FA...Soon another huge Financial crisis?............

Subject:Soon another huge Financial crisis-Karen Ho
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>
> Mark these words: Sovereign Default
>
> Not many people are exposed to these words (ummm... ok, me at least). But
> this will be the catch phrase for 2010. Forget 'sub-prime'. The new lingo
> is sovereign default. And this 2 big words will bring the entire world down
> to it's knees.
>
> I am a believer that there will be a double dip in the world recession
> simply because I do not believe that the current pump priming of economies
> globally is going to be able to pull us out of the on-going financial
> crisis. Apparently the world economy is on some kind of a rebound now.
> Green shoots sprouting everywhere. Is it? Personally I don't think so.
>
> The Dubai fiasco had started the double dip. US$50 to $60 billion may seem
> like chicken feed compared to what the US government had to deal with
> (read: hundreds of billions). But is the Dubai case isolated? That will be
> the most important question.
>
> What are the unfolding effects? For starters, we are now being told that a
> large portion of the Dubai debts is owned by British banks. The Brits are
> at the end of their wits and this will not go down well with their already
> very ill economy. And if the Brits get kicked, the Frenchies will get their
> knickers twisted. And the Germans then hammered. You get what I mean.
>
> And amidst all this, a new form of disaster has emerged. Sovereign debt.
> The Greeks are, pardon my language; in deep shit. Sort of knee high. So
> that's quite a lot of shit. Their government is unable to repay their
> bonds. Sovereign bonds are government bonds which are issued and
> denominated in foreign currency. So upon maturity, the issuing government
> will have to repay the bond holders in the denominated foreign currency. If
> the said government is unable to purchase the said foreign currency for
> repayment of debt, they are screwed.
>
> And this is what we are facing now. We in Malaysia are not getting a lot of
> coverage on this, yet. Just like the beginning of the sub-prime crisis in
> the States. We are after all frogs living under coconut shells.
>
> Your next question will be: Greece ? So what? Not that big economy aren't
> they? And it is such questions which show the naivety of Malaysians. It is
> only in Malaysia where we 'live on our very own island'. Everyone else in
> the world live dependently upon one another.
>
> The Greeks' default will pull with them their business partners and the
> European Union. Portugal is already on the radar right now and all is not
> well with Christiano-Ronaldo-land. Their credit default risk has just
> reached the ceiling. Not very good signs if you ask me. So, who else are
> going down? One by one, other related nations will get pulled down together
> - and drown.
>
> What is causing this mayhem? Budget deficit. Government pump priming their
> nation out of the credit crisis started by Wall Street. A budget deficit
> means that the nation budgeted expenditure exceeds its income. In our lay
> man term, spending in excess of your means. When we need to spend more than
> our paycheck, we have the credit card(s). For governments, they issue
> bonds. Get the dough now, pay in the future. The Greeks and Portuguese are
> in their 'future' now, and they don't have money to pay. So, that's the
> basics of it - at least from my understanding.
>
> So, if this default disease proves more lethal than AH1N1, guess where the
> virus is going to spread to? Everywhere. Including the Americans who are
> borrowing money from their descendants of 2098. Will this spark another
> round of major credit crisis when the 1st of 2 years ago is still not
> solved yet. The likely answer is a yes. And this time there will be no more
> trillion dollars printed to rescue the Americans. Not that their money
> printing machine is broken, they simply do not have the means to do it
> anymore. So, come the double dip, the Americans will perish. Millions of
> Americans will be living on streets or huddling up under flyovers.
>
> And the same shit is going to hit Malaysia this time. There is not going to
> be any money for Najib to spend his way out this time around. PNB can't
> even sell a quarter of its recent RM10 billion bond. The country is already
> as dry as a salted fish.
>
> And rumors have it that Singapore is high on the potential sovereign
> default list. Their budget deficit is also crazy ass high. This is very
> worrying. Every time Singapore sneezes, we shit in our pants. We do trade
> with them, like, a lot. Really really a lot. Back in the Asian Financial
> Crisis of 1997, Thailand brought the entire South East Asia down with it.
> And we aren't even that economically active with them as compared to
> Singapore . And to make matters worse, Singapore is a mini US .. Only
> geographically distanced. If the Americans die, the Singaporeans die. If
> the Singaporeans die, we die!
>
> So folks, pray that the world does not end on 10 December 2012. Pray Nibiru
> comes quicker, much quicker. At least we don't have to see Najib and gang
> make life a living hell for us ordinary Malaysians in the coming very
> desperate times. Plus we know they are not smart enough to prepare Malaysia
> for rainy days.
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