Bailouts

I know that most people find this kind of topic boring but the calamity that is currently taking place within the European Common Market is insane!  I can only surmise that it is the media's concern for keeping the populace in an upbeat state of mind that keeps them from reporting the gravity of the events.  On the other hand it might be that financial news doesn't include much sex and violence, the topic that seems to sell newspapers.

It looks like Greece is near a settlement over its debt crisis with bond holders agreeing to settle for about half the value of the bonds they hold!  Italy will be next and then Spain, with its 25% unemployment, will follow.  I wonder if they will negotiate the same kind of deals?  If they do, it only seems logical that all the other European nations will follow suit and the worlds investors, one of which is the United States, will lose 50% of their assets.  One by one, the European nations are being bailed out of their debt!

Investors settling for half sounds like what has already happened to the U.S. mutual/retirement funds a couple of years back.  In any other disguise this would be considered a market crash and I think I’m finally beginning to see the light.  Instead of a crash, they are letting the market down gradually, one country at a time so we won’t hear the bang.  We are right in the middle of a world market crash and we didn’t even know it!  It’s a little like biological evolution, it all happens so slowly its unnoticeable.

Before long, the U.S. will enter the second cycle of this "slippery slope" and our bailout will be slightly different.  The U.S. bonds being held by investors, mainly China, are dollar bills.  I predict that we will also negotiate our way out of our debt in one of two ways.  We will try to negotiate with China to reduce our debt by half or, if that fails, we will just print more of those greenbacks and pay them off with cheap paper money.  Either way does not portend a rosy future for the dollar, or world economics.