China Economy Concern

[parsley]

"Soverigns create currency... so don't expect that
to run out. "

Indeed, Tom. Print. Print. Print. But would your
Princess perhaps be a little annoyed if her fifty
dollar bill buys one loaf of bread? Pars

[TOM4CWB]

Parsley,

As long as the loaf of bread is backed by some land to grow the wheat... it is a zero sum issue.

I am NOT making the rules... nor is PM Harper.

I am a simple observer... just commenting on what I saw!

[bduke]

Parsley... Your concern regarding the diminishing value of money is the greatest threat to
reducing a so called "middle class".

Governments are aware of this, many cultures and investors realize it also.

This is why real estate, precious metals, commodities, art works etc. are important
investments.

But the so called "middle class" tend to have homes, vehicles, toys, and videos of their trips
as assets.

Democracy as we know it tends to askew priorities as well, hence the litany of campaign
promises.... and subsequent Country indebtedness.

Still economist look at compounding growth rates and debt to GDP ratios etc., and the funds
tend to invest accordingly.

The theory being that an economy compounding at 2 to 3 % greater than its debt growth will
eventually be attractive.

Time will tell.

Cheers... Bill

[bduke]

Sorry folks... I must be stretching the reply box a little too much, and
the results are strange lies..... Bill

[bduke]

LOL.. I think many will agree with "lies" instead of "lines" also!

Bill

[parsley]

Yes, bduke, I agree Germany increases both it's
exports and influence. But at what risk?

Some of the countries have protested profusely
about yielding their sovereignty through terms of
debt repayment. (A bit similar to our provincial
transfer payments). Others have openly flirted
with EU withdrawal. (gimme the money or we
secede. lol) Is there a point at which they throw in
the towel, refuse to pay their debts, withdraw from
the EU and tell Germany to stick it.

Rather like imagining a sovereign co-operative
class-action bankruptcy, isn' t it, cpallett! With the
UN intervening for the poor. Lol

If you look at ever increasing corporates'
benchmark of 'sense of fiscal responsibility', a
common precedent being set is to declare
bankruptcy and walk. Will nations continue that
trend, bduke? Just musing. lol. Pars

[hedgehog]

germany will not exit the euro, as it benefits from having a weak currency for exports.
but,,, greece , portugal, spain ,italy etc will exit the euro, declare bankruptcy and return to drachma, peseta,etc.
that will leave germany and france high and dry with an overvalued euro, unable to export, so will go into recession. their banks will also collapse from the PIGS default.
UK banks will also fail over it.

[bduke]

Parsley... the risk to Germany is minimal. The risk to Merkel's government is greater.

The countries protesting profusely about loss of their sovereignty are, IMHO
"technically" bankrupt now.

The cost of refinancing their enormous debt is rising quickly.

The credit default swaps used to insure the bonds are practically impossible to buy.

Without the Eurozone "co-operative" they could not finance with external funding.

They have little internal funding and the IMF has given up.

Follow the money. They doth protest too much!

IMHO they are playing politics to keep their jobs.

They may leave the Eurozone... i.e. Greece and Portugal... but it isn't Germany
or German banks that can't afford their share.

It is the French banks... hence Sarkozy's insistence upon saving the status quo.

I think the Eurozone and the Euro currency would be much stronger if they force a
couple countries to exit.

France would become a weaker partner and Germany a stronger force.

Whether Nations go "bankrupt" or not is in the interpretation.

Should they leave the Eurozone they will need their own currency... which will likely
be hyper-inflated.

Your concern of extremely high interest rates will be a reality in those countries.

Not sure a common precedent is being set by declaring bankruptcy, but an
increasingly dynamic financial environment combined with far greater values
at risk is definitely in play.

Basel III is working on this problem, and fortunately Canadian banks are meeting
these new capital requirements.

Whether nations will trend towards defalcation depends upon their desperation.

Bonds are the greatest provider of debt, and bond purchasers are very mobile.

Interest rates reflecting risk in these countries will become prohibitive, and they will
have to endure much economic and societal pain with out this financing.

Pay me now or pay more dearly later.

I could be wrong.

Cheers... Bill

[checking]

Actually, Tom, it takes a little over six years with an economy growing at 12% to double. It takes a little over 10 years with an economy growing at 7% to double.

If you are creating the numbers guy with any of your figures, it is no wonder he achieves the rate of return he frequently posts.

[checking]

Sorry, "crediting".

[parsley]

I find most people assume Germany is so fiscally
sound, that any country can backup their credit
sheets to their annual budget. Hmmmm.

http://www.economist.com/content/global_debt_cl
ock

Click on Germany. Angela has been used the
national credit card a little too often.IMHO Pars

[parsley]

Hedgehog, if you were Merkel and saw a huge
tide of countries ready to dump the euro, what
would you do?