It's human-nature to accept the condition in which you're presented. The protests will decline in number and attendance over the next few days/weeks. Not to say it won't spread to the other PIGS, but the populous will accept the austerity measures.
Actually those are other good examples; Turkey and Latvia... In fact Turkey is a really good example.
Thank you for the example and doc. Page 16 shows the interesting chart. Federal Debt as a ratio to GDP was flat at about 20 points`til 1980 or so, then climbed to about 50% of GDP when apparently they began to get their house in order. Further, the federal deficit was only ~8 points compared to 13 or so from Greece. It's a helpful and hopeful example. The EU spinning down the drain would not make life better for me. Still, there are three interesting differences. This was nearly a generation ago, in a new world country and a much better situation. Further, the US was just coming out of a recession in `92. Now one could argue (wrongly IMO, but we'll see) that the US is just now coming out of a recession as well. However, the US improvements would have a much greater impact on it's northern neighbor (especially with NAFTA just around the corner) then we might have with Greece. Debtor nations damage their economy in exchange for goodies for the masses. From free health care to 45 year old retirement plans to 14 month salaries, every one of these freebies directly impacts the GDP. The more measures the government takes to remove this drag, the better the GDP does. Which suggests a chart of debt to GDP ratios is a pretty good tool to show how mucked up a country might be. It would be interesting to compare the debt to GDP from Canada to Greece with a period shift to line up 1992 to now.
The same could be said for the US as well. It has a lot of reserves too. But, and I have no proof of this, the damage done to the balance sheets of all the banks that have paper shorts would cause them to topple and likely neuter any positive that occurs from a higher gold price.
Dreaming? Spare me. The Fed's refusal to perform its role as lender of last resort to solvent banks imploded money supply and sustained the deflationary vacuum that brought the entire system to it's knees. Despite even that, the market bottomed 2 years later. We'd get a bottom within ~18 months. Crashes are naturally sharp, severe, and bankruptcies legion. This next crash will be huge. No doubt. But people survive, the economy always rights itself, and new wealth creation soon follows. The Government simply needs to stand aside and let the system implode, while doling out as much UI as possible, to avert catastrophic loss of life. The one positive slant to all this: our fiat money can actually save, feed and cloth a huge swath of the Country during the next Great Depression. You're talking as if there's some way to avert this bubble. There isn't. Printing more will only buy time (months or a few years) and change the qualitative nature of the crash from deflationary to inflationary. The economy will still go into a Huge Depression. Better to pull the plug now, reneg on Banks and save the currency, than print like hell, buy a year or two, and destroy wages, savings and the dollar. A currency implosion is much worse than a stock market/real estate implosion. You ought to know that having lived through one.
Very true about the US and its gold. I think this process is already underway. Whether by design, or natural monetary evolution - at least that's what I call it. The West has stopped selling its gold. The East, including Russia, are ramping up their gold aquisitions thru various means - including non official purchases. This is not a coincidence. In my view - this is where the real economic battle lines are being drawn. The banks will likely adapt prior to the change. But bottom line, banks come and go. Countries always outlive their banks. I see no other solution for the west as a whole. There is no combination of productive growth and taxes that will ddress these debt imbalances and upcoming unfunded liabilities. In my view, there is no other solution. Fiscal cut backs and growing future debt by rolling current debt over and crossing one's fingers for future growth is nonsense. Never has much of the financial world engaged in such cognitive dissonance, IMHO. It's comical and tragic at the same time. Disastrous currency and debt collapse, or remonetization with something real you have to earn - and everyone values - gold. That is the only remaining choice. That is how the global rebalancing will occur. Not by more paper conjuring.
Buddy, you just chastised me for arguing the same case. Pay down the debt and come what may. Canada and Singapore (and Japan, New Zealand and Russia) had the United States and the EU to pick up slack domestic consumption when their back was against the wall. Who picks up Europe and America's "slack" when they go under? China?? EU and America *IS* is the world economy, for a better part. No one gets out of this alive. Australia and New Zealand might do okay. Their debt-to-GDP is ridiculously low and can pump-prime a good 5 years to whether the storm and still be alright.
I like it. Great idea. But rumor has it gold prices are suppressed to buoy US fixed-income and stocks (the illusion of strong dollar). Dollar weakness relative to gold could spark capital flight from US Treasuries and low yielding stocks into commodities and foreign markets. It might just pass the debt bomb from Europe to America ?
Not to mention the amount of margin calls that would definitely hold up the rise in gold (as profitable positions are liquidated to cover massive losses elsewhere).