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-- Posted Monday, 3 May 2010 | Digg This Article | | Source: GoldSeek.com
Rick’s Picks Monday, May 3, 2010 “Phenomenally accurate forecasts” Europe was putting the finishing touches on yet another bailout for Greece over the weekend, even as new scrutiny fell upon the growing problems of Spain and Portugal. Under the latest rescue package, the IMF and 15 nations – presumably including Spain and Portugal – will pony up $133 billion to keep Greece from defaulting. Will that be enough to do the job? Although it more than doubles the amount of an emergency credit line extended to Greece less than two weeks ago, some observers think it could take as much as $700 billion to avoid bankruptcy. One thing’s for sure: For the average worker, the austerity measures imposed on Greece by this rescue package seem as harsh as chemotherapy. “We find ourselves before the most savage, unprovoked and unjust attack,” said the head of the nation’s civil service union after seeing an outline of the cuts. Unfortunately, there are no guarantees that even severe belt-tightening will work. “There is a very real possibility that at the end of two or three years, Greece will still have an unsustainable debt and will have to restructure because it will have a deep, deep recession in the meantime,” noted a Berkeley economic professor quoted by Bloomberg. Considering that riots started breaking out in Greece when relatively mild austerity measures were being talked about a couple of months ago, it seems plausible that the country could be in for a long, hot summer. 17,000 Swimming Pools Ironically, there is supposedly enough wealth in Greece to have headed off the crisis in the first place -- wealth generated by a shadow economy representing 20 to 30 percent of the nation’s GDP. Alas, tax evaders may be costing the country as much as $30 billion a year, according to estimates. In a wealthy Athens suburb, according to the New York Times, although only 324 residents admitted on their tax returns to owning swimming pools, satellite photos commissioned by tax investigators revealed that the actual number of backyard pools was closer to 17,000. Even if Greece is forced to come back to the well, there are those who doubt that its problems will metastasize to bring down Europe. Sovereign debt bubbles are “another false Wall of Worry,” writes our friend Bob Bronson, a Colorado-based quant who predicted the U.S. housing bust more than a year before the pundits and mainstream media even acknowledged it was possible. “Bailouts of sovereignties, (countries, states and even counties and cities) is qualitatively different than bailing out overleveraged, and technically insolvent, private sector banks, especially mixed with too-big-to-fail and intermingled, and underregulated, shadow banking intermediators like AIG, in fractional reserve based monetary systems,” Bob notes. “Greece, the PIGS et al., have plenty of assets, unlike CitiGroup and AIG, for example, to collateralize central bank loans at reasonably less than market interest rates. The financial media’s hyped concern on this is nonsense and not a meaningful case for the bears, or the bulls, just entertainment value for non-institutional investors and observers.” *** Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. There is a substantial risk of loss in futures and option trading, and even experts can, and sometimes do, lose their proverbial shirts. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2009, Rick Ackerman. All Rights Reserved. www.rickackerman.com
-- Posted Monday, 3 May 2010 | Digg This Article | Source: GoldSeek.com
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