will come into jeopardy.
After Germany aborts, will the bond vigilantes then attack and bankrupt US and UK, by driving yields to 10%+. Even if they were to print money, the effects would be profound, especially in the already battered housing markets.
Now the final question: What will be the safe haven currency, with US/UK/Europe bankrupt? I predicted the Swiss Franc, or at-least observed ( in an another article on the site). Could it be Gold? (Though I doubt that it will hold as strongly as the CHF)
I think that if any of the above materializes, the world economy will be in a much much worse recession than that in 2008.