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Mod Comment:

Guys, can we get back on topic. USA so called "Imperialism", or who started what where, is not the subject, and if you wish to discuss it, start a separate thread.

Norm

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Geelong, VFA Premiers 1878, 1879, 1800, 1882, 1883, 1884, 1886, AFL Premiers 1925, 1931, 1937, 1951, 1952, 1963, 2007, 2009, 2011, .

Jack declaration of his love for the Euros seems to have come in about closing time. I'm guessing he had more of them before he posted his latest comments, and this is just his sentimental way of saying goodbye to them?

His mention of Hungary is a little puzzling. Perhaps the chip shop or curry house was closed as he made his way home. No matter, the way things are going over there, his chips may soon come wrapped in worthless Euro notes.............and God forbid.... Payment demanded in US dollars!

There you are Norm. Back on track.

Huanga.

Hungary, whilst not a EURO zone member, is a member of the EU. The Hungarian Government is implementing some very 'surprising' policies and constitutional changes (the most dangerous being the removal of the independence of the Central Bank).

All this at a time when their currency (the Forint) has halved in value in recent times. They are seeking an emergency loan from the IMF (and, possibly, the ECB). They are being told that no loans will be forthcoming unless they rescind their new policies.

We need to remember that there are 27 members of the European Union, that are supposed to abide by the terms they signed up for when they joined. It's not just the 17 EURO zone members that should be on the radar in Europe right now.

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Peter
Hawthorn - AFL Premiers 1961, 1971, 1976, 1978, 1983, 1986, 1988, 1989, 1991, 2008.

Peter, are you saying that the ECB is totally independent?

1.The owners and shareholders of the European Central Bank are the central banks of the 27 member states of the EU.

2.Although the ECB is governed by European law directly.

3.As result of pressure from France and Greece, independence of ECB has been limited.

"We need to remember that there are 27 members of the European Union, that are supposed to abide by the terms they signed up for when they joined. It's not just the 17 EURO zone members that should be on the radar in Europe right now."

Exactly; but as I understand the position, the UK's recent refusal to join the other 26 countries should have put paid to the Merkozy ( or should that be Sarkel?) plan but apparently 'terms' are negotiable.

Maszki, the ECB is limited by it's charter. The only way that any outside influence can actually tell them what to do is to have the charter amended. i am not sure what the mechanism is, in the ECBs case, but I am sure it would require a majority of the governments to change it. The same independence, within the parameters set by the charter governing them, exists for both the Fed and the RBA.

I don't see any pressure from Germany, other than to abide by the ECB charter. Specifically, the ECB is not allowed to buy sovereign bonds directly (although it can on the secondary market). Many want the ECB to take up debt directly and thereby reduce the interest rates that sovereigns (especially the PIIGS) have to pay. Germany has simply been pointing out they are not allowed to do that. In other words, insisting the ECB stays within the bounds defined by it's charter.

As to what the UK did. It wasn't a case of not abiding by the rules. The EU wanted to change the rules and the UK would not agree to that change without concessions. As the concessions were not forthcoming there was a split in the EU.

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Peter
Hawthorn - AFL Premiers 1961, 1971, 1976, 1978, 1983, 1986, 1988, 1989, 1991, 2008.

Some U.S. stock market analysts are predicting that the EU will invent some kind of quantitative easing this spring, to circumvent the direct purchase of sovereign debt. This would be very bullish for both stock markets, in the short term, but clearly the WRONG thing to do in the long term. But the appeal is irresistible, as it is temporarily the least objectionable way to throw a lifeline to Greece, Portugal, and Italy.

You can put lipstick on a pig, but it's still a pig.

Peter
"As to what the UK did. It wasn't a case of not abiding by the rules. The EU wanted to change the rules and the UK would not agree to that change without concessions. As the concessions were not forthcoming there was a split in the EU."

Which is the point I was making.

The ECB is NOT independent ( nor is the Fed).It is subject to the whims of the 'shareholders'

Terms are negotiable.

The Fed for example is a private entity comprising a conglomerate of banks and corporations given an open-ended contract in 1913(?) by Woodrow Wilson to act as a central bank. I understand that after he signed the agreement he was reported as saying that he had sold out the USA to corporate america.

