Dexia (Franco-Belgian bank) shares fell about 40% yesterday and today because of exposure to the Greek debt.

Meanwhile Eurozone finance ministers have postponed any decision on whether or not to give Greece the next tranche of the bailout money. In other words, they don't want to pull the plug, either.

But the progress towards a Greek default seems inexorable. So what will happen then?

Back to the topic...

The US and the EU are waiting to see who collapses first. In the event they both collapse, well, that'll suck.

Here is a theory: During the most recent financial crisis, the developed countries suffered most. While the demand decreased, the Asian countries restructured, and now for example Thailand exports more to ASEAN countries than to the US or the EU. Other countries in the region have similar shift of customer countries, and of course, everybody's business in China is increasing.

Furthermore, everybody I know in the US and the EU complains about the bad economy, while everybody I know in Thailand, Laos and Cambodia cannot find enough staff to satisfy the increasing demand. This is empirical, I don't have the actual statistics.

The theory says that if the US and EU have increasing problems, the countries in Asia, especacially ASEAN+x and GMS and all these groups, will win further. The future is over here.

Please note that I am not an economist, this is just a theory for which I use this thread to test the waters.

The theory says that if the US and EU have increasing problems, the countries in Asia, especacially ASEAN+x and GMS and all these groups, will win further. The future is over here.

Please note that I am not an economist, this is just a theory for which I use this thread to test the waters.

Sounds good but the Asian growth was due to unbridled credit expansion which fueled hyper consumerism in the west & EU

While the Asian markets are in better shape due to not having the debt problems....will they win further if their customers are bust?

The theory says that if the US and EU have increasing problems, the countries in Asia, especacially ASEAN+x and GMS and all these groups, will win further. The future is over here.

Please note that I am not an economist, this is just a theory for which I use this thread to test the waters.

Sounds good but the Asian growth was due to unbridled credit expansion which fueled hyper consumerism in the west & EU

While the Asian markets are in better shape due to not having the debt problems....will they win further if their customers are bust?

What I am saying is that those are not the main customers any more. Still important, but with declining importance. Most important is now the trade within ASEAN+x, and in addition, trade between ASEAN and Latin America / Caribbean is being promoted.

What I am saying is that those are not the main customers any more. Still important, but with declining importance. Most important is now the trade within ASEAN+x, and in addition, trade between ASEAN and Latin America / Caribbean is being promoted.

I understand but it is those customers with their credit expansion that made the growth/boom possible.

I do not think they can be replaced by those you mentioned due to income not being anywhere near the same.

If instead they somehow create the same credit bubble within their own borders to encourage it.....

well we have the model of where that will lead.

I offer the following,without editorial comment, for your reading pleasure.

______________________________________________________

European Crisis: Precise Solutions in an Imprecise Reality

October 4, 2011 | 0853 GMT

By George Friedman

An important disconnect over the discussion of the future of the European Union exists, one that divides into three parts. First, there is the question of whether the various plans put forward in Europe plausibly could result in success given the premises they are based on. Second, there is the question of whether the premises are realistic.

Entire article here: http://www.stratfor.com/weekly/20111003-european-crisis-precise-solutions-imprecise-reality?utm_source=freelist-f&utm_medium=email&utm_campaign=20111004&utm_term=gweekly&utm_content=readmore&elq=6de714fda574462ca9ce25c0ff192cbc

As if their plates were not overflowing with problem gravy as it is....

They now have Dexia to contend with

Hey it is only $132 Billion (Some say 180 billion Euros )of toxic assets to deal with

They claim they can stop/contain the contagion from spreading to French banks....

Others say no chance

PS: Italy downgraded today by Moody from Aa2 to A2

With negative outlook

What I am saying is that those are not the main customers any more. Still important, but with declining importance. Most important is now the trade within ASEAN+x, and in addition, trade between ASEAN and Latin America / Caribbean is being promoted.

I understand but it is those customers with their credit expansion that made the growth/boom possible.

