Bad for Italy - Good for Gold?

SereneDude

Article on Italian debt crisis

jmski52

The article brings up an important point. When a country's debt gets to the point of being 19% of total GDP, anyone who lends money to them is taking a gamble that they'll ever get it back, even at 7%.

Paul Volker had to jack up rates to 20% for a time in 1980 but that wasn't in response to a huge debt load - it was to knock out inflationary expectations.

A huge debt load will require high rates for a much longer time to get out from under, because the numbers don't care about expectations of any sort. They are just numbers and don't really care what anyone thinks.

SereneDude

Just like the weaker countries on the Euro, the US debt load is unsustainable.
It's a house of cards waiting for only the slightest breeze to knock it over.
My own feeling is that the Italians will default, a situation that will cause a world-wide economic calamity.
Call me paranoid but I just purchased a new handgun and a short barrel 12 gauge shotgun and plenty of ammunition.
Things are gonna get a whole lot worse before they get better.

ricko

While most will not admit it, SereneDude has a point. We do not like to consider our very comfortable, civilized society descending into chaos, however, that is a growing threat on the horizon. True, many things may occur to avert such a tragedy, but it is not looking good at this time. Cheers, RickO

MsMorrisine

now, I don't think our debt load is sustainable either, nd
have recently complained about the market forces mysteriously taking Italy's debt up to 7% where it is "unsustainable."

perhaps it will get ugly?


But I wouldn't think it will get to total chaos.

Greece has shown us all the way... "voluntary" debt writedowns.


sure.... we just all take turns writing down our sovereign debt.


Looks like it is Italy's turn. ??


What has to be hoped for is that it is orderly enough that the banking system isn't taken out by the "put it in the mattress" people (not that I'm against them... no way FDIC can insure ALL the banks, esp. TBTF who will be hit hardest).



Yeah... maybe it will be more orderly ... hopefully....

especially with the advice of:
step 1) don't stop by the gun store.... stop by your TBTF bank and move your account to the small local bank or credit union.

If done slowly enough, the TBTF banks might not crush as many people as feared.


I'm already in the process with step 1. Next month we should be solely on a non-TBTF bank.

pf70collector

Slums in Europe and here in the U.S. could be the norm again. Socialism has made them invisible but they will reappear.