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Could gold-backed bonds be the answer to the eurozone crisis?
"A solution to the eurozone crisis is staring European leaders in the face. Remarkably, they have failed to consider gold as the asset of last resort. Eurozone member nations and the European financial stability facility (EFSF), the bailout fund, could use gold to back new bond issues."
Well, it seems it would work as long as the world price for gold remained pretty close to or even higher than the present elevated price. But wouldn't it be fairly speculative on the part of a gold-backed bond buyer to take a chance on that?
Reply to @Maurice: It's not that there's not enough gold in the world, but it's a matter of "at what price." I don't think a "gold standard" is a solution necessarily (although it's not a question of supply - what's money supply divided by the amount of US gold holdings), but I think it's part of the discussion, which is possibly why a number of central banks continue to buy. There is also always the possibility, however slight, that it could also be used as a financial tactic - an unfriendly country backs their currency with gold, etc.
Who knows, but I think if things really start to become very serious with Europe and elsewhere, there is always the possibility that countries may take desperate financial actions, with gold or otherwise, rather than militarily. That is, if our banks don't tank themselves (because if you believe the JPM situation is the only one of its kind lurking, I disagree) and require a bailout or two again first. I've heard a number of people try to excuse the situation by saying that JPM's mortgage portfolio is losing more than the bad trade ... bizarro world when that excuse is supposed to be spun with a straight face as some sort of positive.
I didn't think Greece was fixable, and if this picture is true, a Gold standard doesn't fix things like that (NOTHING does, and any official who says otherwise is merely advancing their own agenda despite of the unfortunate reality), whether in Greece or some level of it elsewhere. If Greece really has a ministry of finance that looks like that, it's over.
Although, given that - according to CNBC's Steve Leisman - the Facebook IPO is an indicator of how much better we're doing than everyone else - maybe Facebook (which now has even more insiders and early buyers selling stock into the IPO tomorrow) can fix Europe's problems.
Literally, CNBC is having a special documentary on Facebook in the middle of the f'ing trading day.
As for the money printing, if things turn significantly South again, I'm going to be very curious to hear explanations. I'm sure the explanation will be that the trillions spent "weren't big enough."
Boston Properties CEO Mort Zuckerman the other day: "We have the most stimulative fiscal and monetary policy in the history of this country and here we are three years into the recession and it's not ended."
As for gold, rebounding nicely today while the market continues to slide after a lousy Philly Fed number and plunging consumer comfort levels (The Bloomberg Consumer Comfort index just missed expectations by its greatest amount in three years and has plunged over the last 5 weeks by the most in four years - dropping back to four-month lows. Do these two messages explain the catastrophe that is JCP's results this quarter? We suspect so as the outlook for the economy (sub-index) has plummeted by the most in 14 months - once again echoing the last two years and the end of the central-bank easing periods exposing the sad reality beneath http://www.zerohedge.com/news/consumer-blinks-consumer-comfort-collapses-most-4-years.)
Maybe HP is truly a turnaround story - Bernanke is going to need a bigger printer.
Comments
Who knows, but I think if things really start to become very serious with Europe and elsewhere, there is always the possibility that countries may take desperate financial actions, with gold or otherwise, rather than militarily. That is, if our banks don't tank themselves (because if you believe the JPM situation is the only one of its kind lurking, I disagree) and require a bailout or two again first. I've heard a number of people try to excuse the situation by saying that JPM's mortgage portfolio is losing more than the bad trade ... bizarro world when that excuse is supposed to be spun with a straight face as some sort of positive.
As for Gold and the Eurozone, take a look at this sad picture - http://www.zerohedge.com/news/must-see-greece-explained-one-picture
I didn't think Greece was fixable, and if this picture is true, a Gold standard doesn't fix things like that (NOTHING does, and any official who says otherwise is merely advancing their own agenda despite of the unfortunate reality), whether in Greece or some level of it elsewhere. If Greece really has a ministry of finance that looks like that, it's over.
Although, given that - according to CNBC's Steve Leisman - the Facebook IPO is an indicator of how much better we're doing than everyone else - maybe Facebook (which now has even more insiders and early buyers selling stock into the IPO tomorrow) can fix Europe's problems.
Literally, CNBC is having a special documentary on Facebook in the middle of the f'ing trading day.
As for the money printing, if things turn significantly South again, I'm going to be very curious to hear explanations. I'm sure the explanation will be that the trillions spent "weren't big enough."
Boston Properties CEO Mort Zuckerman the other day: "We have the most stimulative fiscal and monetary policy in the history of this country and here we are three years into the recession and it's not ended."
As for gold, rebounding nicely today while the market continues to slide after a lousy Philly Fed number and plunging consumer comfort levels (The Bloomberg Consumer Comfort index just missed expectations by its greatest amount in three years and has plunged over the last 5 weeks by the most in four years - dropping back to four-month lows. Do these two messages explain the catastrophe that is JCP's results this quarter? We suspect so as the outlook for the economy (sub-index) has plummeted by the most in 14 months - once again echoing the last two years and the end of the central-bank easing periods exposing the sad reality beneath http://www.zerohedge.com/news/consumer-blinks-consumer-comfort-collapses-most-4-years.)
Maybe HP is truly a turnaround story - Bernanke is going to need a bigger printer.
http://www.zerohedge.com/news/gold-welcomes-its-new-ctrlping-overlords