muses of the moment

May 10, 2010

The ongoing financial crisis

If you haven’t noticed, the Greek sovereign crisis has turned into a major global liquidity stress. The Big Five Banks have major exposure to European debt. It is also clear that the US is trying bailout the European crisis.

It is anyone’s guess if they can do it. But groovygirl compares this Greek crisis to the oil rig mishap, anyone with any sense knew they could not contain this well. If the one shutoff value doesn’t work, there is little you can do when the source is at the bottom of the ocean. Groovygirl thinks the damage is already done in the European crisis, we are just waiting for the oil slick to make landfall. This is another downturn that will be clear to all by the end of 2010. I expect the spin to be in full swing with the elections this fall. This will be very interesting to watch.

Click here and click here for information about what to look for. You certainly will not hear these things on F-TV.

Update: Cheeky Bastard from has a post about the Fed’s currency swap program just reissued. Click here. I agree that this move will impact the S&P short term, but not long-term. The Fed (et al) is running out of options to boost these markets. They print money, add it to the system, and then the next wave of defaulted debt drains it from the system and they face the deflationary pressures again.

Here is the latest European plan to avert disaster. Click here from Bloomberg. $645 billion (actually, it’s up around $1 trillion), this will end well. There is currently extreme stress on banks. Make sure you have your 2-3 bank and cash available plan set-up (definitely in Europe, but wise to have that plan wherever you live. It’s all globally connected now).

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