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Comments
Gail Kraker
Aug. 13, 2011, 1:02 p.m.
Thank you for this article, Mr. Mauldin.
I wish someone would comment on what they think will happen to prices of
gold and silver if we slip into a recession again. I know they went down last time,
but will it be different now that printing will be going on on the Eurozone and
all else that is going on?
Bart Hall
Aug. 13, 2011, 1:01 p.m.
It may be that the real trigger for a European financial crisis won’t come from the PIIGS at all; it’s the unexpected that gets you. My in-laws are Hungarian, and for years the Hungarians, Czechs, Slovaks, and others thought they were oh-so-clever to arbitrage their residential mortgages by borrowing in Euros or Swiss Francs.
It has become ever-more-challenging to make the payments because incomes in Forint, Koruna, or whatever are largely stagnant whilst their exchange rates against the EUR and CHF have deteriorated badly. Anecdotal reports from family members suggest that more and more people are off-loading assets in an increasingly-futile attempt to keep making their monthly mortgage payments.
Many mortgages are quite late and sum are now in official default. Most banks in Austria and Switzerland do not yet realise that a large majority of their residential paper from central Europe is absolute garbage. Several of those banks will probably be unable to take that hit when it comes. Bang!
Dave Scotese
Aug. 13, 2011, 12:59 p.m.
“And that means figuring out how to get money to new businesses, because that is where net new jobs come from.”
You know John, if well-respected people like you stopped promoting the fatal foolishness that new businesses cannot form without borrowing, that, by itself, would help. There are plenty of “rich” people that would start new businesses using their savings if existing legal requirements weren’t so burdensome. I’m one of them.
Peter Schiff points out in “How an Economy Grows and Why it Crashes” that China is full of “caveat emptor” situations. Existing US legislation is largely designed to eliminate that feature of a robust economy, and the cost of eliminating it is astounding. Tom DiLorenzo, in “Hamilton’s Curse” points out that a number of economic historians consider the so-called “Independent Treasury System” to be one of the most stable periods of U.S. banking - “independent” because banks were chartered by some states (and simply “allowed” in others) rather than being ruled by the federal government. All the devious practices of evil businesses tend to educate and strengthen most consumers, and the federal government’s tendency to protect us from them tends to make them stupid and gullible.
Maybe that’s why China is allowing their currency to rise - because their citizens are smart enough to beware of shysters. Let’s have that caveat emptor here. Then we can spend our money (privately, by choice) on investigative journalism and insurance against fraud instead of (publicly, through coercion) on bombing Libya and bailing out Pakistan.
Rodger Malcolm Mitchell
Aug. 13, 2011, 12:58 p.m.
“What did we learn that we did not already know? The US is headed for a financial crisis if they do not get the deficit under control? This is news?”
What does “under control” mean? A lower deficit? But why? Will the U.S. government not be able to service its debt? No. The U.S. is monetarily sovereign, meaning it can service any debt of any size, any time.
Then what is the problem? Inflation? No, since we became Monetarily Sovereign, there has been no relationship between deficits and inflation. See the counter-intuitive evidence at: http://rodgermmitchell.wordpress.com/2010/04/06/more-thoughts-on-inflation/
Those who do not understand Monetary Sovereignty ( http://rodgermmitchell.wordpress.com/2010/08/13/monetarily-sovereign-the-key-to-understanding-economics/ ), the basis for all modern economics, do not understand economics.
Marc Schulman
Aug. 13, 2011, 12:11 p.m.
John,
I wish I could disagree with you, but I can’t. I’m concerned that we are repeating the events of 1931 and 1937—only this time, at the same time. I make my case in three posts at my blog:
http://www.americanfuture.net/?p=565
http://www.americanfuture.net/?p=601
http://www.americanfuture.net/?p=1302
A related post:
http://www.americanfuture.net/?p=924