He was correct

The Fed is controlled by that corporation, which I understand includes the like of JP Morgan, Bank of America et al.

A 1.2 billion ( or was it a trillion?) dollar 'loan' to JP Morgan on which Dimond voted was the subject of a waiver by Bernanke that there was 'no conflict of interest' in Dimond voting on the issue.

Neither the Fed or the ECB is independent.

You have it in black and white. France and Greece acting in concert have reduced the independence of the ECB. That is a bit like saying a rapist has reduced the virginity of a woman`

You either have it...or you don't

In the case of the ECB, it is NOT independent.

As to changing the 'terms', the UK has something like 14%, Hungary has 1 or 2%. The other non-euro countries add to 30%. All that is needed is one or 2 of the major eurozone players to decide that the euro is dead in the water and hey presto, the ECB and the euro is dead in the water.

Germany (18%); or more correctly the german people; are already opposed to further German involvement in the bail-out.

Finland (1.25%) wants collateral before it agrees to put cash into the bailout fund.

Greece (1.96%) is dead in the water

France (14%) and Italy (12%) have DEEP financial problems, as does Germany (18.9%)

One could be forgiven for thinking that the financial future of the EU and in particular the Eurozone countries, is on very shaky ground

The Euro and the dollar are equally exposed to risk because they are inter-dependent. The euro collapses, so does the dollar. The dollar collapses, so does the Euro.

What is the latest currency? The Zinger?

Maszki, I wish you would start a brand-new thread about American retirees of Polish descent moving to Poland, where they claim they can live very comfortably merely on their Social Security checks from the U.S. They retain their U.S. citizenship.

I read that more and more U.S. citizens are doing this, to a country where they are sincerely welcomed, feel safer, and have all of Europe to explore, at their fingertips. I think I read that Social Security will now deposit the monthly check directly into a Polish bank, and guarantee its availability the first of the month.

How true is all this, and am I over-simplifying?

I think this thread has passed it's use by date. It doesn't seem to matter how many times the same tripe is rolled out, about secret cabals and the supposed conspiracy of the big banks with regard to the Fed and the ECB, and then refuted absolutely!

I love an animated discussion, but one based on facts. When a 'fact' is proven to be utter garbage, but gets repeated again and again, then the discussion has descended into farce and serves no useful purpose. I will leave the conspiracy theorists and US haters to their fun. I'm out of here.

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Peter
Hawthorn - AFL Premiers 1961, 1971, 1976, 1978, 1983, 1986, 1988, 1989, 1991, 2008.

I'm inclined to agree Peter. The thread has been destroyed and the interest gone. It is difficult to tell if maszki and like are just thick? or are argumentative for the sake of argument. Either way I have become tired of the venom they constantly seem to enjoy spitting at the US.

Huanga.

PeterS and Huanga.

I would be disappointed if we left this thread entirely as the 'end game' is not yet upon us; however I agree that a considerable moderation of views, both for and against, the USA's role in this issue would be beneficial.

Whether I am 'thick' or 'argumentive' is irrelevant. I certainly have a view of the US financial establishment that is different from yours; and I am not alone in that view.

As to 'venom',I invite you to re-read Sukhothai's post from Sat Jan 14 which lists an (alleged) illegal (one could say venomous) act by a significant part of the US financial establishment, which is often described above as 'the only game in town'

If these allegations are proven, and the present US financial establishment is the 'only game in town, then God help us all.

Doug2222usa. I miss the point of your post. I am neither a citizen of the USA nor of Polish descent, nor did my wife (who IS Polish) and I migrate to Poland 'to live comfortably merely on their Social Security checks'

If there are such people I would guess that they would return to Poland either for nostalgia or for the reasons that you give; in essence, the falling living standards and rising COL in the USA

The point of my post was that (1) it should be a new different thread, and (2) I thought you might know a lot about it, and that the subject would be of interest to SB-er's. Nothing implied about your personal situation. All of us are searching for the right retirement strategy.

Doug2222usa. My apologies, I was still coming to grips with being referred to as 'thick' and so I may have been a tad sensitive.

There are friends of mine, only 2 or 3 who are US citizens, and who have travelled back to the 'old country' for various reasons.

If you wish you can start the thread as I think many people in the developed countries may appreciate information about other 'westernized countries' where life may be better- and that does not only apply to Poland.

