Thursday, September 15, 2011

Orderly Please

Greece will default. There is nothing surer than the sun rising each morning.

The question is, will the default come suddenly or quickly? Will the market get used to the daily headlines grooming the populous to a default or will we wake up one morning to chaos in Greece and Europe?

Orderly is the name of the game. Sudden shocks cause fear and panic. The Eurocrats are desperate to hold the zone together (or appear to be) and do not want very upset locals rioting on the street if a catastrphic monetary and fiscal failure occurs.

That would make the London riots look like a Teletubbies birthday party. Because the people are getting restless.

In the UK, unions have announced a strike in November including up to three million workers in the State sector. If these people aren't listened to and get angry, look out.  (Meanwhile, in New Zealand, University students are demonstrating on the basis that their fees are too high. Once again, they admit the government doesn't have money, but do not want to be the ones sacrificing their benefits first. In New Zealand, those who own property are still not seeing the big black bus coming up from behind them, however, those who have public sector jobs are beginning to wise up.)

But back to the ordely default of Greece. German Chancellor Angela Merkel said today that Greece is not heading for a chaotic default. That's good news, but she didn't mention 'no default'. Try paying 24% interest on the bonds that you sell, and this only on the 10 year bond. Can't last. The only reason they haven't been seen to have defaulted yet is because the eurocrats have managed to delay the fateful day with more loans and the ECBs promise of a eurobond scheme. Merkel says that there is a good chance of Greece getting some more bailout funds. Madness. Imagine having a mortgage you cannot pay, with high interest rates, and someone comes along and lends you more money to afford the installments! Have you not technically defaulted?

Zerohedge says today; "China could buy every single penny of Greek debt and it still wouldn’t solve the underlying problem: Greece would still be in debt! And more, still hemorrhaging billions of euros each month. Throwing more money at the problem only makes it worse."

What really happens when a nation defaults? This too from Zerohedge; "Argentina’s millennial debt crisis is a great example of this (default)… suddenly the power failed, the police stopped working, the gas stations closed, the grocery stores ran out of food, the retirement checks stopped coming, and the banks went under (taking people’s life savings with them).

So the planning for the orderly default is in play. Slowly feed rumours to the media and let markets adjust accordingly so that when the real news arrives, the market has it all factored in.

Such a large gamble with so many people's lives don't you think?

Gold in New Zealand dollars: $2225.47 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $49.80 per oz
Previous all time high: $59.19
per oz (30 Apr, 2011)

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The Original Private Gold and Silver Bullion Custodian
Your reference: an-001
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