#  >  > Living And Legal Affairs In Thailand >  >  > Thailand and Asia News >  >  > World News >  >  US Stocks Plunge, Dow Falls Over 300 Points As Fears Grip Market

## StrontiumDog

AUGUST 4, 2011, 12:41 P.M. ET*US Stocks Plunge, Dow Falls Over 300 Points As Fears Grip Market* 

        --Dow plunges over 300 points, major indexes slump into correction territory on growth worries 

    --Bank of New York Mellon prepares to charge large depositors to hold cash, reflecting flight into safer assets 

    --Central-bank interventions fail to assuage investors 

      By Brendan Conway and Jonathan Cheng     Of DOW JONES NEWSWIRES      NEW YORK (Dow Jones)--Stocks plunged, driving the Dow Jones Industrial  Average down more than 300 points, as investors appeared to lose faith  in the ability of the world's policy makers to revive the global economy  and stave off a rolling debt crisis in Europe. 

    The Dow slumped as much as 372.52 points, or 3.1%, to a low of  11523.92 in midday action, erasing all its gains for 2011. It recently  was down 293, at 11611, a decline of 2.4%. The slump of the past few  weeks has driven the Dow down almost 10% from its May intraday highs--a  decline that would be classified as a correction. 

    The Standard & Poor's 500-stock index fell 34 points, or 2.7%, to  1227 in recent action. The S&P recently was in correction territory  on an intraday basis, having fallen more than 10% since May. The Nasdaq  Composite slumped 74 points, or 2.8%, to 2618. 

    Investors across the globe have been buffeted by economic and  political turmoil in recent days. In the U.S., fears have turned from  worries about a possible default by the U.S. government to a weakening  economic outlook. A string of data have pointed to a slowing of the  recovery and investors are now bracing for the closely watched nonfarm  payroll report on Friday. In Europe, leaders are struggling to contain a  growing debt crisis. Investors are increasingly worried that troubles  are spreading to Italy and Spain, driving down stocks across the region  and sending borrowing costs of peripheral nations soaring. 

    In the U.S., all but one Dow stock was lower as investors sold across  the board. All of the S&P 500 sectors were in the red and just 12 of  the 500 stocks were up. 

    "This is a fear-driven market. We're in a mini-free fall. It's not a  Black Monday, or Black Thursday, but it's in pretty bad shape--all the  big stocks are being liquidated," said Christian Thwaites, president and  chief executive at Sentinel Investments. 

    Gold and silver, which had been up on the day, reversed course as  investors sold the metals to meet stock-based margin calls, traders  said. If investors have purchased stocks with borrowed money, they often  have to front more cash if the price of those shares fall, known as a  margin call. 

    Underscoring that worried investors are increasingly seeking cold  cash, the Bank of New York Mellon Corp. (BK) is preparing to charge some  large depositors to hold their funds. The biggest U.S. custodial bank  said this week in a note to clients that it will begin slapping a fee  next week on customers who have vastly increased their deposit balances  over the past month. 

    The bank cited the massive dollar deposits it has received over recent  weeks, as investors and corporations retreat from financial markets  amid Europe's debt crisis and the recent debate over U.S. government  borrowing. 

    Investors fled to Treasurys, sending the yield on the 10-year Treasury note, which falls as prices rise, down to 2.507. 

    Fretting about a slowdown, investors were also focused on a pair of  policy moves abroad that did little to assuage their immediate worries. 

    The European Central Bank moved to reactivate two of its anti-crisis  measures in attempt to stop the currency bloc's sovereign-debt woes from  spreading to Italy and Spain. Japan intervened in currency markets to  curb the strength of the yen, which has risen as investors shift into  currencies considered safer assets. 

    "The concern is that you're seeing visible worry by government  officials, by central bankers. The [worry] is, 'Are there any bullets  left in the government arsenal to help'?" said Russ Koesterich, iShares  Global Chief Investment Strategist at BlackRock. "Investors are  realizing that the economy is very fragile, [but] it's not clear that  governments are able to do much help." 

    In his press conference, ECB President Jean-Claude Trichet  acknowledged downside risks to growth in the region, saying economic  risks "may have intensified," and that recent data showed the growth  pace in Europe has decelerated. 

    The ECB left key interest rates unchanged. Trichet's comments on the  weakening economic recovery prompted the central bank to resume its  program of government bond buying for the first time in five months. But  traders said the central bank was only buying Portuguese and Irish  sovereign bonds, a decision that Trichet acknowledged was not  "unanimous." 

    "You've got a weak economy, the aversion of a debt crisis but not a  solution, and you've got the rest of the globe starting to implode in a  lot of areas, especially Europe," said Barry James, president and chief  executive of the James Advantage Funds. "It's natural that people would  react with fear." 

US Stocks Plunge, Dow Falls Over 300 Points As Fears Grip Market - WSJ.com

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## StrontiumDog

*FTSE Loses £50bn Amid Eurozone Crisis - Yahoo!
*
*FTSE Loses £50bn Amid Eurozone Crisis*


Sky News – 1 hour 16 minutes ago

  Almost £50bn has been wiped off the value of the FTSE as the EU president warned the eurozone crisis is spreading.

The FTSE ended at 5393, down 191 points or 3.43%, taking £49.8bn from its value.

  It is the biggest fall on the FTSE for more than two years.

  Since last Friday morning, £124.97bn, or 8.17%, has been wiped off the value of the FTSE 100.

  The biggest fallers were Inmarsat, down 19.3%, Lloyds Banking Group down 10.19% and Vedanta down 9.39%.

  The falls come amid concern about American debt and the state of the eurozone countries.

  In a letter to European Union leaders, Jose Manuel Barroso said:  "Whatever the factors behind the lack of success, it is clear that we  are no longer managing a crisis just in the euro area periphery."

  He called for a re-assessment of all elements of the eurozone's current and future bailout funds.

