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Email this2:00 pm
so what does everyone here think about the debt crisis that's currently unfolding in europe? i could be wrong (and i hope that i am), but i get the feeling that greece is only the beginning. the imf and european union agreed to lend greece billions of dollars to keep the country solvent, but now theres talk that money might not be enough, and now portugal, spain, and even ireland may need major bailouts of their loan obligations pretty soon. all this bailout money has to come from somewhere, and the rich eu nations (uk, germany) arent going to bail the entire union out. they'll walk away from the union before that happens. we could be at the beginning of a very long and painful reckoning where decades of inter-country borrowing (essentially a global ponzi-scheme) has finally caught up with us and is now starting to unwind. this could make the whole lehman brothers bear stearns "financial crisis" look like childs play.
i just sold off all my european stocks and switched my european mutual funds to north american mutual funds. i had to fight the urge to just sell out of everything and sit on cash, but i'm not that pessimistic yet as here in north america we still seem to be recovering, but the recovery here could be short-lived if this thing in europe spirals out of control and we could be looking at a the double-dip recession peole thought we had avoided, or worse an all-out global depression. this is bad folks.
4:43 pm
your comment about european debt crisis=inter country borrowing=global ponzi scheme sounds :frown: i hope its not gonna happen. oh well, this global crap started from united states of america. congratulation g.w.bush!
5:28 pm
Ponzi scheme indeed. Governments may perpetuate the scheme, but its the bond raters like Moody's and S&P that facilitate the scheme by giving near-bankrupt countries like the USA top-notch credit ratings. The global financial system is going to collapse under its own weight within this decade. Greece is just the tip of the iceburg.
10:56 pm
glad i sold out yesterday. man oh man. high interest savings accounts paying 2% aren't looking too bad right now.
1:49 pm
Was reading in the paper this morning that this crisis in Greece could potentially affect the banking system in other European countries. First thing that comes to mind for us savers is ING. Should we be worried?
2:54 pm
if it's just cash you're putting into ING, you have no worries as long as the account is CDIC-insured. basically, that means cash savings accounts or GICs up to 5 years, canadian dollars only, up to $100K per institution (if you have a spouse, you're eligible for more insurance if you structure your accounts correctly). if you have more than $100K cash, just put it into a different institution's CDIC-insured account.
the only way anyone can lose money with a CDIC-insured account (other than having over $100K in it) is if the CDIC reneges on it's obligation to reimburse depositors in the event of an insured institution failing. if that happened, consumer confidence in the banking system would plummet and the financial system would collapse, and the government would never allow that to happen. your money is safe in a CDIC-insured account.
8:57 pm
The only thing that throws me off about the CDIC is it obviously doesn't have enough money in its safe to compensate for the liabilities of even the smaller banks in this country.
In the event of a bank failure, the government would have to pitch in otherwise the CDIC would fail itself. Although you seem very confident that it would.
9:43 pm
think about what would happen if even one bank failed, the CDIC didn't compensate account holders, and the government didn't help. people would see this, and knowing the CDIC didn't fulfil its obligations and the government stood idly by, would rapidly conclude that their money would be safer under their mattresses than in their banks. bank runs would ensue, and i'm sure you know that banks wouldn't actually have the cash on hand to pay out all of the withdrawal requests. peopel would be locked out of their banks, and the result would be panic, social unrest, and violence. we would quickly decend into anarchy.
which is why the government would be forced to step in and compensate account holders. its the government that provides the real security; the existence of the CDIC is incidental.
4:27 pm
a trillion dollars' worth of loans have been made available to the european union by the world's central banks. global markets are way up today, but are still well-off the levels of just a few weeks ago. thing is, we're still talking about LOANS here. the central banks are LOANING the eu this money. who says the eu can/will pay back the loans? the only way out of this mess is if the world banks agree to forgive all or a portion of these loans when the eu is close to defaulting on them. that in effect will transfer a trillion dollars worth of wealth from the rich countries advancing the loans to the eurpoean union. guess who will be making up the shortfall? you guessed it... joe and jane taxpayer in north america. this is madness.
6:15 pm
Generalizing and waxing a bit on what you wrote, guest...
It almost seems like the standard operating procedure these days is that governments will bail out the economy instead of letting anything "too big" fail. In other words, the global markets effectively have an insurance policy, paid for by the people. I can just see large financial corporations realizing this trend and having a long, good laugh about it. Another round of bonuses to whoever helped us get away with this scam!
If we're all paying to prop up economies that can gain but aren't allowed to fail, then the winners are those who are invested. I think that's still most people? (with RRSPs etc), but moreover it's the rich. As usual, it's the lower economic half that loses. The poor, paying to keep the rich rich... Standard Operating Procedure. Just new and creative ways to justify and get away with it.
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