There are pitfalls. As an example and because I still bank in Oz, I lose 3% every time I withdraw cash,

There are advantages. I purchased my 3 hectare farm for $AU26,000 and the cost of living is about 40% that in Oz so a fortunate part of returning to Poland to care for my brother-in-law is that life is better here

So Moderators..do you want to open a new thread about 'Where is the best place to live upon retirement?'

Actually I was focused on Poland because I had read the articles previously, and because you are THERE.

You've already proven part of the thesis, just in a few sentences.

Ok Doug2222usa,

On balance I am content to be in Poland. The yank friends I have are also content but they are here for economic reasons (their $US goes further here but for how long I do not know -refer the thread)

Start the thread and let us see what happens

This has been a very interesting thread, even after being kidnapped.
Now that PeterS has left, I will also.

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I buy too much, can't sell enough - but the information here is priceless.

Hello Everyone.

Just a question about the Euro.

What would be the worst outcome if the European Members, those using the Euro, stop using the Euro and go back to their respective currencies?

Cheers!

There's a HUGE amount of debt denominated in Euros. How does it get paid off, particularly since much of the debt represents pensions and monthly payments morally owed to European citizens?

Also, once in pre-Euro currencies, the EU nations have no mutual restraint mechanism to prevent printing so much new money that hyperinflation is the inevitable result.

Finally, concerning the U.S., our banks hold substantial debt payable in Euros; who pays it off, and in what proportion? Or does everyone default? A net loss of even 10% probably makes most U.S. banks insolvent, far beyond the ability of the FDIC and the SIPC to make things right. This is the fallacy of fiat money and fractional banking, i.e., a "reserve" of only 8% to 12% of the deposits (perfectly legal).

All these catastrophic results are NOT impossible.

Couple of big moves in the Chinese RMB/Gold strategies.... it seems all that earlier talk of the RMB not becoming viable as a worldwide trading currency might have been premature.

The UK Treasury has announced plans to make London the leading international centre for trading China's currency, the yuan.

"London is perfectly placed to act as a gateway for Asian banking and investment in Europe," said UK Chancellor George Osborne.

Bankers say the plans could bring billions of pounds into the City.

China has been gradually relaxing strict controls on the value of its currency and on flows of capital.

Mr Osborne, who arrived in Hong Kong on Monday at the start of a visit to Asia, said he would be holding talks "on establishing London as the new hub for the renminbi market as a complement to Hong Kong".The City, he said, as the world's largest centre for foreign exchange, was "uniquely placed to assist in the development of this exciting market".

According to Treasury officials, the new partnership with Hong Kong puts London in pole position to be the major centre for trading the Chinese currency outside China and Hong Kong.

Source..BBC http://www.bbc.co.uk/news/business-16571765

The City is certainly excited about the agreement struck by the Chancellor. "It's a massive benefit for all the major banks" says James Hickman of currency exchange firm Caxton FX. "It's more volume, more revenue. It's all pluses." Mr Hickman is also in no doubt that firms will be eager to get their hands on RMB to conduct their trade with China. "There's huge pent-up demand for the yuan, not just from UK businesses, but businesses globally" he says. Banks say they are preparing to hire more currency traders on the back of the Chinese currency liberalisation. And City lawyers anticipate new flows of businesses which will come from the need for someone to look over the fine print on new RMB bond contracts.

So how big could this get? Could the RMB ultimately become a global reserve currency, used by central banks and savers around the world? Could a Chinese "redback" challenge the supremacy of the American greenback? Some are in no doubt that this is the direction we are headed as China's place in global trade networks becomes ever more entrenched and the the country's economy catches up in size with the US.

"Will the RMB become a global reserve currency? There's no question about it," says Mr Hickman. "The RMB, the dollar and the euro will all be jockeying for position."

Source..independent http://www.independent.co.uk/news/busin ... 90664.html

China has also been vastly increasing the amount of Gold bullion imported from Hong Kong to record highs... http://www.bloomberg.com/news/2012-01-1 ... emand.html http://www.china.org.cn/business/2012-0 ... 389921.htm http://www.zerohedge.com/news/chinas-go ... boc-buying

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Looking for South Korea up to 1884-1951,North Korea 1st issue 1946-1957,China 1898-1912 and P.R.C 1963- 1980,Thailand 1883- 1918, Commonwealth QV Issues.