  And he told them the eurozone needs to convince markets that it can respond to the debt crisis.

  The comments contributed to another day of sell-offs on the FTSE 100,  which has seen nearly £125bn wiped off the value of London's leading  shares since friday.

  The FTSE 100 closed at 5393, losing 191 points to drop by 3.4%.

    Gold reached another record high of \$1,677.9 as investors made a renewed bid for  safe havens.

  After leaving the eurozone's benchmark interest rate at 1.5% today,  European Central Bank president Jean-Claude Trichet confirmed that the  programme to purchase eurozone government bonds had not ended.

  The ECB's Securities Markets Programme (SMP) has bought around 74  billion euros in public debt so far, to help support the financial  system with liquidity.

  The interest which the Italian and Spanish governments have to pay to  service their debts climbed to record levels on Tuesday of 6.18% and  6.45% respectively.

    At his news conference, Mr Trichet would not confirm whether the bank  is propping up Spanish and Italian bonds through the (SMP).

  The developments follow a grim verdict on the eurozone by the think  tank   Centre for Economics and Business Research (CEBR)     which    believes Italy will default and fall victim to the debt crisis due to  its weak economy.

  Italy and Spain, the eurozone's third and fourth largest economies, are both facing pressure from markets.

  But Italy should be the focus, according to the CEBR as its debt mountain is far greater in terms of scale than Spain's.

  Italian Prime Minister Silvio Berlusconi's recent £38bn austerity  package is not tight enough, and will not be able to repair its weak  economy, the think tank said following a speech to the Italian  Parlaiment by   Mr Berlusconi     on Wednesday.

  Speaking on Sky News, CEBR chief executive Doug McWilliams said:  "Berlusconi hasn't solved the problem of the Italian economy, which has  now become uncompetitive with the Euro."

  The CEBR points out that, with Italy's economy twice as big as  Greece, Portugal and the Irish Republic combined, a bailout would  probably be unaffordable for the eurozone.

  It would, in fact, mean the end of the eurozone altogether, the CEBR said.

  Spanish Prime Minister   Jose Luis Zapatero   has in recent days sought to adopt a more proactive stance on tackling the crisis.

  He has called for an early election to "create political and economic  certainty", and delayed his summer holiday to deal with economic  reforms.

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## SiLeakHunt

Buy gold, again !

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## OhOh

U.S. eats up most of debt limit in one day - Washington Times

_"U.S. debt shot up $239 billion on Tuesday — the largest one-day bump in history — as the government flexed the new borrowing room it earned in this week’s debt-limit increase deal.

The debt subject to the statutory limit shot way past the old cap of $14.294 trillion to hit $14.532 trillion on Tuesday, according to the latest the Treasury Department figures, which are released on the next business day.

That increase puts the government already remarkably close to the new debt limit of $14.694, which means one day’s new borrowing ate up 60 percent of the $400 billion in space Congress granted the president this week.

Debt numbers go up and down regularly, depending on what the Treasury Department is redeeming or issuing on any day, but have been on a steep upward trend for the past decade as spending has ballooned and revenues have fluctuated.

For the past 2½ months, though, the number essentially was frozen as the government was poised to reach the borrowing limit set by law. The Treasury Department used extraordinary means to stall, but was about to run out of room on Tuesday.

With little time to spare, Congress and the White House managed to cobble together a deal to grant new borrowing authority: an initial increase of $400 billion, coupled with future increases."_

Continues.......

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## Hampsha

WW3 on the way? Maybe just in the US.





It's not even Friday. What will happen tomorrow in the US?

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## LooseBowels

You shouldn't have borrowed all that dosh for your big house and buying gold that you can't afford and never could.  :Smile: 

now we want it back and pronto

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## spliff

> Buy gold, again !


Should have done that 2 years ago....would already have been 80% up... :bananaman:

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## Tom Sawyer

Not so sure about that. Once the USD stablises Gold could deflate - and fast.

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## socal

> Not so sure about that. Once the USD stablises Gold could deflate - and fast.


Its not going to stabilize.

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## StrontiumDog

The reason the markets are diving - Ezra Klein - The Washington Post

Posted at  01:58 PM ET, 08/04/2011                                                         

*The reason the markets are diving*

 By  Ezra Klein


 (Scott Olson - GETTY IMAGES)                     

Washington likes to talk about the economy in terms  of things it can control. Spending and deficits. Stimulus. Policy  uncertainty. 

 But the Dow Jones isn’t diving because  spending has risen, deficits have grown or stimulus policy has changed.  It’s diving because of forces Washington can’t control, and in many  cases, doesn’t understand very well.
How many members of Congress do you  think could give a coherent account of what has happened to oil or  steel prices over the last three years? Or what’s happening in the  Eurozone? Or to the yuan?

 A dramatic gap has opened between the economy as Washington sees it  -- and wants to intervene in it -- and the economy that actually exists.  Whatever weak recovery we might have hoped for is being hindered by  global commodity prices, consumer deleveraging, fears of flagging demand  in emerging markets, earthquakes in Asia, and much more. Globally, it’s  been an almost uninterrupted run of crises and bad luck. Meanwhile,  Washington just spent two months arguing over whether it would pay its  bills or spark an unnecessary financial crisis.

 Last week, Congress resolved that question. This week, the markets  are tanking. Which suggests that Washington is asking itself the wrong  question.

 The right question is simple enough to pose: Where will the recovery  come from? The problem is that no one has an answer. And as one hopeful  hypothesis after another is dashed, the markets are beginning to panic.

  It won’t come from the United States. Our recovery has slowed, and  updates to the Commerce Department’s growth figures have shown that the  hole we’re in is significantly deeper than we realized. Thursday’s news  only underscored that conclusion, as the early signs suggest that  Friday’s job numbers report will be disappointing.

