Jim Sinclair's Commentary:
Think about this carefully as F-TV keep selling you the short euro story using a most disrespectful term for five countries. ~
insert ~ "disrespectful term"
(January 26th, 2009 A This is Money article explains)
PIGS is an acronym for a group of four countries. Portugal, Ireland, Greece and Spain - all in deep economic trouble in the eurozone.These are the four countries reckoned to be suffering from having to stick with the euro - and with the European Central Bank's interest rate policy.
Standard & Poor's, the ratings agency, thinks these four countries may have to ask the International Monetary Fund for help. To give you flavour, it seems that Ireland's economy could contract 4% this year.
Economists think we should be talking PIIGS here, not PIGS - they bundle Italy in with the four PIGS countries.Since this article first appeared, S&P did indeed downgrade Spain's credit rating, and there is talk that the UK could also lose its coveted AAA rating.
Francisco, a reader from Madrid took exception to the original article and its slur against Spain. He (quite rightly) pointed out that people in glass houses shouldn't throw stones:
"Spain produced a star performance: Average growth of more than 3% for the last ten years, budget surplus, low public debt, massive immigration (five million, second only to the US)."
"Even at these tough times, no Spanish bank has been nationalised or bailed out as has been the case in the UK, Germany, the US, the Netherlands or Belgium."
"Furthermore, Spanish public debt stands below 36% whilst the UK's is 50%, Germany is 60 and the rest is higher than 70%. So think twice before using this kind of derogatory term against these countries, because countries like the UK are in a bigger mess."
As more recent articles from This is Money deal with the continued devaluation of Sterling, and the likely nationalisation of more UK banks, it seems that Francisco might well have a point.
In reality, the whole of Europe is in trouble, and comparing the degree of economic suffering in each country - especially those linked through a common currency - is an exercise in futility)
resume article ~
They forgot New York and a bunch of other US states are waiting in the wings.
The seven states to make my list are California , Florida , Illinois , Ohio , Michigan , North Carolina , and New Jersey . Each has a population above 8 million people. Each has had to borrow more than a billion dollars, so far, to pay claims out of their now bankrupt unemployment insurance fund. Also, each state currently registers broad, underemployment above 15% as indicated by the U-6 measure for the States. And finally, each state is a large net importer of either oil, natural gas, electricity, or all three of these energy sources.
My seven states of energy debt represent a full 35% of the total US population. As with other US states, they face looming policy clashes between protected state and city workers on one hand, and the growing ranks of the private economy's underemployed on the other.
The recent circus at the LA City Council meeting was a nice foreshadowing that the days of unlimited borrowing by governments-against future growth based on cheap energy-is coming to an end.
Washington can print up dollars and fund these states for years, if it so chooses. But just as with the 70 million people in Portugal, Italy, Greece and Spain, the 108 million people in these seven large states are probably facing even higher levels of unemployment as austerity measures finally slam into their cashless coffers, and reduce their ability to borrow.
We are on a course of economic destruction. Even with the wave of conservative sentiment rising against the current Obama regime, I seriously doubt whether we will see the ship turn around come November.
Let me explain why....
There was a time a few years ago when we could reasonably manage our yearly deficit which was just under 500 billion. The cost of our life style, in those days, as a country in order to live was a bit short of two billion a day. Please forgive the simplicity of this example.
Think of it this way. Let say in order for you to live it cost you $ 150. per day; you know food, rent, gas, clothes, electricity, garbage, etc. But let's say you only had $120; to live on per day. Where does the other $30. per day come from. Who, what or how do you make up the deficit of the $30. per day, so that you meet your daily need of $150. per day? The difference is your personal deficit, which would be $30 per day.
America had up until two years ago a daily deficit of 2 billion a day. We were able to meet that deficit by selling bonds to foreigners ( China ) at the rate of 2 billion a day. So we were able to deal with our short fall. China and other foreign buyers (but mostly China ) paid or made up for our deficit.
Today, after one year of the Obama administration the daily deficit has grown to three times that number. Where are we going to get the money to make up the short fall now that it has ballooned up three times what it was? Who will step up to buy even more of our bonds?
But the problem is even more serious than that, because the Chinese no longer want to buy what they previously purchased; they do not want to buy our bonds at all. Just two days ago the yield on 30 year treasury notes fell substantially. This even further exacerbated any interest in the purchase of our debt. The cracks in our system are beginning to be visible.
We as a nation are bankrupt. The only way the charade can continue is by the Federal Reserve printing more and more money. This is inflating our money supply, and making it worth less. What this means to you is that the dollars in your bank account(s) or in your pocket are being taxed without you even being aware of it.
The dollar must fall. It is simple economic law. That is the reason the Chinese do not want to buy our dollars via bond instruments any longer.
Since the Chinese are bowing out greater taxation is inevitable. This along with printing press money insures we are headed towards a collapse, while at the same time greater unemployment lays ahead.
I warned of this problem 18 months ago and now here we are with the evidence for those predictions surfacing and coming home to roost.
But this problem is not just happening in the United States it is happening all over the world. That is why there is looming bankruptcy for many nations as well as many states within our own country.
We are in an economic vortex that will eventually bring total collapse to the world banking system. Please do not hang your hat on a Conservative political revival to save the day. The world's problems can be traced to money. There is a new money system coming and it is on the horizon.
Please, if you can, put a hedge around what you have left, and hunker down!!!
For more extensive and sophisticated analysis please go to:
http://www.shadowstats.com/article/hyperinflation-2010
and ...
For more great articles by Ken ... check out his website @
"Ken Klein" kenkleinproductions@gmail.com
