Tell me Warren12 have you any qualifications in economics? Have you ever studied economics?
Secondly name me any country in the history of the world who started up the printing presses, in the process creating a fiat or worthless currency and it didnt end up in hyperinflation and collapse? Both europe and US are well down that road.
At what point do countries debt to equity ratio's reach before they start going broke? - No we get smart comments about tinfoil hats.
This is extremely important stuff. The smart will understand and position themselves, the dumb, apathetic, and uneducated will just be swept away in the flotsam of life.
Trying telling the people of Greece and Spain with unemployment now running at over 20% and youth unemployment running at 50% that debt isnt a problem.
One of the most feared issues on this forum is interest rates rising. Why? Because people have over borrowed, 100% 95% and at record low interest rates.
And if interest rates jump 1% or 2% people cant pay their mortgages.
That massively affects house prices.
So whats todays little lesson. Well remember Greece and how they supposedly saved and it didnt go broke, (well it actually defaulted - but the politicians made up words and pretended that Greece didnt default.)!
Well they scrambled hard to save Greece and just got there. Germany wanted to force Greece out, but amazingly they took the pain and opted to stay in.
Now we are onto Spain and the spanish are shitting themselves. This is a rerun of Greece all over. But Spain is 10x the size. Right behind it is Italy.
All because of too much debt, something the good citizens of Vancouver know all too well!
We are not entirely sure what a "resolved" Eurozone crisis is supposed to look like, but we are pretty sure it is not supposed to look like the chart below...
A resolved crisis is not supposed to feature soaring Spanish bond yields and rising credit-default swap prices. In fact, the squiggles on this chart below may be the most disturbing images to emerge from Spain since Salvador Dali's melting clocks.
Less than two months after the financial leaders of the Western World - you know who you are - informed the rest of us that they had vanquished the euro crisis, it has flared up anew in the "peripheral" credit markets of Europe. Peripheral is the polite term for the P.I.I.G.S. nations of Portugal, Italy, Ireland Greece and Spain.
In Spain, the yield on 10-year government bonds jumped to nearly 6% - the highest level since early December. Meanwhile, the price of insuring a 5-year Spanish government bond against a default (i.e. the 5-year CDS price), jumped to within a whisker of a new record high.
These are not the data points of confidence and comfort; these are the data points of resurgent distress. Bond yields don't soar when investors trust the borrower; and default insurance doesn't jump to near-record levels when investors are confident they will be repaid.
Bond yields and CDS prices are climbing throughout the financial markets of the peripheral European nations. Meanwhile, share prices on the European continent are tumbling. Despite a brisk start to the year, several European bourses have slipped into the red for 2012.
Perhaps this rocky price action reflects some "healthy" profit-taking and nothing more. On the other hand, healthy profit-taking can easily morph into a great big bear market when the underlying fundamentals are as suspect as the balance sheets of the PIIGS governments.
In other words, as we have mentioned more than once in this column, bankrupt entities tend to go bankrupt. So any time an investor lends money to an insolvent entity, he is playing a game of chicken...or as they would say in Spain, un juego del pollo.
Seven weeks ago, Dan Amoss, the editor of the Strategic Short Report, predicted that this particular juego del pollo was far from over. Even though the mainstream financial news agencies were busy cheering the end of the euro crisis, Dan was warning his subscribers to prepare for the next phase of it.
In light of this week's dismal price action in Spain and elsewhere, Dan's comments from March 2 seem both prescient and pertinent.What would be the price of Vancouver real estate if borrowing costs are at 6%-7%? A hell of a lot lower. Thats whats facing Spain right now.
Both the FED and the ECB are accutely away how quickly this could turn into a contagion throughout the worlds financial systems. And this could happen very quickly like last time and they will fight very hard to stop it, but sometimes these avalanches cant be stopped.
Its very obvious that many posters who are bullish on Vancouver real estate, delusionally believe that Vancouver is cut off from the rest of the world. They cant join the dots and understand.
So for those who are having trouble with this issue here is an early primer. You join the dots in sequential order.
Geezer: "What if somebody listened to Taipan and doesnt buy".
Well, they will thank their lucky stars, that they arent one of the thousands of miserable souls who cant sell their properties in 2013!