 It won’t come from Europe or Japan. The debt crises in Greece, Spain,  Portugal and Italy have quieted any conversation about recovery and  raised the question of whether the Eurozone can survive. And Japan is  still trying to rebuild after the horrific earthquake and tsunami that  ripped across its coastline back in March.

 For some time, the hope was that recovery could come from the world’s  emerging economies, driven by China. But after years in which the Asian  giant managed to defy global economic trends and post one incredible  growth number after the other, the Chinese government is admitting that  the economy has overheated and they need to begin tapping the brakes.  That doesn’t simply suggest the emerging economies won’t drive a global  recovery; it also raises a new source of concern: What if the Chinese  government fails to engineer a soft landing for its economy? 

 The impoverished and reckless economic policy conversation in  Washington isn’t helping to cope with these trends, but even if we got  our act together, the reality is that we have limited influence over  what happens in China or in the Eurozone and Japan. And it’s not even  clear how much an ideal policy response would do to speed America’s  recovery. 

 As bad as the daily data was two years ago, it was easier to tell a  story of recovery. The full scope and stickiness of the financial crisis  wasn’t yet visible, and the disappointments of the aftermath hadn’t yet  sunk in.
 Today there's more stability, but we seem to have stabilized into an  era of high unemployment, low growth and endless risk. Rather than  recovering from the crisis, it is almost as if we have settled into it.   And no one quite knows how we’re going to escape.

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## Butterfly

it was expected, should bounce back in the next few days

buy, buy, buy  :Smile:

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## baby maker

> it was expected, should bounce back in the next few days
> 
> buy, buy, buy


 

*.....butters....old sausage...where you been...*
*following your own advice...i hope...*
*i'm bidding CBAPA/ASX [at] 202/200.2....*
*....and just like you...old sausage...i'm getting filled...*

*Jees....maybe you are right....for once..*

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## baldrick

why do people consider the USD to be a safe haven ?

thought they were due to have their rating downgraded.

and Bernake will be looking at instituting QE3 shortly

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## billy the kid

stocks go up and down
but this time the banks may not be bailed
could we be heading for Desolation Row.

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## StrontiumDog

Asian Leaders Vow to Respond If Needed - WSJ.com
AUGUST 5, 2011, 4:58 A.M. ET*Asian Leaders Vow to Respond If Needed* 

*By NATASHA BRERETON-FUKUI* 

SINGAPORE—Asia-Pacific policy makers Friday voiced  concern about the darkening of the global outlook and declared  themselves ready to respond, potentially complicating the fight against  inflation that many in the fast-growing region are waging. 

 Stocks tumbled overnight in Europe and the U.S.—with the Dow Jones  Industrial Average marking its biggest single-day point loss since Dec.  1, 2008—and Asian markets continued the bearish tone Friday, as a potent  combination of fears came to a head. 

 Since the U.S. narrowly avoided default earlier in the week,  attention has focused on weakening growth prospects for the world's  largest economy. Meanwhile, euro-zone leaders face the possibility that  they may have to step in to support Italy and Spain. 

 Chinese Foreign Minister Yang Jiechi urged all countries to cooperate  to boost the global economy's recovery and to overhaul the  international financial system, as he warned of continuing sovereign  debt risks in the U.S. and the European Union. 

 "The global economy is slowly recovering, but the situation is still  complex with many uncertainties," Mr. Yang said in remarks made to a  Polish news organization and posted on the Chinese Foreign Ministry's  website Friday. Mr. Yang is currently visiting Poland, the ministry  said. 

 "Developments continue with Europe's sovereign debt issues and the risk of a U.S. sovereign debt default has risen," he said. 

 Asia-Pacific officials have worked to keep a lid on inflation in  recent months, as the region accelerated out of the global downturn. But  renewed weakness elsewhere in the world raises the prospect some could  dilute, pause or reverse their tightening medicine. 

 "We have the policy flexibility to deal with the uncertainty in the  international economy should measures be required," Australia's Deputy  Prime Minister and Treasurer Wayne Swan said, although he noted that  growth in the Asia-Pacific region was strong. 

 The country's central bank separately warned that sovereign-debt woes  in Europe and the U.S. could play out in a "disorderly and disruptive"  manner, leading to a marked rise in risk aversion and uncertainty. 

 South Korean authorities said Friday they would step up the  monitoring of financial markets amid heightened volatility. Officials  from the Bank of Korea, the finance ministry and financial regulatory  agencies are scheduled to meet Sunday to discuss market conditions and  necessary policy responses, taking into account the latest economic  data.

 The nation's Ministry of Strategy and Finance said its economy could  be affected by global uncertainties short term. But it also cited  Korea's continuing growth, strong fiscal standing, adequate  foreign-exchange reserves and the fact local exporters sell goods and  services to different parts of the world. 

 Indonesian President Susilo Bambang Yudhoyono said Friday that the  domestic economy is better prepared to weather the risks of a potential  global slowdown than it had been in 2008. "We managed to minimize the  impact of the 2008 global economic crisis," he said, adding that  although "we hope what's happening in the U.S. and Europe does not lead  to another crisis, it is our responsibility to anticipate and prepare  ourselves."

 Indonesian officials also cited continuing strong growth. Indonesia's  gross domestic product grew 6.49% in the second quarter from a year  earlier. "We see these falls as temporary and we believe the rupiah and  stocks will rebound," said Hatta Rajasa, Indonesia's chief economic  minister.

 Bank of Thailand Gov. Prasarn Trairatvorakul expressed concerns about  the risk of slowing global economic growth, but said further tightening  was still needed, given clear signs of accelerating inflation. 

 The proposed spending policies of the incoming government, if fulfilled, would propel price growth, he added.

 Philippines central bank governor Amanda Tetangco said he would be monitoring international developments carefully. 

 Some analysts said the global risks could spur policy makers to hold  off from further tightening until the outlook becomes clearer. 

