Volatility Rising in Europe

We are living through one of those great shifts in history that you read about as a kid. I find it fascinating. U.S. bonds are spiking amidst volatility in Europe, and this is what must happen before U.S. bonds crash. I’ve always said Europe will collapse first, then the U.S. We are still the deepest financial market in the world, and this gives us time to prepare.

Everything is connected. If there is a government debt problem throughout the Western world and Japan while the population is aging, this poses a huge problem. If government bonds, which retirees are heavily invested in, are topping after a 30-year bull run, isn’t this a massive crisis in the making? It is always bond market collapses that just wipe everyone out. It is the debt market, not the stock market, that keeps the global economy humming along.

Make no mistake about it- Europe is blowing up. America will probably be the last country to blow up, but it’s coming. Think about it this way: even with balanced budgets- which would raise the unemployment rate to double digits- our debt would continue to rise at an ever-accelerating pace because of interest. As Einstein said, compound interest is the 8th wonder of the world.

Political uncertainty in Europe is rising, and this reminds me a lot of  the world pre- WW II. It is when the economy is the weakest that rabblerousers can win the hearts of people. This is the risk we face. Government stupidity has consequences.

People fail to grasp the big picture because it is complex, and they are pointing fingers at the wrong people. This isn’t about rich vs poor, it’s about government fiscal mismanagement. Raise taxes while promoting austerity and I guarantee a Depression in America. Let’s not be so stupid. There is a way to save the global economy, but I doubt our leaders will figure it out. As you all know by now, you should be buying gold on dips because this is going to get ugly.

  • http://www.learcapital.com/exactprice haljett

    I think we can see some of the buying going on today for gold on the dips.

    The whole Europe crisis is like watching a train wreck coming on in slow motion.

    Should all this really blow up, and like you, I doubt our leaders will ever get a clue on how to fix it, the global pain that people are going to experience worries me greatly. The seeds of class warfare have been too deeply planted I fear.

    Speaking of leaders unable to figure things out: I had to laugh this morning when I saw that they were talking about putting a special tax on Christmas trees. The article implied that the administration saw it as a means to promote the purchasing of more Christmas trees. That spin just spells doom to me.

    • http://www.expectedreturnsblog.com Moses

      Wow, a tax on Christmas trees to promote the purchase of Christmas trees? That’s interesting and a little backwards haha.

  • Darrell

    hey Moses:

    I don’t think it is our politicians that don’t have a clue,
    I think they understand that they are not managing our taxes smartly, they
    just don’t believe what you and other fiscal types say will happen will happen;
    it is the voters that elect them that don’t have a clue. It is the voting majority
    that is leading the economy to a crash and when it happens they will have no
    idea how it happen. And, as you say, all we can do is buy gold  and silver. 

    • http://www.expectedreturnsblog.com Moses

      That is true- our leaders don’t really think a debt disaster is possible. It’s amazing and sad at the same time.