Eurozone Bonds for a Breakdown


The Eurozone continues to dominate the mood of the market and it will do so until it breaks apart. The European Central Bank is under mounting pressure to buy unlimited amounts of Italian and Spanish bonds to keep the Eurozone together.

Apparently that will fix things. But the problem is these countries’ competitiveness relative to the German economy. Bailing them out and forcing reforms that call for internal devaluation to restore competitiveness just won’t work.

But that won’t stop self-interested politicians from wasting billions more euros in trying. German chancellor Angela Merkel is even prepared to sacrifice German sovereignty to Brussels to help ‘solve’ the crisis. We wonder what her people think of that?

The European leaders are like a bunch of two year olds trying to jam a piece of the puzzle in where it doesn’t fit. An adult needs to come along and tell them to go and play outside where they won’t hurt anyone, or themselves This is a slow-motion train wreck of epic proportions.

But right now this doesn’t seem to be worrying the Aussie market too much. After all, our banks are strong and China will be able to engineer a ‘soft landing’, meaning the good times should continue rolling for resource companies.

Or maybe it’s just the Obama effect. But he’s leaving da house soon, so where does that leave the US …and us?

According to Murray Dawes’ latest free market update, markets are precariously positioned. You can check out what Murray has to say here.

Until tomorrow…

Greg Canavan,
for The Daily Reckoning Australia

Greg Canavan
Greg Canavan is the Managing Editor of The Daily Reckoning and is the foremost authority for retail investors on value investing in Australia. He is a former head of Australasian Research for an Australian asset-management group and has been a regular guest on CNBC, Sky Business’s The Perrett Report and Lateline Business. Greg is also the editor of Crisis & Opportunity, an investment publication designed to help investors profit from companies and stocks that are undervalued on the market. To follow Greg's financial world view more closely you can subscribe to The Daily Reckoning for free here. If you’re already a Daily Reckoning subscriber, then we recommend you also join him on Google+. It's where he shares investment research, commentary and ideas that he can't always fit into his regular Daily Reckoning emails. For more on Greg go here.

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4 years 11 months ago

I haven’t had time to go through this line by line yet but it may be well worth a look :

“30,000 billion US dollars in ghost assets will disappear by early 2013”

4 years 11 months ago
The USD private sector debt chart in then afforementioned article needed to be viewed over a more extended period to see the critical dates and mark those some that were more responsible than others. Responsibility 1 : Volcker. Early 80’s. Productivity is too hard, export the brownbelt jobs, retain the marketing and distribution, lower cost base to increase owner profits and bank rents. Read the book of appeasement written for American industrialists. American Pastoral by Phiilip Roth. It was those damned lazy blacks that wanted too much that were to blame. Don’t fail to notice the glovemaker’s expansive personal… Read more »
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