 "We … expect the Asian central banks which are still hiking  rates—central banks in China, India, Korea, Taiwan and Thailand—to move  to the defensive side to protect downside in growth," said Prakash  Sakpal, an economist at ING Bank.

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## Bower

I had coffee this morning with a friend of mine who works for Hargreaves Lansdown, i asked him what i should do in the current market, his reply, he feels like a man who knows a hundred ways to make love to a woman but cant get a date !

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## Chairman Mao

> "U.S. debt shot up $239 billion on Tuesday


lol..

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## Tom Sawyer

> I had coffee this morning with a friend of mine who works for Hargreaves Lansdown, i asked him what i should do in the current market, his reply, he feels like a man who knows a hundred ways to make love to a woman but cant get a date !


Of course that means he's now one hundred times richer - he just used his own money during this slow period.

LOL

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## Tom Sawyer

*Unconventional Wisdom*

*A special anniversary report challenging the world's most dangerous thinking. - FT Foreign Policy Magazine (Jan/Feb 2011 Edition)*



*Immanuel Wallerstein* 
*THE GLOBAL ECONOMY WON'T RECOVER, NOW OR EVER* 

Virtually everyone everywhere-economists, politicians, pundits -- agrees that the world has been in some kind of economic trouble since at least 2008. And virtually everyone seems to believe that in the next few years the world will somehow "recover" from these difficulties. After all, upturns always occur after downturns. The remedies recommended vary considerably, but the idea that the system shall continue in its essential features is a deeply rooted faith. 

But it is wrong. All systems have lives. When their processes move too far from equilibrium, they fluctuate chaotically and bifurcate. Our existing system, what I call a capitalist world-economy, has been in existence for some 500 years and has for at least a century encompassed the entire globe. It has functioned remarkably well. But like all systems, it has moved steadily further and further from equilibrium. For a while now, it has moved too far from equilibrium, such that it is today in structural crisis. 

The problem is that the basic costs of all production have risen remarkably. There are the personnel expenses of all kinds -- for unskilled workers, for cadres, for top-level management. There are the costs incurred as producers pass on the costs of their production to the rest of us -- for detoxification, for renewal of resources, for infrastructure. And the democratization of the world has led to demands for more and more education, more and more health provisions, and more and more guarantees of lifetime income. To meet these demands, there has been a significant increase in taxation of all kinds. Together, these costs have risen beyond the point that permits serious capital accumulation. Why not then simply raise prices? Because there are limits beyond which one cannot push their level. It is called the elasticity of demand. The result is a growing profit squeeze, which is reaching a point where the game is not worth the candle. 

What we are witnessing as a result is chaotic fluctuations of all kinds -- economic, political, sociocultural. These fluctuations cannot easily be controlled by public policy. The result is ever greater uncertainty about all kinds of short-term decision-making, as well as frantic realignments of every variety. Doubt feeds on itself as we search for ways out of the menacing uncertainty posed by terrorism, climate change, pandemics, and nuclear proliferation. 

The only sure thing is that the present system cannot continue. The fundamental political struggle is over what kind of system will replace capitalism, not whether it should survive. The choice is between a new system that replicates some of the present system's essential features of hierarchy and polarization and one that is relatively democratic and egalitarian. 

The extraordinary expansion of the world-economy in the postwar years (more or less 1945 to 1970) has been followed by a long period of economic stagnation in which the basic source of gain has been rank speculation sustained by successive indebtednesses. The latest financial crisis didn't bring down this system; it merely exposed it as hollow. Our recent "difficulties" are merely the next-to-last bubble in a process of boom and bust the world-system has been undergoing since around 1970. The last bubble will be state indebtednesses, including in the so-called emerging economies, leading to bankruptcies. 

Most people do not recognize -- or refuse to recognize -- these realities. It is wrenching to accept that the historical system in which we are living is in structural crisis and will not survive. 

Meanwhile, the system proceeds by its accepted rules. We meet at G-20 sessions and seek a futile consensus. We speculate on the markets. We "develop" our economies in whatever way we can. All this activity simply accentuates the structural crisis. The real action, the struggle over what new system will be created, is elsewhere. 

_Immanuel Wallerstein is a senior research scholar at Yale University._ 

Jonas Bendiksen/Magnum Photos

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## Tom Sawyer

^
A good piece I think - though a bit of a hand-wringer (oi vey!) without clear suggestions for a way forward.

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## Marmite the Dog

I'm led to believe that the deregulation of the financial systems caused the problems, not the system itself. Wouldn't tougher regulation solve many of the problems like it did in Asia after '97?

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## Butterfly

^ indeed, all thanks to Reagan and Thatcher

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## blue

Traders don't own stocks and shares,
when  other people buy or sell them, they get commission 
so then when the market level falls ,why do they always show traders with thier head in thier hands

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## Butterfly

^ some are market makers, therefore they are definitely impacted as they have to keep inventory of the stock

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## Agent_Smith

> The extraordinary expansion of the world-economy in the postwar years (more or less 1945 to 1970) has been followed by a long period of economic stagnation in which the basic source of gain has been rank speculation sustained by successive indebtednesses.


This has the ring of truth to it.  I'm not an economist but this viewpoint seems to fit the last 40 years of economic activity, particularly here in the US.






> I'm led to believe that the deregulation of the financial systems caused the problems,


Yes, when you let the players run the game then all sorts of bad shit happens.  A good government is a good referee.

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## baby maker

March 24, 2012 
*I've Never Seen a Confluence of Negative Factors Like This*
Since August I've been calling for a collapse in Europe. Obviously I'm way early here, largely due to intervention from the ECB. I also underestimated the extent to which leaders would push to hold things together.

After all, Greece had already received bailouts in excess of 150% of its GDP and still posted a GDP loss of 6.8% in 2011. It's hard to believe they'd want to accept more austerity measures and more debt.

