By: Daryl Montgomery
Once again Greece has avoided a messy default and once again its creditors have had to take a greater loss on their loans and once again standards had to be abandoned to make the deal go through. And once again, we’re not done yet.
Realistically, Greece is actually undergoing a messy default; it’s just doing it in slow motion. When creditors are not fully paid, there is a default. The original default terms ...
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By: Daryl Montgomery
As the situation in Greece deteriorates further, Moody’s announced today that it intended to downgrade 114 European financial institutions and 17 global banks. Hopes that China will buy up EU sovereign debt to help prop up the faltering eurozone may wind up costing the U.S. more than it does China.
The hostility between Greece and the EU/IMF/ECB bailout troika is palpable. Nevertheless, there are claims that a deal should be reached by Monday. Whether the ...
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By: Daryl Montgomery
Investors make the most consistent money by following bigger trends and going long in uptrends or shorting into downtrends. Longer term trends are not unidirectional however, but subject to either sharp or intermediate term reversals. At those points, it is best to get out of the market until the uptrend or downtrend resumes. Of course all trends eventually come to an end and it is important to recognize this when it happens and to ...
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By: Daryl Montgomery
The current debt crisis that is now impacting the entire Euro-Zone started in Greece in late 2009. The problems there have yet to be fixed despite numerous mainstream media reports to the contrary in the last two years.
The EU’s debt crisis is not getting resolved because it is no more possible to solve a debt crisis with more debt than it is to sober up a drunk by giving him more alcohol.
By: Daryl Montgomery
While the EU is still reeling from S&P’s downgrade of the sovereign debt of nine of its members on January 13th and the latest talks to keep Greece afloat have hit a wall, there is an even bigger problem with the effectiveness of its stimulus programs — the money is just not finding its way into the economy.
Global markets were jubilant in December when the ECB (European Central Bank) pumped 490 billion ...
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By: Daryl Montgomery
Since the 2008 Credit Crisis, deflation has been the primary worry of mainstream economists and monetary and fiscal policies that utilize various forms of “money printing” have been implemented throughout the world to try to stop it. Unfortunately, money printing combined with deflation can potentially lead to hyperinflation.
Hyperinflation is a little understood and little studied phenomenon. Even inflation itself is only partially understood and traditional university economic programs devote minimal attention to ...
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By: Daryl Montgomery
While gold and silver are in long-term secular bull markets, they have experienced price weakness in the last few months of 2011. The technical picture indicates that they are likely to remain pressured for a while longer before recovering in 2012.
GLD (the major ETF for gold) fell below its 200-day simple moving average earlier in December and at the time, I pointed out in a previous article that this indicated lower prices in ...
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By: Daryl Montgomery
Housing stats for November were released today, December 20th, and the stock market rallied strongly on the supposedly “good” news. The statistical error rate in the housing report is so huge, that the numbers are meaningless — and easily subject to manipulation by a government that is desperate to provide news of a recovering economy.
Housing starts peaked at 2,273,000 in January 2006. According to the Commerce Department, construction of new U.S. residences ...
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By: Daryl Montgomery
Gold fell and closed below its 200-day moving average yesterday, December 14th. This indicates a technical breakdown and the last time this happened was in August 2008. Gold bottomed approximately 30% off its high three months later in November.
Any analysis of an investment’s technical state should begin with the big picture, so recent events can be put in context. Gold is in a secular (long-term) bull market which will last until approximately 2020. This means that the ...
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