Saturday, June 11, 2011

Has the unwind begun?

"The 2008 financial crisis was a financial earthquake whose depth and breadth we still do not understand nor appreciate."

Faithful readers will recognize this oft-repeated statement which I never tire of re-stating.

In Europe the continued insolvency of the PIIGS (Portugal, Iceland, Ireland, Greece and Spain) continues.  And as wrangling continues about how Greek bailout #2 is to proceed, the European Central Bank and Germany are at polar opposites on what to do.

And as the rancor over what to do heats up, Eurogroup President Jean-Claude Juncker has made some interesting comments.

The Eurogroup is a meeting of the finance ministers of the eurozone.  And Juncker has just attempted to deflect and redirect attention from the internal problems of Greece within Europe to the financial troubles of the United States.


Well Juncker has continued the theme we highlighted yesterday with China's credit rating agency Danong and said that which no one wants to say publicly:
  • "Not withstanding the euro zone's problems, the deficit and overall debt in the U.S. and Japanese economy are substantially higher than in Europe. The debt level of the USA is disastrous. The real problem is that no one can explain well why the euro zone is in the epicenter of a global financial challenge at a moment, at which the fundamental indicators of the euro zone are substantially better than those of the U.S. or Japanese economy."
As this blog has stated repeatedly... the defining issue of the next decade is going to be all about sovereign debt.

Not just in Europe, but all over the world... particularly in the United States.

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