Posted on 04/28/2010 7:55:23 PM PDT by TigerLikesRooster
Mohammad El-Erian And Paul Krugman Both Wildly Gloomy About Spiraling Crisis In Greece
Joe Weisenthal | Apr. 28, 2010, 10:32 PM | 141 | comment 1
The market has been in full-on panic about Greece for awhile now -- hence the parabolic spike in short-term rates -- and now it seems the wise men of the market are fully on board.
Felix Salmon points to new pieces from both Mohammad El-Erian and Paul Krugman, both of whom see nothing but bad news right now.
El-Erian, in so many words, says Greece will default. Krugman is talking about the real possibility of unwinding the euro and ends his piece with: "I think I’ll go hide under the table now."
That's some seriously gloomy language from arguably the most influential public economist in America.
(Excerpt) Read more at businessinsider.com ...
Please hide there and never come out. That way, you can make all of us a whole lot happier.
P!
Have no kids, promise people everything for not working, what could go wrong?
Krugman is an idiot. The PIMCO guy is not.
Get out of long term bonds... secure a FIXED mortgage if you don’t have one already - pay off variable interest rate debt - it’s gonna happen here eventually...
Cheers!
What's wrong with Krugman? - Greece's economy is just what that idiot ordered.
What's wrong with Krugman? - Greece's economy is just what that idiot ordered.
Krugman must be having a horrid time with this. After all, Greece has actually used many of his economics theories.
He’s getting a taste of what his chickens leave behind when they all come home to roost.
On a more upbeat note, here’s Nuriel Roubini as quoted by “Business Insider”
“in a few days,” he said, “there might not be a eurozone for us to discuss.”
(link on the right side of business insider page)
http://www.businessinsider.com/roubini-in-a-few-days-time-there-might-not-be-a-eurozone-for-us-to-discuss-2010-4
Eventually, perhaps, but with the dollar still the global reserve currency, the Eurozone will have to fall apart first, along with the national economies of the UK and France. The question is whether Germany is a) stupid for its willingness to throw bad money after worse on behalf of another country, or b) genius for positioning itself to become the creditor of all Europe.
If anything, this Euro-collapse is going to drive even more money into the U.S. bond market. The water is rising, to be sure, but we’re the last rooftop that everyone will scramble onto. Couple with that the lack of demand for credit - and the equal lack of willingness to actually lend - and I don’t see inflation getting a footing except in some select commodities like oil, gold, and, to some extent, the equity markets themselves (though I think this interim bull market is out of gas). Money is simply not circulating, and it won’t until banks can repair their balance sheets, and that ain’t happening for a long time, since, well, all of these banks are about to take a bath in Europe.
The biggest obstacle - the most insidious part of this whole process, is that with each nation that defaults, it creates a bigger burden for the “healthy” nations to cover. If the EU wants to help Greece, a country like Italy has to pass a law that will authorize it to give money to that ailing country, while its own economy is gasping for breath. If Spain goes under, now that responsibility is spread to the remaining countries in greater amounts, and so on and so on, until it gets to the point that a couple of nations are expected to foot the entire bill for whoever’s left standing, plus save their own economy.
Greece has done one thing - and only one thing right - timing. In this ridiculous environment, “he who fails first, fails best”. There might not be any money left to save the UK when the contagion finally gets to the island.
Influential? Sure he is. As if insiders try to get his column early, so to profit from the wild gyrations his pronouncements foment.
I was watching Larry Kudlow’s financial show earlier this evening. If I understood correctly, German and French banks own a lot of Greece’s debt. Another banker that’s often on that show, David Goldman, opined a when the Greece problem first broke, that what happens in Germany won’t affect the US as much as most people think, because our trade relations with them are of very minor importance compared to those with the Asian and Pacific region. But as you indicate there are many countries hanging on by their fingernails, and it might not take much of a push.
Great line. I agree with you - BUT... I think we'll be hit sooner than you think because of our out of control spending - and China's unwillingness to keep buying our "dicey" debt at low rates... We'll see.
Apparently Europe is doomed because of their unfettered free market capitalism?!?!?!?
What’s your take on this whole mess?
I thought the Euro would collapse years ago. I believe the ECB will take major action to halt its slide if it nears 1:1 with the dollar but that might just delay the inevitable. You will see a big push from Germany and a few other countries to return to their old currency. I think just about anything is possible as long as governments continue to expand at 2 or 3 or 4 times their nation’s GDP.
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