Source: Bloomberg, Financial Sense® Wealth Management. Past performance is no guarantee of future results.
All focus is on Turkey right now as their currency goes into freefall and 5-year credit default swaps (insurance against default) have now spiked to levels last seen during the 2008-2009 financial crisis. Continue reading →
Greece engaged in angry exchanges with the International Monetary Fund (IMF) over the weekend after WikiLeaks transcripts suggested that the fund was seeking to threaten Greece with a risk of default.
WikiLeaks published the text on Saturday (2 April) of an alleged conversation between three IMF officials in which they say that Greece only does what it needs to do only when it runs out of money – a situation they suggest could happen again soon.
The Greek government responded by asking the IMF whether “seeking to create default conditions in Greece, shortly ahead of the referendum in Britain, is the fund’s official position”.
TROUBLES in the Italian and Portuguese economies could blow up this year to shatter the eurozone, as disastrous Greece almost did last year.
Investors have become increasingly concerned about the anti-austerity agenda of the Portuguese socialist government, fearing defaults could lie further ahead, which has seen the borrowing costs for the government soar. Continue reading →
Fed is really caught between a rock and a very dark place. Yes, they have the IMF and the world pleading with them not to raise rates for it will hurt other debtors who borrowed excessively using dollars to save money. The Fed is also caught between domestic policy objectives that dictate they MUST raise rates of they will bankrupt countless pension funds and international where emerging markets will go into default because commodities have collapsed and they have no way of paying off this debt that has risen to about 50% of the US national debt. Continue reading →
While Greece is suffering from a protracted debt crisis, facing new tough reforms, the question arises whether if the United States will soon become incapable to handle its own growing debts, asks Romina Boccia, the Heritage Foundation’s Grover M. Hermann Fellow in Federal Budgetary Affairs.
“The United States differs from Greece in important ways. The US economy is much larger and better diversified. More than half of the US debt is held by creditors within its borders, rather than by foreign entities. Moreover, the United States also creates its own money, enabling it to devalue its currency and debt to avoid defaulting on payments for a lack of cash,” the analyst underscored.
Prime Minister Alexis Tsipras returned to face a mutiny within his coalition after he surrendered to European demands for action to qualify for up to 86 billion euros ($127.8 billion) of aid Greece needs to stay in the euro.
With two factions in his government already saying they won’t support the deal, Tsipras met with his closest aides as he tries to stop the revolt from spreading before a vote in parliament on Wednesday. Creditors’ demands include an overhaul of sales tax, a broadening of the tax base and a clampdown on pension costs.
Tsipras will “have to change his administration and clear out hardliners and radicals from his party,” as well as rely on opposition support to pass the necessary measures, said Eurasia Group analysts Mujtaba Rahman and Federico Santi. “But it is a tough call to determine how Tsipras will go about doing this.” Continue reading →
“Wake up people of the world and investors. Greece will come to your neighborhood very soon, maybe not this year, but next year or whenever it is, because the world is over infected. And defaults will follow, or they will have to create very high inflation rates.”
That’s Marc Faber’s message to all of those who may still think that Greece doesn’t matter in the grand scheme of things. In an interview with Bloomberg TV, Faber talks Greece, China, and of course the Fed. Continue reading →
In the meantime, the turmoil offers an opportunity for Russia to advance its interests. Of course, the EU is an absolutely critical trading partner for Russia, so if the bloc starts to fray at the seams, that presents financial risks to an already struggling Russian economy. Russia’s central bank governor Elvira Nabiulllina warned in June of the brewing threat that a Greek default would have on Russia. “We do consider that scenario as one of possible risks which would increase turbulence in the financial markets in the European market, bearing in mind the fact the European Union is one of major trading partners, and we are definitely worried by it,” she said in an interview with CNBC.
With the economic fallout in mind, Russia does see strategic opportunities in growing discord within Europe. First, Russia is pushing its Turkish Stream Pipeline, a natural gas pipeline that it has proposed that would run from Russia through Turkey and link up in Greece. From there, Russian gas would travel on to the rest of Europe. Russia is vying against a separate pipeline project that would send natural gas from the Caspian Sea through Turkey and on to Europe. Continue reading →
SAN JUAN, Puerto Rico (AP) — Puerto Rico’s financial future hung in limbo Tuesday as economists and officials warned that the U.S. territory could head down Greece’s path if it is not allowed to declare bankruptcy as it struggles with $72 billion in public debt.
The island prepared to close a troubled fiscal year amid intense investor scrutiny just hours before the first of several multimillion-dollar debt payments is due. It remained unclear whether the government would meet the roughly $400 million obligation due Wednesday, obtain yet another extension from creditors, or default.
Gov. Alejandro Garcia Padilla has said that the overall debt is unpayable and that he will seek a moratorium on payments, although it is still unknown whether bondholders will agree to that or opt to resolve the issue in court.Continue reading →
(NaturalNews) We have been tracking and reporting on the worsening economic situation in Greece now for more than a year, and it appears as though our earlier predictions – that the broke Mediterranean nation would eventually default on bailout loans it received in 2012, under different leadership – will happen.
Reuters reported Monday that Greece will not pay a 1.6 billion-euro installment it owes on its loan that is due June 30, according to a Greek government official who confirmed the default yesterday, further highlighting the overall severity of the country’s financial crisis. Continue reading →
This is how fragile the entire EU system is. If Greece sneezes, Italy coughs. The EU at best might be able to handle a Grexit, although that doesn’t look likely as stated here many times before. Look for the markets to go through a lot of turmoil but Greece is here to stay, whether its within the EU or a newly formed United States of Europe currently underway. Almost all experts agree it’s too strategically important to lose to the Sino-Soviet axis.
While things have normalized since the open thanks entirely to the SNB’s aggressive EUR-buying, CHF-selling intervention (good to see that central banks have read the BIS’ report and have learned from their prior intervention mistakes), earlier this morning we got a snapshot of what happens if and when the SNB, and then the ECB itself, finally lose control when as a result of the Greek crisis the contagion promptly spread a few hundred kilometers west to Italy where as the WSJ reported, “several Italian banks failed to start trading on Monday as fears over a Greek debt default induced many investors to shed peripheral stocks, including Italian, with banks suffering the most.” Continue reading →