Category ‘European Debt Crisis’

It is fascinating to hear financial pundits do their predictions for 2012. Surprise, surprise, fund managers are predicting that stocks will go up this year. Mercer surveyed 50 fund managers and they indicated that world and Canadian stocks will go up by 7%, US stocks will see 8% growth and Europe 6%! Based on what? No one knows but it is not very strategic to talk about the reality if you want to separate fools from their money.

Recently, fund managers were actually happy to see finally the rates going down for the PIIGS bonds. Confidence is coming back, they …

I have no merit for this title; I took it from the great book, The Darwin Awards II by Wendy Northcutt. Taken from the description on the back cover: “The Darwin Awards II brings together a fresh collection of the hapless, the heedless, and the just plain foolhardly among us.” I felt like giving a couple of those awards to our masters of the universe because they really outdone themselves in the last week. I know, they are still with us and thus can pollute the gene pool so they don’t totally qualify. Let’s see:

• Last week, the EC comes up …

The latest news from the Euro front: apparently, European leaders have agreed to a “leveraged” EFSF to go up to one trillion Euros, to add firepower as they say. This agreement would also include a 60% haircut on Greek debt.

Not too long ago, those same politicians were blasting Wall Street for the “leverage” and the SPIV (Special Purpose Investment Vehicle – Enron got famous with those) which were the hallmark of the mortgage industry in the years leading to the crisis. Now those same politicians want to use “leverage” to try to rescue the Euro! Well, who doesn’t like leverage? …

Everybody was chanting the virtues of the euro, from North to South, like a big happy family. With the euro, Greece was able to borrow on the credit card of Germany. After defaulting 5 times in recent history, fewer creditors would have rushed to lend money to Greece in drachma. But with Germany and the ECB as a back up – that was another proposition altogether. This was the new frontier! Banks lent to Greece like there were no tomorrows.

Now Greece is in the hole to the tune of 350 B euros and the banks and the ECB are on …

Gasoline was already expensive in Europe but it has now reached US$8/gallon. And if that was not enough – the cost of borrowing for the PIIGS is going up again. Almost 6% to raise 2yr debt for Portugal. 10 year debt is at 7.8%. Spain has just been downgraded by Moody’s and Ireland is considering defaulting on senior bank debt if the EU is not yielding.

The increased cost to finance Portuguese debt made the Treasury minister in Portugal, Mr. Costa Pina, very upset – he said the EU should get its act together. Well yes Costa but bailing out …