Most economists think IF they print their local currencies again and while all the Billions of Euros are still valid, then Gresham's Law will be in effect. The opposing view is that Thier's Law will be more relevant.

Basically Gresham has it that "Bad money drives out good", and Thier had it as "Good money drives out bad"....

In 1923 during the great Inflation in the Weimar Republic Gresham's Law began to work in reverse, since the official money became so worthless that virtually nobody would take it. This was particularly serious since farmers began to hoard food. Accordingly, any currencies backed by any sorts of value became the circulating mediums of exchange. In 2009 Hyperinflation in Zimbabwe began to show similar characteristics.

These examples show that in the absence of effective legal tender laws, Gresham's Law works in reverse. If given the choice of what money to accept, people will transact with money they believe to be of highest long-term value. However, if not given the choice, and required to accept all money, good and bad, they will tend to keep the money of greater perceived value in their possession, and pass on the bad money to someone else. In short, in the absence of legal tender laws, the seller will not accept anything but money of certain value (good money), while the existence of legal tender laws will cause the buyer to offer only money with the lowest commodity value (bad money) as the creditor must accept such money at face value.

Also...the good money doesn't even have to be the Euro, it could be the Dollar or Pound..anything really. The experiences of dollarization in countries with weak economies and currencies (for example Israel in the 1980s, Eastern Europe and countries in the period immediately after the collapse of the Soviet bloc, or South American countries throughout the late 20th and early 21st century) may be seen as Gresham's Law operating in its reverse form, since in general the dollar has not been legal tender in such situations, and in some cases its use has been illegal.

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Looking for South Korea up to 1884-1951,North Korea 1st issue 1946-1957,China 1898-1912 and P.R.C 1963- 1980,Thailand 1883- 1918, Commonwealth QV Issues.

Thank you guys for providing those answers.

I like this thread so I am going to ask another question.

Should Greece be allowed to go back to the Drachma?

Cheers!

What do you mean, "...should they be allowed?"

Who's going to stop them, if they decide? They may suffer a lot of consequences, but the decision appears to be entirely theirs.

I'll rephrase the question.

Should Greece go back to the Drachma?

If they did, what would be the consequences?

Cheers!

I am no expert on currency manipulation, that's for sure.

But returning to the drachma would surely cause a substantial reduction in the Greeks' standard of living, prices would skyrocket in real terms, and no one would lend them money, since no one wants to be repaid in weak drachmas. It would be, in effect, a back-door default, and the problem is, by setting a precedent, then the next Eurozone weakling decides to do the same thing, wiping out (in practical terms) its Euro-denominated debt.

I know there's some benefits to returning to the drachma, but I can't think of them right now, other than tourism would flourish. But paying for imports would prove an intolerable burden. The Greeks would demand higher wages, and inflation would ravage the country. Once you're riding the tiger, it's hard to jump off.

I'm no expert either, but other countries have defaulted on debt in the past, and survived. The latest being Iceland which, 3 years on is back selling bonds. Argentina is another example. There are also many examples where countries have 'changed' their currencies-usually by major devaluation; the initial change to the Euro; or converting to decimal currencies; so there are ample precedences upon which to evaluate the impact.

Greece returning to the drachma will result in the drachma falling against the Euro which will in turn means the cost of imports will rise and the costs of exports will fall; that is Greek goods will be substantially cheaper throughout the EU and EU products will be more expensive in Greece.

The effect of these changes on the Greek population will depend upon whether Greece is self-sufficient in terms of those products upon which COL is based. I base this opinion on the belief that while Greece will/may default on its loans and bonds, it will 'pay' back its own institutions.

It is the impact outside Greece which should cause the most concern. According to a Barclay's report published on 7 April 2011, the major 'lenders' to Greece were the EU (38b euros) and the IMF (15b euros) with a further 11.4b on loan from two greek banks. Other unspecified lenders are owed 11.4b euros. I will leave it up to the experts to come up with the effect on these lenders in the event of a default other than to say the EU bailout fund can cover these 'bad' debts.

