Comments on: The Trouble With a Sovereign Debt Crisis

By: Coffee Addict

Coffee Addict — Mon, 30 Nov 2009 00:15:03 +0000

My general sentiment is that with all the low velocity, marginal momentum (fake) liquidity now pumped into the broader markets it may actually be incapable of deflating too quickly. The phenomena will not prevent volatile shifts between and within markets and asset classes.

I think that we can accept that Dubai is sort of following in Iceland’s footprints. Unlike Iceland, Dubai’s governance structure and work ethic is pathetic. There will be a partial bailout and on this the markets may recover for a time. The likelihood of Abu Dubai bailing out Dubai World’s contractors is I think non existent and corporate losses will be realised, but as Alex Cowie says this will take a few weeks to work though the system.

The initial concern has to be the flow on effects into the finance and derivatives markets. Credit default covenants will be triggered, contracts will be terminated etc, etc.

So where does this leave my original hypothesis. Probably where it stands. If Angela Merkel’s view is accepted, there will be no (full) bailouts for the string of sovereign defaults which are expected over the next 12 months. After each initial shock there will be a recovery IF losses are allowed to be realised rather than socialised and otherwise spread around. If you hold shares company that saw fit to build air conditioned ski slopes in the desert (analogy borrowed from Dan D) then perhaps you deserve to take a loss. Excessive bailout actions would reduce the global velocity of money further from its current low point.

OK I’m prattling on now. I stand happy to be corrected.

By: Lachlan Scanlan

Lachlan Scanlan — Sun, 29 Nov 2009 10:34:55 +0000

Horticulture is where I want to be (get back to) anyhow Dan but its hard to imagine the how we feed the world without the bovines. Putting one cow in the freezer makes for an awful lot of full tummies.

By: Ned S

Ned S — Sun, 29 Nov 2009 10:31:59 +0000

You're a fortunate man Lachlan. I'm still not sure what I'd like to do when I "grow up". Can think of plenty of hobbies of course. But fully suspect that if I did any of them professionally they just wouldn't seem much like fun at all. What's the old joke ... Stop the laughter - You are at work - You are not supposed to be enjoying yourself!

By: Dan

Dan — Sun, 29 Nov 2009 01:18:04 +0000

It could well be that, eventually, with the ETS some beurocrat in.. New York or Brussels is going to tell you what you're allowed to farm, Lachlan. Chances are it'll be grass and no animals.

By: Lachlan Scanlan

Lachlan Scanlan — Sun, 29 Nov 2009 00:41:54 +0000

Ned I want farmland to farm on and if I ever get it I wont be concerned about its future value because the investment angle is not what its about for me. Maybe you feel the same about your home which I completely understand. Investment/leverage/wealth management, is a means to an end but commonly we end up obsessed with the means and forget about the end. Interesting how I have to learn to make money so I can be a poor farmer. I think (for farmers, not so those in city/industrial status) farm land and water are more valuable than gold at minimum to the point where you have enough to support yourself. Maybe a lot of people miss that point ie "store of wealth" if you aint got no wealth (true savings you can live without for long time)then you probably cant afford to hold physical gold. If you want to speculate with small change then derivative positions are better but using these an art in itself ie without experience or some training, almost guaranteed to lose money.

By: Ned S

Ned S — Sat, 28 Nov 2009 23:27:48 +0000

Magic beans could be handy Dan - Can I eat them - Do you have a favourite recipe for preparing same?

Sounds like the kids are enjoying the good life Lachie! Barra hey - Might feed "ma and pa" to them! I've got a mate wants me to check out full on negatively geared investment houses for him here - Must admit in a saner world I'd probably warm more to your thoughts regarding good farmland though? The Saudis and Indians seem to agree - They are taking out long term contracts in places like Ethiopia ...

http://www.washingtonpost.com/wp-dyn/content/article/2009/11/22/AR2009112201478.html

By: Jon Bain

Jon Bain — Sat, 28 Nov 2009 22:13:08 +0000

Russia in debt?
http://en.wikipedia.org/wiki/List_of_countries_by_public_debt
http://en.wikipedia.org/wiki/List_of_countries_by_external_debt

looking hunky-dory from what i can see.

By: Lachlan Scanlan

Lachlan Scanlan — Sat, 28 Nov 2009 21:18:58 +0000

Kevy's got a better job lined up ruling the world when hes finished running the arse end (quote Keating) of the world. Ol Penny though..never seems to smile much eh Ned.
Kids had enough of bats now but enough fruit there for weeks yet. Just have to put up with their squarkin n carryin on. Tree frogs on windows and fifteen new ducklings the latest craze.
Oh and re. fish...Ive seen some barramundi grown in small tanks in less than a year you could of fed several people with Ned.
Gotta go feed cows now Ned....we had excessive rain here in Winter but been excessive dry ever since. Average is still above norm so climate people can go jump

By: Dan

Dan — Sat, 28 Nov 2009 15:11:08 +0000

Ned, sure you don't want to swap your house for these magic beans I have in this here velvet pouch? Look how shiny they are!

By: Ned S

Ned S — Sat, 28 Nov 2009 11:50:36 +0000

In Australia where Komraad Krudd has assured me they'll only ever go down significantly over the tax payer's bled white corpse ...

Fish are still doing well Lachie ... To the point where I reckon I might have to let ma and pa eat their next brood! How's ya bats?