Received in an Email
From one of my investment newsletters: a good, concise explanation of the European problems (besides a dearth of soap and shampoo):
There are three dynamics and a tension:
Ӣ Dynamic I The inevitable default by Greece on its sovereign debt raises the likelihood that one or more of the other heavily indebted countries will default as well. This is eroding the value of the debt of all five (Greece, Ireland, Portugal, Spain, Italy), and creating the perception that weak European banks holding the bulk of the sovereign debt are getting closer and closer to insolvency.
Ӣ Dynamic II The longer this has gone on the greater the prospects for renewed recession in Europe which feeds back making sovereign default all that much more likely.
Ӣ Dynamic III The greater the likelihood of insolvency in the European banking system, the more short-term dollar funding from US financial institutions (big banks and money market funds) is drying up. This only increases the potential for losses on Europe-denominated CDs, commercial paper, repos, and credit derivatives (CDS) written either here or in Europe, jeopardizing US lenders and risking a run on the banking system here in the US.
Ӣ Tension The key tension is between the citizens (voters) of the separate countries and the political elites of Europe including their national politicians. Voters in high productivity core countries do not want to give up their sovereignty to a fiscal union of Europe, and a majority of the public are fed up with bailouts to the less productive spendthrift countries of the southern periphery.
Step-Big Brother
Well, I don't know whether it's true or not, but TDE might soon be under Fed surveillance: "The Federal Reserve Plans To Identify 'Key Bloggers' And Monitor Billions Of Conversations About The Fed On Facebook, Twitter, Forums And Blogs." Link.
In all seriousness, I gotta believe Zero Hedge is on the list.
