Sunday, May 23, 2010

Part 4: European Dominos: Global Cascade?

"With the rest of the world in turmoil, can America really continue on a positive path?  The dominoes will hit American shores - the question is when."  So sayeth Leo Isaak at www.minyanville.com.  In short: "...have you noticed how Gold has been soaring along with the dollar?  That isn't supposed to happen, but it is and everyone should be paying attention....People are voting with their feet...If a debt-laden Europe is seeing these kinds of problems, the US will eventually see them as well....Yes, the US can print money at will, but that is as much of a negative as it is a positive....[US] still sells bonds, and at some point velocity will catch up with us, driving down the value of the dollar and driving up interest rates...until rates match investor requirements...Right now Greece should be paying at least 15% on its sovereign debt....The Fed won't raise rates ... but the market will do it for them.  Inflation will finally trump deflation....Deflation coming from stagnant wages, tight consumer credit, and economic slack is being offset by rising prices in the cost of government, medicine, education, and other things we "need" versus things we "want", plus the massive amount of money that has been printed to date (and is sitting on bank balance sheets).  Austerity will be welcomed by many in America....the Tea Party movement didn't just arise out of thin air...Sacrifice ... no longer exists in Europe.  [We'll] see if it still exists in America."