There are 285b euros worth of bonds which Greece has sold, of which 75b is held by Greek banks or institutions and a further 60b is held by the EU or Euro area Central Banks. The largest 'other' holder of greek bonds is BNP with 5b euros. My opinion is that these bond holders can also survive a default.

The most important impact of Greece returning to the drachma is however the precedence that it is setting and will continue to set. Greece is only now understanding that it is in the box seat in many ways. The current negotiations with bondholders relating to a 'haircut' are faltering as some holders want the full 100% and Greece understands that if the bondholders do not accept the current offer then they will get NOTHING, and that, for Greece that may be just the right way to go.

Greece will survive a default and a return to the drachma, albiet with some pain, but if they fully implement and maintain the austerity measures that are in place they will come out of the doldrums in 2 or 3 years probably economically stronger than they have ever been

On the sidelines are Ireland, Spain,Portugal, and Italy all of whom are awaiting a result. If Greece makes a successful transition back to the drachma we may well see an exodus from the Euro.

I must re-iterate that being 'thick' and/or argumentative, the above is only my personal opinion, as is my final comment that my 'worst-case' scenario is for the euro to continue to be artificially propped up and that future generations will have to pay the price.

They WILL. There will be no choice sadly. Back to Basket Case Land.

maszki

Thank you for providing that though-out opinion.

What do you think is the best course of action for Greece or for all the other Euro members for that matter?

Cheers!

Amark, if I knew the answer to that question I'd be wearing a suit, smoking cuban cigars and the proud owner of many fabulous and unique stamps

My opinion, and remember I have been called 'thick' ( because I do not believe everything I read) is that the sooner the euro experiment fails the better it will be for all concerned.

Without political integration, monetary integration is bound to fail. The EU and others (IMF) are now attempting to force greece into an asset sell off; that is, allow other EU countries to 'own' greek national assets- and Greece itself. Essentially it is to force Greece into a subservient position in respect of the major players; read France and Germany

Yet France and Germany have far greater debt than Greece, so what is the bottom line?

National survival.

For the next few months I will be sitting back watching Sarkozy, who has an election coming up; a country with a credit downgrade and massive debt; to see if he maintains his 'euro at all costs' stance or whether political survival kicks in.

What in my opinion is the best end result?

Abandon the Euro, re-instate national currencies. The only other option which is MOST unlikely is TOTAL political integration; the United States of Europe.

Whatever happens, let it be before 2014 because that is the time that Poland is talking about joining the Eurozone and I do not want to be around to see Poland once more 'shafted' by Europe and the USA.

Twice in my lifetime is enough.

It will definitely be interesting to see what stance Sarkozy decides to take and how will Merkel react if he decides to abandon the "Euro at all costs."



Is this date set in stone?
I thought that a nation that wants to join the Euro must meet certain criteria.

Cheers!

I don't think the Euro will even get to 2014, Greece won't even get their full bailout money now, I always liked the Polish curency..in a time when Keynesians will tell you Gold isn't money. The Polish word for their money means exactly that.

Isn't anyone here going to brand you thick maszki, I think they have left the room, at last we can debate alternative economic ideas and principles now, without being branded thick, communist or anti-American.

Some things people invested in the present sysem, or people working in financial institutions that have been brainwashed into thinking that this system is the only system can never see that the rest of the 99% know fully well...

1)We know where this economic problem in the world financial markets came from. The financial system is broken, fraudulent and falling apart.

2)This present system has only been in use since the early 70's, all of our parents were born under a different economic system and most of us here were too.

3)Since Nixon announced that 'We are ALL Keynesians now!' the value of the Dollar has dropped 85%.

We have an economic situation that is out of control which no other economic system has managed to do, regionalisation, localisation, free markets, no-income tax and local government are ALL policies that are promoted by other economic schools, check Google and Wiki as well as economic papers on these other schools of thought and you can see for yourself that the fiat system we have now hasn't been around for long and has been a complete farce.

(Although I do stress as you can clearly see throughout this thread, if you are indoctorinated in the present Keynesian system, you are against certain economic laws that most other schools, John Adams and free-market economists say are ESSENTIAL...including regarding Gold as money and 'Say's Law') Other schools did fine for over 200 years, this system has done pretty crappy for the 40 years it's had!