Moreover, political tensions between Greece and Germany had reached the point that Greeks were openly comparing German Chancellor Angela Merkel and Finance Minister Wolfgang Schauble as Nazis while the Germans referred to Greece as a "bottomless hole" into which money was being tossed.

Looking back on it, the clear reality was that Germany wanted to force Greece out of the EU but didn't want to do it explicitly: instead they opted to offer Greece aid provided Greece accepted austerity measures so onerous that there was no chance Greece would go for it.

Well, Greece surprised many, including myself, and went for it. And so the EU experiment continues to exist today. However, before the end of this issue I will make it clear precisely why this will not be the case for much longer and why we are on the verge of a systemic collapse in Europe.

For starters, unemployment in Greece as a whole is now over 20%. For Greek youth (aged 15-24) it's over 50%. The country is in nothing short of a Depression.

Indeed, Greece has now experienced five straight years of contraction bringing the total contraction of Greece's GDP to 17%. To provide some historical perspective here, when Argentina collapsed in 2001 its total GDP collapse was 20% and this was accompanied by full-scale defaults as well as systemic collapse and open riots.

With new austerity measures now in place there is little doubt Greece will see a GDP contraction of 20%, if not more. I expect we'll see other "Argentina-esque" developments in the country as well. Put mildly, the Greek issue is not resolved.

The one thing that would change my views here would be if Greece staged a full-scale default. While the political leaders and others view a total default as a nightmare (and it would be for Greek pensions, retirees, and many EU banks), it is only a total default that could possibly solve Greece's debt problems and allow it to return to growth.

Defaults are akin to forest fires; they wipe out all the dead wood and set the stage for a new period of growth. We've just witnessed this in Iceland, which did the following between 2008 and 2011:


Had its banks default on $85 billion in debt (the country's GDP is just $13 billion).Jailed the bankers responsible for committing fraud during the bubble.Gave Icelandic citizens debt forgiveness equal to 13% of GD.Today, just a few years later, Iceland is posting GDP growth of 2.9%: above that of both the EU and the developed world in general. In plain terms, the short-term pain combined with moves that reestablished trust in the financial system (holding those who broke the law accountable) created a solid foundation for Iceland's recovery.

Now, compare this to Greece which has "kicked the can" i.e. put off a default, for two years now, dragging its economy into one of the worst Depressions of the last 20 years, while actually increasing its debt load (this latest bailout added 130 billion in debt in return for 100 billion in debt forgiveness). 


Iceland staged a REAL default, and has returned to growth within 2-3 years. Greece and the Eurozone in general have done everything they can to put off a REAL default with miserable results. I'll let the numbers talk for themselves:



The point I'm trying to make here is that defaults can in fact be positive in the sense that they deleverage the system and set a sound foundation for growth. The short-term pain is acute (Iceland saw its economy collapse 6.7% in 2009 when it defaulted). However, a combination of defaulting and debt forgiveness (for households) can restructure an economy enough for it to begin growing again.

However, EU leaders refuse to accept this even though the facts are staring them right in the face. The reason is due to one of my old adages: politics drives Europe, NOT economics.

And thanks to the Second Greek Bailout (not to mention the talk of a potential Third Bailout which has already sprung up), we now know that EU leaders have chosen to go "all in" on the EU experiment.

Put another way, EU leaders will continue on their current path of more bailouts until one of two things happens:

The political consequences of maintaining this strategy outweigh the benefitsThe European bond markets force EU leaders' hands.I firmly believe that we will see one of these happen in the May-June window of time. We have a confluence of political, fundamental, technical, and monetary factors occurring in that time period make the possibility of a banking Crisis in Europe higher than at any other point in the last three years. Indeed, I've never seen such confluence of factors like this before. And it all makes for a very ugly situation in Europe.


*Private Wealth Advisory*

Graham Summers
Chief Market Strategist

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## Butterfly

> Greece did actually default, it is an event, whatever euro politicians say


they called their bonds, which corporate American do all the time when interests rates are too low and their bonds pay too high a coupon

Sovereign debt is usually not callable, so Greece did it retroactively

that's controversial, but not a default

of course some want to call it a default so they can cash in on those CDS and keep those great Greek yield of 20% on their invested money.

No free lunch for anyone,

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## nostromo

> Originally Posted by nostromo
> 
> 
> Greece did actually default, it is an event, whatever euro politicians say
> 
> 
> they called their bonds, which corporate American do all the time when interests rates are too low and their bonds pay too high a coupon
> 
> Sovereign debt is usually not callable, so Greece did it retroactively
> ...


Butters,

I never said or thought you are stupid. I would go as far as to call  you intelligent. You suffer from Euro Forever syndrome though, besides being a bastard :Smile: 

Eurozone created the Greek problem, as it did the Portugal, Ireland, Spain and Italy problems. France is about one of them. Belgium is certainly one of them. You most certainly know the basics of economics as a science. There, more uncompetitive countries can devalue their currency to meet the market. They can not borrow over their limit. Within eurozone it all was available, cheap credit is still here today, as ECB does it Italian way. We call it "Good money after bad money". Of course European Union does not like the market in the first place, out of 27 "commissars" 11 are ex or present communist leaders. How did that happen? Certainly they were not elected. Well, because of people like you bet the wrong horse or did not care or are happy with it in hope for some quango.

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## nostromo

baby maker, Iceland is a good example.

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## OhOh

What to believe, that is the question. it's all very confusing for a simpleton like me.

