Monday, December 26, 2011

Kyle Bass: Currency Crisis Coming in 3 to 5 Years

Kyle Bass 1 hour interview with AmeriCatalyst 2011 oin November 2011 on his view on the world today. That's very informative, even though it's rather depressing.

Interesting points including:
  • Greece is bankrupt, a full mark down is required
  • Western Economies will fail: Europe first, then Japan, then the USA.
  • Japan has serious debt problems, most people will lose a third of their savings.
  • Investors still don't want to accept reality
  • PE are low, because E is too high and it will come down.
  • We either take pain now, or we take apocalyptic pain later.
  • Central banks will probably just print money and destroy the currencies.
  • The US (government) has the same people who brought up in this mess, to fix the mess. It makes the US a laughing stock.
Click on the link to view. (no embed available)

Friday, December 2, 2011

How to Save the Euro

Axel Merk, Portfolio Manager at Merk Funds has published an update to Merk Insights newsletter entitled "Guide to Save the Euro".

The articles is composed of 3 main parts:
  • Fiscal sustainability
    Fiscal sustainability is about revenue and expenses, but also about perception.
  • Method 1: Surrendering sovereign control over budgeting process
    When a government asks the IMF to help, tough austerity measures are imposed, a de facto handover of sovereign control to an outside agency
  • Method 2: Embracing bond market pressures
    It requires dealing with the reality that low interest rates must be earned. It also means that governments have to embrace the reality that they may have to renegotiate some of their debt.

The conclusion is that we should "expect a muddled combination of increased IMF support, increased fiscal convergence, increased focus on strengthening bank balance sheets, increased involvement to keep banks afloat (the ECB is already debating providing multi-year unlimited credit lines), and increased cost of borrowing for Germany. However, this is likely to remain a drawn out process and the tail risks that European policy makers mess this up cannot be ignored, either. We come back to our initial argument: a lot depends on perception. Perception is a function of leadership and a credible path that is likely to lead to results. The prime minister-elect of Spain wasted his first opportunity to make a good impression. The German psyche has been badly wounded by the botched auction. In typical European fashion, another summit has been announced to discuss closer fiscal integration. In case anyone wonders why this process is so painful, it is because the right decisions are politically so incredibly difficult to make."

The full "guide" can be read at

Peter Schiff: The Real Currency Crisis is Coming to the US

Interview with Peter Schiff on Fox Business News (1st of December 2011) where he explains the Eurozone has severe problems but it's nothing in comparison to the United States and that the real currency crisis is coming to the US to the dismay of Fox Business host.