Monday, May 10, 2010

Schiff: Is Sovereign Debt Crisis Contained to Subprime?

Good piece from Peter Schiff. Excerpt:
Once again the vast majority fails to see a crisis in the making, even as it stares at them from close range. Just as market observers in 2007 told us that the credit crisis would be confined to the subprime mortgage market, current analysts tell us that sovereign debt problems are confined to Greece, Spain, Portugal, and perhaps Italy. They were wrong then, and I believe that they're wrong now.

4 comments:

Perplexio said...

The way Sarkozy and Merkel weaseled the UK into helping to bail out the Euro, putting that burden on the British taxpayers has me worried. They took advantage of the current election uncertainty to sneak it through.

It feels like a house of cards that's teetering and if the Euro goes down, it may very well pull the British pound down with it and along with that the British Commonwealth nations will fall shortly thereafter. And then who would the Brits turn to for a bail-out? The US? China? and if they turn to the US, they're still indirectly getting the money from China any way... so basically the entire world's economy would be propped up by the Chinese... Why aren't more people worried about this?

Doug Reich said...

Great question! Je ne se pa.

Jim said...

This situation reminds me that during the early Bush Administration the IMF was pushing a sovereign bankruptcy process that would give priority for repaying the IMF and World Bank while also freezing payment of private debts and private transfer of funds out of the bankrupt country.

I am concerned that the Obama Administration will be more friendly to this proposal.

Doug Reich said...

Jim,

All I can say is that if it is the worst possible idea, then Obama will support it.