I do not think they can be replaced by those you mentioned due to income not being anywhere near the same.

If instead they somehow create the same credit bubble within their own borders to encourage it.....

well we have the model of where that will lead.

Well, what you think and what I think about future demand in Asia vs the western world is different. That's OK, future will tell.

I do not believe that a credit bubble is necessary. I don't think we need fake demand to survive, I think natural growth will create sufficient purchasing power in Asia for the Asian companies and countries to survive and prosper.

Well, what you think and what I think about future demand in Asia vs the western world is different. That's OK, future will tell.

I do not believe that a credit bubble is necessary. I don't think we need fake demand to survive, I think natural growth will create sufficient purchasing power in Asia for the Asian companies and countries to survive and prosper.

Trust me when I say there is nothing I would like better.

Yes the future will tell but it is the now that concerns.

Something to consider is that Asian companies were built on x-profit for x-product

The wages of the majority there.. which would be needed to replace the western customers is not there.

That leaves two choices...

Asian companies lower price on x-products to make them affordable to those with the lower wages & thus

make a way for themselves to continue. Or raise the workers wages to replace the western customers.

That will mean they no longer get x-profit. Will they keep the wages the same? Raise them? Lower them?

Natural growth has never been a problem in the East. They have the people yes.

If they can afford to become the customer base that is fine.

Like I said...I would like nothing better.

I would like to see their population become rightfully rewarded for the decades they have been doing the heavy lifting

producing products they themselves cannot afford.

Demand has always been there & yes as you say does not need to be faked.

Ability to pay is what is not there & thus another credit expansion is born.

flying, on 2011-10-04 12:38:06, said:

If I had to hazard a guess the USD will not collapse in the same way as the Euro.

They are in fact both collapsing as we speak. But the US can print ad nauseam.

you are making a mistake if you think €URos cannot be printed till pigs can fly.

you are making a mistake if you think €URos cannot be printed till pigs can fly.

Well it wouldn't be my 1st nor my last mistake

Also if the FED keeps swapping USD for Euro's I agree

the printing could be sustained longer.

I tend to say the US can print more only due to their

World Reserve status.

you are making a mistake if you think €URos cannot be printed till pigs can fly.

Well it wouldn't be my 1st nor my last mistake

Also if the FED keeps swapping USD for Euro's I agree the printing could be sustained longer.

I tend to say the US can print more only due to their World Reserve status.

there is no limit for any country to print its currency as long as their is enough cash to pay for the printing supplies. the Zimbabwe Dollar was never a reserve currency. but more nominal ZBD were issued within a few years than USD since its inception.

there is no limit for any country to print its currency as long as their is enough cash to pay for the printing supplies. the Zimbabwe Dollar was never a reserve currency. but more nominal ZBD were issued within a few years than USD since its inception.

Good example !

It's total fiscal madness to print money when you don't have assets backing it - this is what brought about all the problems of the past few years.

It's total fiscal madness to print money when you don't have assets backing it - this is what brought about all the problems of the past few years.

Why? It devalues your currency, and inflation allows you to cut real wages and standards of living. It discourages hoarding cash and encourages short-term consumption and investment in real assets. It reduces the real value of your debts, as well as your savings.

Its a bit unfortunate for those amongst us who are living off saved cash, though...

SC

It's total fiscal madness to print money when you don't have assets backing it - this is what brought about all the problems of the past few years.

Why? It devalues your currency, and inflation allows you to cut real wages and standards of living. It discourages hoarding cash and encourages short-term consumption and investment in real assets. It reduces the real value of your debts, as well as your savings.

Its a bit unfortunate for those amongst us who are living off saved cash, though...

SC

A great leveller for the impoverished amongst us. Luckily I transferred my savings into KP nuts three years ago so my investments are safe enough...