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## baby maker

> I've Never Seen a Confluence of Negative Factors Like This


 

*.....the more I hold out and wait....the more I'm getting burnt...*
*everytime I look around my money is buying less....*


*Took anothers advice....missed a trade on BillaBong....fell to $1.80....*
*now....or last I looked....$2.80/$3.00....*
*Know the rules....don't....do not...listen to any other mug,*
*make your own losses....*

*Won't do that again.....Yer!.....Right....*

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## Butterfly

> it's all very confusing for a simpleton like me.


then I suggest you don't invest money in financial instruments you don't understand

cash with 0% is better than an investment with negative annual returns

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## Butterfly

for American investors, US REITS are proving to be good investment for the past 2 years, increasing in value and dividends, performance were as high as 20% for the different REITs Indexes in 2011

European REITs are also being traded now, and Singapore and Thailand is starting to issue them en masse

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## koman

> for American investors, US REITS are proving to be good investment for the past 2 years, increasing in value and dividends, performance were as high as 20% for the different REITs Indexes in 2011
> 
> European REITs are also being traded now, and Singapore and Thailand is starting to issue them en masse


Are these things not some kind of dirivitive?   How would you choose....the performance is all over the place....some showing close to 20% others under 1%

They look about as safe as backing a lame horse, and hoping all the others fall down......

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## Butterfly

^ no derivatives, they are like stocks or funds, and most have to pay their "operating income" as dividends, a bit like a preferred stock, so the dividend yield are quite high, about 6.5% per year, and the price appreciation can be another 20% over the next 2 years

you can make bets on inidvidual REITs instead of REITs Indexes ETFs, but they could be risky since you will need to watch constantly their price movement and do you research. Some are leveraged and they have loans with banks and investment funds so again you need to see how this could add to the risk of holding them.

I think the REITs Residential and REITs Commercial Complex are being quite followed these days, so buying the Indexes is a safer bet, each sub-index has less than 10 REITs and I think even Equal Weighted REITs Indexes are available now. Equal Weighted instead of MarketCap weighted indexes will have better performance in the long run because of the rebalancing.

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## koman

> ^ no derivatives, they are like stocks or funds, and most have to pay their "operating income" as dividends, a bit like a preferred stock, so the dividend yield are quite high, about 6.5% per year, and the price appreciation can be another 20% over the next 2 years
> 
> you can make bets on inidvidual REITs instead of REITs Indexes ETFs, but they could be risky since you will need to watch constantly their price movement and do you research. Some are leveraged and they have loans with banks and investment funds so again you need to see how this could add to the risk of holding them.
> 
> I think the REITs Residential and REITs Commercial Complex are being quite followed these days, so buying the Indexes is a safer bet, each sub-index has less than 10 REITs and I think even Equal Weighted REITs Indexes are available now. Equal Weighted instead of MarketCap weighted indexes will have better performance in the long run because of the rebalancing.


Thank you Butters....clear as Mekong water.... :Smile:  
How do you buy an "index"?   Are these things cobbled together along the lines of a mutual funds or something?      Where/how can you buy into them?  Most people would not have the know-how or the resources to research them...at least on an individual basis....but they do seem interesting.

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## Warrior

> March 24, 2012 
> *I've Never Seen a Confluence of Negative Factors Like This*
> 
> Since August I've been calling for a collapse in Europe. *Obviously I'm way early here, largely due to intervention from* the ECB. I also underestimated the extent to which leaders would push to hold things together.
> 
> ...
> 
> 
> *Private Wealth Advisory*
> ...


 
I like this type of predictions  :smiley laughing:  :smiley laughing: 

"_Obviously I am way early here,_ .." Why is that obvious?

_"... largely due to intervention from..._ " Yes, if there were no others who could intervene, you would have been right. In fact, we can all be right if there were no others to intervene. 
But now, Mr Summers, you are wrong.

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## Butterfly

> Originally Posted by Butterfly
> 
> 
> ^ no derivatives, they are like stocks or funds, and most have to pay their "operating income" as dividends, a bit like a preferred stock, so the dividend yield are quite high, about 6.5% per year, and the price appreciation can be another 20% over the next 2 years
> 
> you can make bets on inidvidual REITs instead of REITs Indexes ETFs, but they could be risky since you will need to watch constantly their price movement and do you research. Some are leveraged and they have loans with banks and investment funds so again you need to see how this could add to the risk of holding them.
> 
> I think the REITs Residential and REITs Commercial Complex are being quite followed these days, so buying the Indexes is a safer bet, each sub-index has less than 10 REITs and I think even Equal Weighted REITs Indexes are available now. Equal Weighted instead of MarketCap weighted indexes will have better performance in the long run because of the rebalancing.
> 
> ...


you can actually start here,

REIT.com

they will list the ETFs fund providers for the NAREIT Indexes

an ETF is like a stock you buy on an exchange, it will invest in security according to the mandate of the ETF. For REITs Indexes ETF, the mandate is to invest in the securities of the NAREIT Indexes

Exchange-Traded Funds

for performance by REITs sector and sub-sector

Industry Data & Performance

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## socal

> Originally Posted by OhOh
> 
> it's all very confusing for a simpleton like me.
> 
> 
> then I suggest you don't invest money in financial instruments you don't understand
> 
> cash with 0% is better than an investment with negative annual returns


Cash is not 0% return. Cash is whatever the interest rate is minus inflation. So cash in most places cash is negative 2 or 3%. :mid: 

I suggest you dont invest money in financial instruments you dont understand either

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## socal

> for American investors, US REITS are proving to be good investment for the past 2 years, increasing in value and dividends, performance were as high as 20% for the different REITs Indexes in 2011
> 
> European REITs are also being traded now, and Singapore and Thailand is starting to issue them en masse


Real estate is in a bear market.

 Japan had the same dead cat bounce in their real estate bear market

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## socal

> Originally Posted by Butterfly
> 
> 
> for American investors, US REITS are proving to be good investment for the past 2 years, increasing in value and dividends, performance were as high as 20% for the different REITs Indexes in 2011
> 
> European REITs are also being traded now, and Singapore and Thailand is starting to issue them en masse
> 
> 
> Are these things not some kind of dirivitive?   How would you choose....the performance is all over the place....some showing close to 20% others under 1%
> ...