Lots of suggestions from the other schools of how to end this financial mess, and I agree with many of them(Iceland, Brazil, Turkey and Argentina have ALL looked at and have utilised programs from other schools with success) ..but under the system we have then the only answer you will get is 'print more money', and they never realise that every extra note they create makes the rest worth less...on a scale of trillions.

And if we all get a different economic system? Well most of them don't believe in the Income Tax, give the consumer the money and he spends it in the community...everyone wins. The U.S didn't have an income tax until 1913, the most prosperous and wealthy country until then, cue the Federal reserve, fiat money and it's been downhill since.

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Looking for South Korea up to 1884-1951,North Korea 1st issue 1946-1957,China 1898-1912 and P.R.C 1963- 1980,Thailand 1883- 1918, Commonwealth QV Issues.

I posted this above late October when Kodak shares were about $2.

They are today about 30 cents and heading into Chapter 11 Bankrupcy protection it seems.

CURRENT graph is - a 97.84% loss in 5 years. EU take note - NOTHING is safe in 2012! Not Kodak, not the Euro.

I’ve been thinking about this a bit. I have many different ideas about all this and some are contradictory. It is a very complicated situation and there cannot possibly be a single easy solution to solve it all. Here is my simplified but longish take on the issue and I would be interested in any comments on any point.

There are several major issues that are becoming critical at about the same time. I suspect the fact that we have 7 Billion people and will have 9 billion in only a few decades is part of the problem. The EU, USA, Australia and most western developed countries have created an economic situation where most real manufacturing of items have been exported to the developing world (mainly China) who do it much cheaper and so have hollowed out their own manufacturing industries, reducing the number of jobs, while allowing huge debts to develop. The retail sector is also being reduced as more and more people buy goods direct from the manufacturer by using the Internet.
A big chunk of the current debt was created by a financial sector that was deregulated from the 1980s at the order of the neo-liberals (in simplified terms the free market is king and can do all things) and allowed the creation of financial derivatives backed by dodgy assets. This has resulted in a massive transfer of wealth to the elite of each country while the average global western/developed wage fell in real terms over the same period. At the same time hundreds of millions of Chinese have come out of abject poverty so it hasn’t been all bad. Most (although not all) countries rewarded this failure of the financial sector by bailing out the biggest creating yet more debt. As far as I can tell the countries with the least financial regulations (the USA is among them) have not tightened financial regulations to prevent any further disasters or to gain more control on the situation. As more and more industries are exported to cheaper countries the Western/developed world has less ability to repay the debt from trade with real items while the rich elite fight to hold on to their new found wealth. The debt is not going to go away soon and the interest payments are making it larger. So at some point the EU will either find some way to kick the debt riddled countries out of the euro or some will leave of their own accord to try and avoid the debt problems. The past history of countries and empires with large growing debt problems is that they reduce the size of their military and bring back troops posted overseas. There seems to be some evidence of the US starting down that path. Hopefully the US will manage to deal with its debt but it isn’t looking good at the moment. If the Euro and the US$ collapse then trade costs between countries will increase as national currencies will have to be used instead of these two useful de facto world currencies.

My main concern is that I can’t see the current debt crises being fixed before three other big issues arrive to make it so much worse. Our current population and civilization depend on cheap oil to keep it running. Peak oil will be upon us within the next 2 to 5 years and that will reduce the amount of cheap oil for us to use. Pretty much everything will skyrocket in price and with higher transportation costs sourcing things locally will become a major requirement. Where will the money come from to rebuild local industries if the world is still groaning under the current debts? Peak phosphorous is already upon us and so food prices will continue increasing with the increasing cost of phosphorous fertilisers, which are a requirement for the green revolution. The third issue is the ever increasing costs associated from dealing with global climate change.

I hope I’m wrong about all of this but there appears as if there is very little action being taken to deal with the problems. Most of the suggested solution seems to be cut back on spending and hope for the best and keep business as usual. From what I’ve been reading I don’t see how the Euro will stay in existence as it now is. With their huge debt and ongoing usage of resources and its decreasing exports I don’t see how the US$ will be able to continue holding its value either. The current fragile financial system will not be able to deal with the increasing costs of doing business. With the growing costs associated with the three problems I have listed I’m suspecting that within only a few years we will have a very different world. A world of national interests. A world with much less international trade. A world with a smaller financial sector. A world with a much smaller, local and more focused structure.