A whole series of downgrades of UK and European banks by the credit rating agencies (plus, I think Spain and Italy's credit rating). That means the CRAs think these institutions are less likely to be backed up by their respective governments, and therefore that their borrowing of funds will cost more. Does this mean what it sounds like, that anybody borrowing from these banks will have to pay a higher rate of interest? If so, it indirectly pushes up the costs of funds to the PIGS, and makes them more likely to default.

Joan of Arc (aka Christine Lagarde) has got her hands full. Let's hope she's hearing some useful voices (and doesn't come to a sticky end like her predecessor).

A point on 'world reserve' status, Flying....I agree that this status would limit the amount of money the US (and the ECB... if that mints the Euros) could print.... does it apply to UK as well, or are we blessedly out of the charmed circle?

It's total fiscal madness to print money when you don't have assets backing it - this is what brought about all the problems of the past few years.

Why? It devalues your currency, and inflation allows you to cut real wages and standards of living. It discourages hoarding cash and encourages short-term consumption and investment in real assets. It reduces the real value of your debts, as well as your savings.

Its a bit unfortunate for those amongst us who are living off saved cash, though...

SC

If an individual could devalue currency, he may increase sales of his products. Or he could simply cut his profit margin to increase sales.

It's different with nations. There is supposed to be some sort of guarantee behind the currency - used to be the gold standard, but that went to pot in the 1930s.

The problem has been that national governments have failed to live within their income. They make budgets and when they're a trillion or two out in their maths, they run to the bankers and borrow the balance. Then they print the money to pay the bankers, which, as you say, devalues the currency and swindles the bankers. This happens every few months with many 'advanced' countries. The poorer countries try to live within their budget, because the interest repayments would be too high.

So Labour passed to the coalition government in the UK a stonking great debt burden, but although the current government say they're trying to solve this, I am sure the next government will be met with debts just as large, maybe greater.

It's total fiscal madness to print money when you don't have assets backing it - this is what brought about all the problems of the past few years.

Why? It devalues your currency, and inflation allows you to cut real wages and standards of living. It discourages hoarding cash and encourages short-term consumption and investment in real assets. It reduces the real value of your debts, as well as your savings.

Its a bit unfortunate for those amongst us who are living off saved cash, though...

SC

If an individual could devalue currency, he may increase sales of his products. Or he could simply cut his profit margin to increase sales.

It's different with nations. There is supposed to be some sort of guarantee behind the currency - used to be the gold standard, but that went to pot in the 1930s.

The problem has been that national governments have failed to live within their income. They make budgets and when they're a trillion or two out in their maths, they run to the bankers and borrow the balance. Then they print the money to pay the bankers, which, as you say, devalues the currency and swindles the bankers. This happens every few months with many 'advanced' countries. The poorer countries try to live within their budget, because the interest repayments would be too high.

So Labour passed to the coalition government in the UK a stonking great debt burden, but although the current government say they're trying to solve this, I am sure the next government will be met with debts just as large, maybe greater.

Inflation (devaluation) allows us to cut wages and prices without losing face. It allows us to retrospectively reduce prices, by effectively reducing the value of savings and previously retained earnings and savings. I don't understand about swindling the bankers. The bankers don't bank. We bank with the bankers. It is our savings (and debts) that are depreciated. The bankers make their money on the margins, not the capital.

SC

It's different with nations. There is supposed to be some sort of guarantee behind the currency - used to be the gold standard, but that went to pot in the 1930s.

Not having checked the details at this hour, I thought the Bretton-Woods system was abolished in the 1970s.

My so called "blue chip" investments lost $4000 in the past month, but considering that I don't even spend what I get from my pension that will go on until I die, it doesn't upset me too much. By the time I actually get to spend my investments I'll be too old to enjoy them. What ever is left will be spent by my children trying to pay off their mortgages.

The cost of living has now got so bad that my wife is having sex with me because she can't afford batteries!

The cost of living has now got so bad that my wife is having sex with me because she can't afford batteries!

It's different with nations. There is supposed to be some sort of guarantee behind the currency - used to be the gold standard, but that went to pot in the 1930s.

