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Greece is just the 'tip of the iceberg', Nouriel Roubini warns

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May 01, 2010 – Comments (17)

I completely agree

ECB may have to turn to 'nuclear option' to prevent Southern European debt collapse - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=383418
Chris Martenson: The Shell Game Continues… - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=373325
A 'Bloodbath' in US bonds? - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=371461
Moving Some Macroeconomic Deck Chairs: The Dollar, Dollar Swaps, Bonds and LIBOR - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=369098
Treasury pays most since August to sell 3-yr. debt - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=368822
Debt Saturation - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=357428
Pimco’s El-Erian Says Public Finance Shock May Deepen - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=352370
Something Very Strange Is Happening With Treasuries - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=346594

And Roubini is focused on the rest of Europe, and rightly so. The crisis will occur in the several other European nations next. But the crisis will culminate here. This was ground zero for most of the shennanigans and irresponsible economic and monetary policy and the soverign debt crisis will come back here.

In the short term the US Dollar (and ironically even US treasuries) will be the "beneficiaries", .... wait not sarcastic enough .... """"""""""""""beneficiaries"""""""""""""" of a European soverign debt crisis. But that just makes the US soverign debt crisis an even more tragic Epic Fail as people look for safety in the US before its own debt collapse.

Before this crisis is done, there are very few fiat currencies that will offer protection. And absolutely none of them are the US Dollar. 

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Greece is just the "tip of the iceberg” of a sovereign debt crisis that has the potential to derail a global recovery, Nouriel Roubini has warned.
Published: 6:00AM BST 29 Apr 2010

http://www.telegraph.co.uk/finance/economics/7648775/Greece-is-just-the-tip-of-the-iceberg-Nouriel-Roubini-warns.html

[excerpt]

Nouriel Roubini, professor of economics and international business at New York University, testifies before the Joint Economic Committee October 30, 2008 on Capitol Hill in Washington, DC. Nouriel Roubini was one of the few to anticipate the scale of the crisis

Professor Roubini, the New York-based academic who was one of the few to anticipate the scale of the financial crisis, told a panel in California that the buildup of debt is likely to lead to countries defaulting or resorting to inflation to ease the burden on their populations.

“While today markets are worried about Greece, Greece is just the tip of the iceberg,” Roubini told the Milken Institute Global Conference in Beverly Hills, California. "The thing I worry about is the buildup of sovereign debt.”

 
Although Greece's misreporting of the scale of its own debt has helped shatter investors' faith, the southern European country is not alone in its struggle. The depth of the property bust in both Spain and Portugal has prompted the ratings agency Standard & Poor's to downgrade the creditworthiness of both.

17 Comments – Post Your Own

#1) On May 01, 2010 at 12:43 PM, portefeuille (99.56) wrote:

Italy's sale of up to €8bn euros of debt today will, according to analysts, provide a good gauge of whether the concerns about Greece and Portugal are spreading to other members of the Eurozone.

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Italy Sells Close to Maximum Amount at Bond Auction

April 29 (Bloomberg) -- Italy raised close to the maximum amount that it planned from bond sales today in the first auction by a peripheral euro-region member since Standard & Poor’s downgrades of Greece, Portugal and Spain this week.

The government sold 3 billion euros ($4 billion) of 2012 notes, 1.16 billion euros of 2017 floating-rate notes and 3.5 billion euros of 2020 bonds, the Treasury said today in a statement. Italy raised about 7.7 billion euros, having targeted as much as 8 billion euros from the sales.

...

The 2012 bond was sold at a yield of 2.07 percent, compared with an average of 1.98 percent in the previous five auctions. The 2017 floating-rate note yielded 1.63 percent, compared with the five-sale average of 1.1 percent, and the 2020 debt’s yield was 4.09 percent, compared with the average of 4 percent.

...

“Today’s auction result dismisses investors’ fears over contagion effects on Italy,” Chiara Cremonesi, a fixed-income strategist at UniCredit SpA in London, wrote today in an e- mailed note. “It also confirms our view that the better economic, fiscal and rating outlook for Italy puts it in a favorable positioning among the periphery group. We expect Italy to continue benefiting from this favorable positioning over the next months.”

Ten-year Italian bonds trimmed losses after the auction, with yields little changed at 4.11 percent, compared with 4.19 percent earlier. Two-year notes extended gains, sending the yield 37 basis points lower to 1.89 percent.

Italian debt, rated A+ by S&P, the fifth-highest ranking, has outperformed the bonds of Portugal, Ireland, Greece and Spain this year.

...

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#2) On May 01, 2010 at 12:59 PM, 100ozRound (29.70) wrote:

I have rec'd every single one of your posts, but I cannot rec this one...

 

 

 

Just kidding!  rec'd!

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#3) On May 01, 2010 at 1:02 PM, binve (< 20) wrote:

100ozRound ,

>>I have rec'd every single one of your posts, but I cannot rec this one...  Just kidding!  rec'd!