I agree with about 90% of your analysis. I think we will be a net energy exporter within 10 years, after the infrastructure gets built to handle shale oil from the Bakken and natural gas in the Appalachians, let's call it shale gas for simplicity. There are several hundred years of reserves, but its usage still pumps carbon dioxide into the atmosphere, just like combustion of oil.

In the next 50 years, we had better figure out solar and wind and wave power, and perhaps fusion, or we're doomed.

You are right about population, but no one wants to discuss this ultra-sensitive subject. Economic incentives to have smaller families seem to have fallen by the wayside, even in China; this is one of the fallacies of capitalism -- it demands growth.

It's people that consume resources, not plants or machinery or transportation. One of the major factors is the global push for more meat in the diet; growing grain to feed animals is one of the most wasteful practices now extant, but it will not stop until prices make meat a luxury, like it was in China two generations ago. Reversing population growth stretches resources faster than any innovation or rationing scheme. But it won't happen. U.S. "welfare" pays the poor to breed children (Chicago = $1500/month per child), and many cultures place a high value on fertility, however expressed. I could post some real zingers (YouTube interviews) here, but would get in hot water immediately.

When this "pot boils over," I'll be gone. Good luck.

Biggles, pull a steel helmet over your flying goggles because the Moderator will be onto you about paragraphing

To you and Doug2222usa I can only say that there are no simple answers.

I'm reminded of that old expression "If it ain't broke, don't fix it" But the reality is that there is always somebody wanting to fix it because they have worked out a way to benefit from it either by achieving power ( the EU and the introduction of the Euro) or money.

I wonder how many of the Greek bondholders have taken out insurance against default?

Amark, your question "Is this date set in stone?"

No. A few years ago, the date was set as 2012, but it keeps getting put back although the present Prime Minister (Tusk) is still talking up Poland joining despite the growing opposition

Your other comment "I thought that a nation that wants to join the Euro must meet certain criteria." is correct. I don't know the criteria but if there is a problem Poland can do what greece did- call in a 'big-shot" financial entity from wall street- and 'cook the books'.

I agree with you maszki that there is no simple answer as my third sentence states.

And doug I doubt very much that the shale gas will last 100s of years. It is a simple matter of mathematics. They used to say that about coal too. In the 70s it was said that coal was going to last for hundreds of years at the current usage. The key factor is at the current usage.

No source of energy is being used up at a constant rate. With any sort of growth the amount of fuel being used keeps growing at an exponential rate and it is used up much faster than if it was held to a historical value. Coal usage is growing at about 7%/annum and so the amount being used up doubles every decade. Almost certainly coal will "run out" (not a simple issue) sometime before the end of this century. I've read reports that the energy value of coal being dug up in Europe is now about 8% less than what it was 30 or 40 years ago as the better coal has been used first. So they have to extract that much more anyway just to stay still with energy consumption.

With the growth of the gas industry being so fast and the replacement of oil with gas becoming an imperative I doubt that the shale gas will last a century. The growing movement against the use of this gas (damage to our farmlands is becoming a major issue here) may prevent it from being fully developed anyway. Especially when the damages of climate change reach a point where any usage of a CO2 creating energy source will not be accepted.

Without a cheap source of energy the US economy will shrink and thus the value of the US dollar will also reduce. I'm still thinking it is a matter of when and not if.

The outlook is very favorable, and improving every year.

From the Ridley report (available online):

"...30. World energy consumption is less than 500 exajoules per year, equivalent to approximately 500 Tcf. Thus recoverable shale gas resources of, say, 8,000 Tcf (i.e., 20-30% of in-place resources) would last at least a century if their consumption displaced half of conventional gas use (which is 23% of total energy use). In January 2011 the International Energy Agency raised its estimate of how long world gas reserves will actually last to a quarter of a millennium. Given the likelihood of other energy sources coming on line long before then, the energy expert Nick Grealy has said that shale gas may be 'essentially eternal.'"

But what's important is that it buys us TIME to perfect solar, wind, and wave technology, all three of which are accelerating rapidly on the learning curve.

The most unpredictable factor is whether governments will create economic incentives to reduce the rate of population growth.

An excellent post Biggles, and your assessment of the state of world play now, and for the foreseeable future appears to be as accurate as it can get.

