Tuesday, February 14, 2012

Temperature Rising


I can't help thinking that New Zealanders might be living in a surreal world.

On the one hand many are worried that their weekly wage receipts don't appear to be covering those weekly bills like they used to. They watch the news and blame the Europeans and Wall Street, but really have little clue as to the underlying fundamentals that have placed them in this liquidity trap.

Then again, I might be in a surreal world and all might be OK by this time next year. The unpayable debts, the inflating money supplies, the wars without end, the increasing riots in the so-called civilised West, may all just vapourise and all will be balanced once more. Back to the old times of increasing wealth and plenty for all...at least in my world.

But, I doubt my world is surreal. Evidence can be interpreted in various ways and different conclusions drawn. But when a body of evidence begins to stack in favour of a particular idea, then one usually has to give way and change ones mind.

Today we hear of the rating agencies downgrading Italy, Portugal and Spain. Now there is simply nothing these countries can do to stop their economic death spiral and their economies imploding. It is over. The results of this catastrophe may be contained and we may all get to carry on for a few more months or years. But the debt is now too much to handle and the only answer is more money printing.

The best answer, based on the body of evidence, for you and me to portect our wealth is gold and silver. "Get thyself out of the Fiat Money System"?

But back to New Zealand. Quotable value is saying house prices have risen over the past few months by 1.1%. Banks are on the verge of lifting interest rates. Banks are also nearing downgrade territory here.  But people are still demanding higher prices for housing and people are still buying, like there's no tomorrow. When increased interest rates hit, the surreal world will flood into the real for them.

And hurt, pain and anger will ensue. Welcome to Greece?

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