Not having checked the details at this hour, I thought the Bretton-Woods system was abolished in the 1970s.

Yes the Bretton Woods ended with Nixon slamming the window. But that was half of the gold standard.

The Bretton Woods agreement was an agreement/fixed trade that allowed countries to sell gold to the US Treasury at a fixed $35/oz

The gold standard ended in 1933 when Roosevelt outlawed the private ownership of gold bullion.

When Nixon slammed the window gold ownership by citizens was once again allowed.

Basically what Nixon did was to keep foreign countries from exchanging their USD for gold.

Not unlike the old gold system/standard. Where citizens could do the same.

So you basically have two defaults .....One Roosevelt defaulted on the American Citizens when their money once good as gold.....could no longer be turned in at banks for gold or silver.

Then Nixon defaulted on the world when he no longer would settle debts via gold or allow foreign exchanges to turn in their USD for gold.

So now today we have paper IOU's that say right on them that they are in fact a Federal Reserve Note.

Many people still think the Federal Reserve is a branch of the Federal Government. Yet it is no more a branch than Federal Express.

In the old days we had Money. Note that on the bills it read what it is backed by & redeemable for.

Note it also reads that an equivalent has been deposited for each bill created.

Today we have paper backed by nothing but a wing & a prayer.

This was done so that they could basically live beyond their means

Thanks for a clear explanation of what I've been grousing about.

Thanks, Flying, I learned two things:

1. Federal Express isn't a government agency (I don't really believe you, though)!

2. I can now tell my conservative, Christian friends to quit buying gold and invest in the US $ since it is backed by faith and prayer!

The history of currencies is interesting, but might lead us a little bit far off the topic of the Eurozone's debt problems.

What backs up the Euro, croissants, wine, German sausage and cheese?

The history of currencies is interesting, but might lead us a little bit far off the topic of the Eurozone's debt problems.

What backs up the Euro, croissants, wine, German sausage and cheese?

Actually it is the history of fiat currencies & how they get their worth that will help most understand the how's & why's of where we are today.

For the most part what the Euro is facing is no different than what the USD is facing

As for backing of the Euro.... basically the same which backs the USD or any fiat currency

The Euro is tougher because it does not have the political ties that the US does.

Meaning the US states are united. The Euro countries are not politically united but are trying to be fiscally united through the Euro.

This is a good video I just watched

Felix Zulauf, Chairman of Zulauf Asset Management, and James Turk, Director of the GoldMoney Foundation,

talk about the debt crisis spreading from Greece to the rest of Europe.

Worth the 22 minutes IMHO. Good explanation of what the Euro is facing.

Thanks, Flying, I learned two things:

1. Federal Express isn't a government agency (I don't really believe you, though)!

2. I can now tell my conservative, Christian friends to quit buying gold and invest in the US $ since it is backed by faith and prayer!

Well your christian pals need not worry as they can always turn water into wine

The history of currencies is interesting, but might lead us a little bit far off the topic of the Eurozone's debt problems.

What backs up the Euro, croissants, wine, German sausage and cheese?

Actually it is the history of fiat currencies & how they get their worth that will help most understand the how's & why's of where we are today.

For the most part what the Euro is facing is no different than what the USD is facing

As for backing of the Euro.... basically the same which backs the USD or any fiat currency

The Euro is tougher because it does not have the political ties that the US does.

Meaning the US states are united. The Euro countries are not politically united but are trying to be fiscally united through the Euro.

This is a good video I just watched

Felix Zulauf, Chairman of Zulauf Asset Management, and James Turk, Director of the GoldMoney Foundation,

talk about the debt crisis spreading from Greece to the rest of Europe.

Worth the 22 minutes IMHO. Good explanation of what the Euro is facing.

Interesting interview indeed. I watched the whole thing, and there are parts I agree with, and parts I don't. However, it's too long to discuss here in detail. Let's say he is one expert, and other expers will have different opinions.