Huanga.

Interesting read!!

By: Max Default

Make no mistake Greece is a crystal ball showing the future of indebted western nations.

Two things concern me:-

Firstly, austerity is simply hardship for citizens to bail out banks. Why the hell doesn't Greece simply default and make banks take their lumps? Oh that's right, the banks own the ruling politicians and are the agents for global prosperity and the New World Order. What BS! The banks are parasites on capitalism and are stealing money from millions of defenseless tax paying citizens.

Secondly take a close look at how the Greek government is using electricity to enforce the new tax. Pay up or we will shut you down. Has there ever been a stronger case to build independence from essential services such as electricity, water, gas etc. We still have time to prepare, but mark my words this Greek scenario is an insight into our immediate future.

I wonder, are there any Western nations that are not significantly indebted??

Is there any government that does not have a deficit? Even the OPEC nations, with oil revenues -- are any of them running a surplus? Are ALL the world's nations running in the red?

Bhutan, Uruguay, Luxembourg, Kuwait -- big deficits??

I Hear Antarctica is breaking Even..

The largest creditor nations are Japan and China.

As a technical matter, even creditor nations have some debt; they just extend much more credit.

I believe Estonia has the lowest National debt.

http://www.economicshelp.org

According to the above link, Libya with a public debt burden of 3.3% of GDP is the lowest of the 132 nations listed.

Within the EU Estonia has the lowest debt level at 125 (7.7%) followed by Bulgaria 115 (16.2%)

Which nations within the Eurozone (after all, that is the subject of this thread) have the highest public debt levels?

Greece and Italy of course (144% and 118% respectively) but France (83.5%) and Germany (78%) also have massive public debt.

The figures quoted are for 2010.

Here is another link showing European Finance Statistics.

Cheers!

How many readers saw todays announcement that some of the holders of Greek debt WANT a default because they have insurance against default that will give them back 100% of the debt and not the 50% the Greeks are negotiating.
What a sick system where on one hand you can buy bonds and on the other take out insurance to protect against default.
I wonder who thought up this tactic?

It's just another way for insurance companies to make a profit.
But, I guess the premium must have been high on these bonds.

Amark, I can't see how the insurance companies can make a buck out of Greece defaulting. There is something of the order of $150 billion in bonds held by banks etc. If only half of them carry default insurance that means the insurance companies will pay out $75 billion.

I don't know of too many insurance companies that can carry that load of debt although I am sure that many of them would have spread the load amongst other insurers. Even so, $75 billion is a huge payout.

Looks like another bailout for AIG et al on the horizon if Greece goes bottom up.

maszki

You are absolutely right, those numbers are staggering. Will they be in the red? Time will tell.
Perhaps, there is a clause or clauses in the agreements that will prevent them from paying out. Again, time will tell.

Furthermore, I am sure that you are aware that insurance companies also insure themselves for undertaking risk. But, here again how far down can you go before someone must pay?

Cheers!

A credit default swap (CDS) is rather simple (talking about plain vanilla CDS). It is essentially the same as automobile insurance , home insurance or stamp insurance. It trades at a market price - much like the premium of an insurance contract. If something bad happens to your asset, you call in your insurance policy, right? If the underwriter of the bond defaults, you exercise the CDS and recover the par value of the bond.

However, profiting from a default is not as straightforward as you make it sound, especially when it does not trigger a credit event (the 50% haircut currently being negotiated would not trigger a credit event because it is "voluntary") thereby voiding the CDS. Imagine if your local government was responsible for crushing your car and then stated that your car insurance will not cover you, sorry.

If a messy default happens, many insurance companies who are net exposed to CDSs will fail or require bailing out. There is a real risk the CDS will not protect you. I doubt anyone WANTS a default. But a default may be preferable to the "voluntary" haircut of which the ECB and governments are not taking part (there are legal issues regarding paying out some holders fully and stiffing others).

Also, the market price of a CDS for short term greek bonds has priced in a default for quite some time. It is costly to protect Greek bond holdings. Just ask Corzine at MF Global.

David

I should add that there are important distinctions between insurance and CDSs, but for bond holders (the party refered to in maszki's quote), the comparison with insurance works well enough. For holders of a CDS but not the bond, a naked CDS, the comparison breaks down.