Many times in recent months, Greece was supposed to run out of money, but then, at the last minute, found a few billions to pay the bills. Now though it seems that this incredible streak of luck is at its end and a hard landing may be imminent.
How to profit ? It's very hard to profit from any bankruptcy. In the very short term, the liquidity implications drag all asset prices down. Soon though, money creation will go into overdrive and again benefit mainly gold and silver prices.
Wednesday, December 28, 2011
Friday, December 9, 2011
Confidence
Faith, trust, confidence are some of the main ingredients needed to plan and invest for the future.
Now take the financial affairs of this fictional family:
Their income is $25,000 a year, they're spending $37,000 and their debt stands at $150,000. Obviously, they are in trouble and the head of the family agrees. To get out of it, he decides reduce the annual deficit from $12,000 to only $11,950.
Would you take your own, hard earned money and lend it to them ?
The numbers correspond to the federal budget (after taking off several zeros). How does anyone believe that the government can act recklessly and instill confidence at the same time ?
If you were to advise this fictional family, you'd likely recommend bankruptcy. It may very well be too late for the government to avoid this fate, but any honest attempt to avert it, must start by slashing spending.
I know, some people would argue that you just need to raise income. But how ? What happens when you raise the price for any product or service ? People buy less of it. This is also true for taxes. When they go up, people will find ways to avoid them.
Trust and confidence can only be restored when reality is dealt with. Absent that, this "financial crisis" is only getting worse.
Now take the financial affairs of this fictional family:
Their income is $25,000 a year, they're spending $37,000 and their debt stands at $150,000. Obviously, they are in trouble and the head of the family agrees. To get out of it, he decides reduce the annual deficit from $12,000 to only $11,950.
Would you take your own, hard earned money and lend it to them ?
The numbers correspond to the federal budget (after taking off several zeros). How does anyone believe that the government can act recklessly and instill confidence at the same time ?
If you were to advise this fictional family, you'd likely recommend bankruptcy. It may very well be too late for the government to avoid this fate, but any honest attempt to avert it, must start by slashing spending.
I know, some people would argue that you just need to raise income. But how ? What happens when you raise the price for any product or service ? People buy less of it. This is also true for taxes. When they go up, people will find ways to avoid them.
Trust and confidence can only be restored when reality is dealt with. Absent that, this "financial crisis" is only getting worse.
Friday, December 2, 2011
Public versus Private
Violent versus Peaceful
Coercive versus Voluntary
We have reached an inflection point: Whereas governments were able to "magically" deliver more than they collected, promised more than they were asked to deliver, they are now overwhelmed by the resulting debt. If you'd like to know how that bankruptcy manifest, look at South America 1980 - 1992, or the collapse of the Soviet Union
Coercive versus Voluntary
We have reached an inflection point: Whereas governments were able to "magically" deliver more than they collected, promised more than they were asked to deliver, they are now overwhelmed by the resulting debt. If you'd like to know how that bankruptcy manifest, look at South America 1980 - 1992, or the collapse of the Soviet Union
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