Thursday, November 10, 2011

Italy is Coming Out of the Shadows

So Italy is finally coming out of the shadows. After being an extra in the Greek patomime, Italy comes out and shows it can really act. Its performance shocking some. However, some of us knew all along that is was a talented debtor, one to surpass even the Greeks.

Here is the deal. There is no way that Italy can survive a 7% interest rate on its debt and there is no way that Italy can be bailed out. It's debt is too big. What happens now? At this point, the euro looks doomed as the currency that we know it. The ECB could print trillions and keep the game going for another few months, but the likes of Germany will never accept this. The Eurocrats talk a lot, talk is cheap. Events will overwhelm them.

On  'lighter' note, here's an explanation (from an Australian viewpoint) of the European debt situation. Not quite a pantomime but perhaps a tragedy?

Here's a line from the video:
"How can broke economies lend money to other broke economies who haven't got any money because they can't pay back the money the broke economy lent to the other broke economy and shouldn't have lent it to them in the first place because the broke economy can't pay it back!"

Finally, gold is back up to its all-time high in New Zealand dollars, yet the gold price is still US$150 off it's all-time highs in US dollars. A combination of risk-off trades selling the NZ dollar and heading into 'safe' (choke) US dollars and some into wealth insurance; gold. Gold is showing record pricing levels now in most currencies.  The canary in the gold-mine is suffocating. Time to go.

Gold in New Zealand dollars: $2268.39 per oz
Previous all time high: $2284.16 per oz (19 Aug, 2011)

Silver in New Zealand dollars: $43.57 per oz
Previous all time high: $59.19
per oz (30 Apr, 2011)

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