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HomeDebt/GDP: Ring of Fire
Posted by Larry Doyle on February 15th, 2010 11:45 AM |
All eyes within the markets and on the global financial landscape are currently fixated on Greece. Will it default? Will the EU bail out this island nation? If so, at what cost and on what terms? What is at the core of Greece’s fiscal nightmare? Excessive debt. So, what else is new?
Do not think that the excessive debt within Greece is the only nation on our global financial landscape facing this problem. What other nations do we need to keep on our radar? Bloomberg addresses this question in writing, Carney Says Investors Signal Stimulus ‘Limits’ as Deficits Grow:
Alongside Greece, Pacific Investment Management Co. identifies the U.S., Italy, France, Japan and the U.K. as economies sitting in a “ring of fire.” Each has debt above 90 percent of gross domestic product or the potential for it to rise there soon, slowing economic growth, Pimco said.
Deutsche Bank AG this month warned that the increased cost of insuring against debt defaults by peripheral European nations may be a “dress rehearsal” for the U.S. and U.K. Credit- default swaps on Greece’s debt rose to a record this month.
Living beyond one’s means is no recipe for future economic prosperity. While politicians may talk about the need for fiscal discipline, talk is cheap. Pork piled upon pork wrapped in more pork has stolen our children’s future. Washington may not appreciate the ring of fire, but Main Street is engulfed in it.
As we navigate our global economic landscape, we now need to make sure we pack fire retardant clothing in addition to other protective materials.
What a world.
LD
Nouriel Roubini Agrees with Jeff Gundlach
Posted by Larry Doyle on October 27th, 2009 11:18 AM |
Dr. Doom agrees with Wall Street’s top fixed income manger? Who are these individuals and on what do they agree?
Both these individuals are Economic All-Stars here at Sense on Cents (see left sidebar). Nouriel Roubini (aka Dr. Doom) and Jeff Gundlach (aka Wall Street’s top fixed income manger) possess a contrarian view on the future of the U.S. dollar. While most analysts, economists, traders, investors, and speculators call for ongoing weakness in the greenback, Roubini and Gundlach believe the dollar will rebound and risk-based assets will retreat.
I addressed Gundlach’s views on this market driving principle on September 10th when I wrote “Jeff Gundlach of TCW Calling for Deflation and Dollar Rally”: (more…)
“My Mama Told Me . . .
Posted by Larry Doyle on February 28th, 2009 2:20 PM |
. . . You Better Shop Around.”
What does that wonderful song from Smokey Robinson and the Miracles have to do with our economy? I’ll tie that in a bit later.
More and more people are inquiring of me how and why banks are making credit tighter both in terms of availability and in terms of rates charged.
This tightening of credit is due to the “crowding out effect” from dramatically increased government borrowing along with the actuality and likelihood of increased defaults across all consumer and corporate loans. In the face of those defaults, banks will set aside more capital in reserve to cushion those losses.
What is a consumer to do? There are two tactics:
1. Everything’s Negotiable which I highlighted in a post dated December 23, 2008. Talk to your bankers and/or credit providers. Put your banks and other credit providers in competition. Where does one start and how does one easily comparison shop? I’m glad you asked because that leads me to point #2.
2. Shop around (thank you, Smokey)! Sense on Cents provides links via our Primers (in the right sidebar) for a look across the market to virtually every consumer credit need. Remember I have NO professional relationship with any of these entities. From borrowing needs to investing, with many stops in between, I hope these primers help you navigate the economic landscape going forward!!
And now, a trip down memory lane . . .