Some bonds (greek) show 20% returns too. Some bonds (Germany, Japan) show under 1%

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## socal

> Originally Posted by Butterfly
> 
> 
> ^ no derivatives, they are like stocks or funds, and most have to pay their "operating income" as dividends, a bit like a preferred stock, so the dividend yield are quite high, about 6.5% per year, and the price appreciation can be another 20% over the next 2 years
> 
> you can make bets on inidvidual REITs instead of REITs Indexes ETFs, but they could be risky since you will need to watch constantly their price movement and do you research. Some are leveraged and they have loans with banks and investment funds so again you need to see how this could add to the risk of holding them.
> 
> I think the REITs Residential and REITs Commercial Complex are being quite followed these days, so buying the Indexes is a safer bet, each sub-index has less than 10 REITs and I think even Equal Weighted REITs Indexes are available now. Equal Weighted instead of MarketCap weighted indexes will have better performance in the long run because of the rebalancing.
> 
> ...


they are cobbled together at places like MF Global and Goldman Sachs. Once interest rates spike, and we are in a new credit cycle,then RIETs will become a reasonable place to put some money for nominal returns.

got gold ? :mid:

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## socal

> Originally Posted by baby maker
> 
> 
> March 24, 2012 
> *I've Never Seen a Confluence of Negative Factors Like This*
> 
> Since August I've been calling for a collapse in Europe. *Obviously I'm way early here, largely due to intervention from* the ECB. I also underestimated the extent to which leaders would push to hold things together.
> 
> ...
> ...


Brent crude hit an all time high priced in Euro's last month. That is what happens when you print money to cover up problems. You end up making bigger problems and you create an even bigger bust in the future.

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## nostromo

> Originally Posted by baby maker
> 
> 
> March 24, 2012 
> *I've Never Seen a Confluence of Negative Factors Like This*
> 
> Since August I've been calling for a collapse in Europe. *Obviously I'm way early here, largely due to intervention from* the ECB. I also underestimated the extent to which leaders would push to hold things together.
> 
> ...
> ...



So you missed the "Is the European Central Bank Still Solvent?" seminar in London few days ago? 

You should be concerned, as you are from the Netherlands. The Nederlandsche Bank, central bank of the country, is de facto funding Eurozone 150 billion euros through target2 system that was not designed for this (other strong countries, Germany  500 billion, Finland 100 billion, Luxembourg 100 billion - and every, read my lips, every other country in eurozone is  a leech). In the end should euro project fail in any part the taxpayers in those 4 countries will pay, like you. Does shutting down hospitals in your country sound right? If only Greece exits euro, you will pay quite a lot, they owe ECB 100 bn, your portion of which you will not see coming back to your central bank. Way to go for european dream... 

But of course, 100 billions, 100 baht, you get confused. But let me tell you, we are talking about huge amounts of money. 100 million euros is a a lot. 500 million, 1 billion, 10 billion, put into science, education, research and development, we would have a better world. 100 billion, 500 billion, 1000 billion. Why not suggested 3000 billion for euro bailout, "that should keep euro going for 2 or 3 years" as suggested by some mentally ill person, to which analyst responded "they do not have that money" on Bloomberg. 

As every professional trader knows, there is a time when you should just cut your losses, even if you lose very much too much, you will still be alive and there will be another day. Eurozone stop loss point was reached long time a go and now they are going for broke. "Ex" communist commissars of politbyro- eh commission holding the steering wheel hating the market forces and not understanding market economy. Maybe the funding countries should consider their position. 

Do not get me started over fundamentals, why europeans (except the countries mentioned above) are by design incompetitive against Asia, US or UK...

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## socal

> Originally Posted by Warrior
> 
> 
> 
> 
> 
> 
> 
>  Originally Posted by baby maker
> ...


Anyone who thinks the Eurozone is in worse shape then the US fed or Japan simply hasn't looked at the data. The Eurozone as a whole is a net creditor with no trade deficit. The US is the biggest debtor in the world with a 50 billion per month trade deficit. The US has 50 billion in forex reserves. Thailand has 250 billion. The Eurozone has more gold then any entity in the world. They have over 10,000 tons of gold. The US treasury has 8000 tons. The smallest state in the Eurozone is in the worst financial shape (Greece) The biggest state in the US dollar block is in the worst shape (California)

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## nostromo

> Originally Posted by nostromo
> 
> 
> 
> 
> 
> 
> 
>  Originally Posted by Warrior
> ...


It is not about what you have, it is about what you can do in future, to produce wealth. 

In my opinion, US and Japan are very much more reliable than EU. Built on market economy and trade. EUR was built on political ideals.  

As for Cal, it is part of USA, same people same values, not like South Europe would ever be part of Northern Europe. 

If you take a look, most of Eurozone countries are in a mess - well, all except the fab four i mentioned, and they are being dragged down by crap other europe. Speaking of who generates europes trade... Lets hear it for 5 hour work week for euros! And eternal funding...

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## robuzo

David McWilliams has a new Punk Economics lesson up that I think is relevant to the discussion here:
Punk Economics: Lesson 3 - YouTube

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## nostromo

> David McWilliams has a new Punk Economics lesson up that I think is relevant to the discussion here:
> Punk Economics: Lesson 3 - YouTube


Good points made there and a good vid as well, making it easier for common people to understand what we are talking about. David McWilliams is a clever chap. Actually saw this vid first on zerohedge.com. Should anyone want more...

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## nostromo

"€1 Trillion May Not Be Enough" latest on zerohedge.com
...in Der Spiegel, the authors observe that "Even a 1-Trillion Euro Firewall wouldn't be enough."

Dangerous times.

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## robuzo

> Originally Posted by robuzo
> 
> 
> David McWilliams has a new Punk Economics lesson up that I think is relevant to the discussion here:
> Punk Economics: Lesson 3 - YouTube
> 
> 
> Good points made there and a good vid as well, making it easier for common people to understand what we are talking about. David McWilliams is a clever chap. Actually saw this vid first on zerohedge.com. Should anyone want more...


