Thursday, June 16, 2011

Greece and the Golden Fleece

The Greek legend of the Golden Fleece is the tale of Jason and his band of Argonauts, who set out on a quest by order of King Pelias for the fleece, in order to place Jason rightfully on the throne of Iolcus in Thessaly. Jason found the fleece.

The ram whose fleece this fleece was fleeced from, was the offspring of the god Poseidon.
Jason returns with the Golden Fleece
(courtesy of Wikipedia)
Greece now needs gods and it now needs gold. Where is Jason when they need him?

The rioting in Greece today has escalated the problems this bankrupt country faces. Nobody wants to take the cuts proposed by the Greek Government, forced on them by the Germans and the French. The people are demanding their entitlements are maintained. The Greek people still don't get it. The entitlements were never there. It was debt and now, nobody lends to a CCC rated country. Especially to pay for retirement at age 55.

As a result of this situation, three of the largest French Banks had their credit rating downgraded today. A contagion effecting the financial and political systems in Europe may be beginning.

The situation is volatile, fluid and dangerous for the world financial system already on the precipice.

Consumer confidence is already at an all-time low and an escalation in Greece, and perhaps a default, could cause widespread panic in the EU and spread to Asia and America. Investment Fund Giants and their market algorithms would be going beserk on the sell-side.

The world doesn't get a run on Banks by mobs turning up in hours, it gets a run on Banks in micro-seconds. You think watching 1929 from an armcahir may have been interesting, with the next crash, you won't even have time to blink an eye and it will be over. Wealth destruction in milliseconds.

Scary, yes, but not desperate. There is time to protect your wealth.

But back to the Fleeced Greeks.

You see it isn't all the Greeks fault. The EU had rules that ensured sovereign debt would not get out of hand in individual EU member countries. But this was 'kinda overlooked' in the happy-go-lucky days of bubbles and froth from 2000 to 2007. Banks were making money from Greece and Greece was borrowing happily. The French and German Banks and Governments turned a blind-eye. They were making a killing.

Now the golden ram has been killed and the fleeced Greeks are unhappy they were somewhat duped and their wealth is coming under the control of the Germans and French. This is the stuff of anger and war.

Not good.

This next crisis could involve Central Banks. These banks assumed risk from 2008. When Central Banks cannot maintain solvency and confidence, there will be a shutdown in Government. This may start in Greece and flow to other Sovereign nations.

Many will say in jest that a Government shutdown would be great news! They steal and spend our money in wildly inapproriate ways. However, you would agree, that chaos is never a pretty sight. Look at the violence in Greece.

Greece is headed for shutdown. Could the world be headed for a northern summer of chaos? Hopefully not.

Gold in New Zealand dollars: $1897.15 per oz
Previous all time high: $1955.10 per oz

Silver in New Zealand dollars: $44.06 per oz
Previous all time high: $48.58
per oz

The Anglo-Far East Company
The Original Private Bullion Custodian
Your reference: an-001

1 comment:

  1. You're comment on wealth destruction in milliseconds I think is dead on. And scary.