Tuesday, May 4, 2010

 The following is the view from another trader that all of the central banks are trying to prop up economies that are bankrupt in order to avoid the inevitable. The inevitable for many countries will be failure and financial collapse as they can no longer sustain the debt that they have amassed. The same or very similar debt is being created here in the US and if this isn't addressed and changed,  many of us will begin to see life as a 2nd or 3rd world country.

France in this article shows how much it stands to lose if the PIIGS fail. If they fail so does France.

Yet Another Bailout Rally

Yes sir, today was the 6th, or 7th, or 10th...or 20th mega-rally based on a Greek bailout. If we're lucky, the powers that be (central bankers) will keep the Greek economy on life support - just barely keeping it from being a corpse. This way, whenever Benron Bernanke or Tax-Cheatin-Timmy want to send a little sugar to their Fraud Street cronies they can pull another miracle: a never ending just-in-time bailout.
Once again, failure was not an option for a central banker - moral hazard be damned. Will this bailout hold? It probably will, but I won't completely believe it until the Germans approve the cash layout, and Greece receives it from the ECB. Hopefully Greece will get those Euros quickly; after all, there are 50-year old bakers and hair stylists that want to retire now or they will riot in the streets.
It's no surprise that France really wants to get this behind them because the French are on the hook for a lot of money if the PIIGS fail. According to the following numbers are accurate.
If Portugal defaults, France loses $45,000,000,000.00
If Ireland defaults, France loses $60,000,000,000.00
If Greece defaults, France loses $75,000,000,000.00
If Spain defaults, France loses $220,000,000,000.00
If Italy defaults, France loses $511,000,000,000.00 (nearly 20% of the French GDP!)
The PIIGS owe France nearly $1 trillion dollars.
I suppose things will really get interesting if (when) Spain and/or Italy get into worse shape.
Trade well and follow the trend, not the so-called “experts.”