I think I saw it first either there or Naked Capitalism, another good alternative financial commentary site.

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## socal

> Originally Posted by socal
> 
> 
> 
> 
> 
> 
> 
>  Originally Posted by nostromo
> ...



Right now and in the future, countries in the EU and Japan  are already producing more wealth the the US. Hence the TRADE SURPLUSES Japan and the EU have. They are producing more then they consume. Everyone lives under this dilusion that the US is in better shape just because it used to be an export power in the 50s and 60s. The Eurozone is also the biggest trading partner with China. Not the US.

Eurozone countries are in a mess now because the ECB is allowing debt to be liquidated. They are pushing through austarity. The US is doing the exact opposite. They printing up new money to cover debt and they are not allowing it to liquidate. This is what Germany did after WW1 and they got hyperinflation. Europe isn't that stupid anymore

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## Butterfly

> David McWilliams has a new Punk Economics lesson up that I think is relevant to the discussion here:
> Punk Economics: Lesson 3 - YouTube


I liked the graphics they did,

not entirely incorrect, but a bit simplistic and they forgot to mention a few key items on the situation, for example the Aggregate Supply shift we suffered in 2008 which is more than simply a financial crisis, and the necessary role of the central bank to save the economy, not simply the banks

----------


## nostromo

> Originally Posted by nostromo
> 
> 
> 
> 
> 
> 
> 
>  Originally Posted by socal
> ...


It is quite rare these days to hear a professional defending europe. Please do not mention Europe and Japan in the same sentence. Japan is very much at the top, despite all the problems; europe sinks and stinks. What you say about trade surpluses, that is all about the fab four with all industry and services sector there is left in EU. Being killed by being in Europe. Or did you seriously think selling some weird cheese would buy euro out of the hole EU commission made?

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## OhOh

> It is quite rare these days to hear a professional defending europe


Are the the same "professionals" who are raping and pillaging at the moment?

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## nostromo

> Originally Posted by nostromo
> 
> It is quite rare these days to hear a professional defending europe
> 
> 
> Are the the same "professionals" who are raping and pillaging at the moment?


Well, while you do not like market economy, consider this world order enabled you to come to Thailand and to have a nice life. And have a bling and aircon.

----------


## OhOh

> Originally Posted by OhOh
> 
> 
> 
> 
> 
> 
> 
>  Originally Posted by nostromo
> ...


The "market economy" eh. When the majority of the QEXXX has been purchased by the "insiders" it's not functioning. When there are less and less consumers able to eat without a government bailout. While the government debt increases every time the "professionals" make mistakes.

That ain't no market. No fucker "enabled" me to rise from where I came from to where I ended up. It was all my work and decisions, good and bad, that ruled my roller-coaster.

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## Agent_Smith

> consider this world order


Consider it while you can, it is heading for a really unpleasant end soon enough.

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## nostromo

"It was all my work and decisions, good and bad, that ruled my roller-coaster"

There you start to gain my respect. But not quite enough now, at this particular point in time.

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## OhOh

> "It was all my work and decisions, good and bad, that ruled my roller-coaster"
> 
> There you start to gain my respect. But not quite enough now, at this particular point in time.


Care to elucidate?

----------


## nostromo

No. To make it min 5 chars I say "a cat".

----------


## nostromo

> Originally Posted by nostromo
> 
> consider this world order
> 
> 
> Consider it while you can, it is heading for a really unpleasant end soon enough.


I am happy with it. Just stay off anything euro. Easy to look down to hoi polloi euro wankers, yeah I do it all the time. Word regarding euro is "go short".

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## nostromo

I was right. Another week gone. I won. Huge pips. Against EUR crap. I listen to Land of Confusion by Genesis with million monitors, one dedicated to Susan Li on Bloomberg. She is intelligent and beautiful. Where EURUSD support level 1 week is now? Lol 52 weeks... Fundamentals... kicking in? If you do not get this, you are a loser. Sorry. No, just a common person.

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## socal

> I was right. Another week gone. I won. Huge pips. Against EUR crap. I listen to Land of Confusion by Genesis with million monitors, one dedicated to Susan Li on Bloomberg. She is intelligent and beautiful. Where EURUSD support level 1 week is now? Lol 52 weeks... Fundamentals... kicking in? If you do not get this, you are a loser. Sorry. No, just a common person.


She is one of the best lookin on there. Betty Lou too

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## nostromo

I like Betty Liu very much as well. Wont watch the competing crap channel, except to get another opinion. Besides Bloomberg is first when announcements are made, faster than I can make my snitch talk

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## nostromo

deleted double post

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## socal

> I like Betty Liu very much as well. Wont watch the competing crap channel, except to get another opinion. Besides Bloomberg is first when announcements are made, faster than I can make my snitch talk


Anyway good luck with your short term euro trades. All I'm sayin is that the USD has worse problems in the long run. Fundamentally speaking..

----------


## Butterfly

> I listen to Land of Confusion by Genesis with million monitors, one dedicated to Susan Li on Bloomberg.


day trader loser signature  :rofl:

----------


## OhOh



----------


## nostromo

> Originally Posted by nostromo
> 
> 
> I like Betty Liu very much as well. Wont watch the competing crap channel, except to get another opinion. Besides Bloomberg is first when announcements are made, faster than I can make my snitch talk
> 
> 
> Anyway good luck with your short term euro trades. All I'm sayin is that the USD has worse problems in the long run. Fundamentally speaking..


Thanks. And good luck with gold for you. US certainly has very serious problems, but not that kind of deep structural problems EU has. And US is correcting its course, that can not be said of EU - more and more money after bad. In my analysis, anyway. History will tell.

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## nostromo

> Originally Posted by nostromo
> 
> I listen to Land of Confusion by Genesis with million monitors, one dedicated to Susan Li on Bloomberg.
> 
> 
> day trader loser signature


Jealous are we?

----------