LOL! Thank you my fellow Metalhead!! :)..

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#4) On May 01, 2010 at 1:22 PM, 100ozRound (29.70) wrote:

You got it man!  I have much respect for the views you present here!

Keep em coming!

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#5) On May 01, 2010 at 1:23 PM, binve (< 20) wrote:

Will do my man! Thanks!

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#6) On May 01, 2010 at 1:26 PM, uclayoda87 (29.51) wrote:

I was not quite sure if the term metalhead referred to tin foil or gold since both require a certain amount of skepticism to wear these hats.  As an author of what many may call Conspiracy Theories, I don't mind the tin foil hat as the alchemy in the markets will eventually turn it to gold.

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#7) On May 01, 2010 at 1:30 PM, binve (< 20) wrote:

uclayoda87,

LOL! Right on man, did you see my new logo? My tin foil hat zone has been modified :)

Thanks man!..

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#8) On May 01, 2010 at 1:36 PM, 100ozRound (29.70) wrote:

uclayoda87

binve

Big LOLZ!!

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#9) On May 01, 2010 at 1:38 PM, binve (< 20) wrote:

100ozRound,

LOL! Thanks man :) I knew you would definitely appreciate that one :).

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#10) On May 01, 2010 at 1:39 PM, binve (< 20) wrote:

I first used it in this post: http://marketthoughtsandanalysis.blogspot.com/2010/04/more-thoughts-on-golds-massive-bull.html.

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#11) On May 01, 2010 at 1:48 PM, uclayoda87 (29.51) wrote:

Excellent!

The belief that the money center pundits who were putting sell recommendations on all the small miners in late Jan/Feb 2010 was a conspiracy appears to have panned out, so to speak.  I turned a lot of depreciating denim (dollars) into gold, literally supporting the alchemy theory of the markets.

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#12) On May 01, 2010 at 1:59 PM, TMFLomax (29.19) wrote:

binve

Great post! And "gold-foil hat," that's funny!

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#13) On May 01, 2010 at 2:05 PM, binve (< 20) wrote:

uclayoda87 ,

Thanks man!

>> I turned a lot of depreciating denim (dollars) into gold, literally supporting the alchemy theory of the markets.

LOL! That is possibly the best line I have read in a few months :) Thanks man!!

TMFLomax ,

Thanks Lomax!

And LOL! Yep, my original logo for my "tin-foil hat" posts was

But then I "transmuted" it to

:)  Thanks!..

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#14) On May 01, 2010 at 5:36 PM, Tastylunch (29.54) wrote:

Binve

totally OT:

did you see this?

could you imagine the war it would have started if it was posted on CAPS instead of a Fool article?

http://www.fool.com/investing/value/2010/04/30/technical-analysis-is-stupid.aspx?source=ihpsitota0000001&lidx=1

now if only the author had thrown some snide comments about climate change and libertarianism and we'd have the makings of the ultimate CAPS throwdown. :)

:)

p.s. I liked the tinhoil hat thing, Although I liked the Original better since it was Silver looking. :)

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#15) On May 01, 2010 at 5:54 PM, binve (< 20) wrote:

Tastylunch,

Hey man!

LOL! I would have probably ignored it. Posts like that are only designed to start an argument, not to communicate/elucidate/illuminate. People who write posts like that are largely tools and deserve whatever flak they get and deserve to lose however much (and probably more) respect that they do.

>>p.s. I liked the tinhoil hat thing, Although I liked the Original better since it was Silver looking. :)

Thanks man :) Yeah, the original is great, but that was something that I totally ripped off (one of my friends found it for me), but the gold-foil additon was my little bit of photoshopping :)

Thanks man!..

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#16) On May 07, 2010 at 2:18 AM, awallejr (82.72) wrote:

Kind of ironic that around this time last year the US dollar was mocked and there was talk on how the Euro might replace it as the world currency.  I suspect it is no coincidence that  as the dollar now rises the market corrects down.  However, in the end it is all relative, and how the dollar fairs against Asian currencies may be more important since we export there more.

While it hurts me, grats Binve on getting above 20 heheh.

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#17) On May 07, 2010 at 9:04 AM, binve (< 20) wrote:

>>Kind of ironic that around this time last year the US dollar was mocked and there was talk on how the Euro might replace it as the world currency. 

I still mock it. I was calling for a bounce in the dollar that would last several months around the time that it did bounce. And as long as the EU crisis is acute, the dollar will be a "safe haven". But this does not make the Dollar a stronger fundamental currency. And even in fiat-currency land, there will be much stronger (less profligate) currencies than the US Dollar when this crisis has run its course. The most likely outcome is not inflation or deflation. It's both: stagflation. I have made the case for that many times. Here is a good summary: Debt Saturation - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=357428.

>>While it hurts me, grats Binve on getting above 20 heheh.

Thanks

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