Soverign Debt crisis

Kia Ora,

Well thought I would resurrect this blog as so much is going on.

First we had the debt crisis, now we have the sovereign debt crisis.

As the world talks about recovery (is it really) other forces have being at work.

Iceland's banking system crashed & now the people are voting to not pay off the British & Dutch banks who got them there.

Then came Dubai saying it would delay payments on debt owing.

Now we have the PIIGS(Portugal, Ireland, Italy, Greece & Spain) in trouble. Most focus has being on Greece. The problem here is as part of the Euro they can't print their own money to get them out of trouble. In the last week or so the Greek People have being protesting with chants of "burn the banks".

But is Greece or any of the other European countries in that much trouble. If it wasn't for the inability to print their own money we wouldn't even be mentioning them.

In even worse state than them are the UK & US who are heading the direction of Japan. At some stage Japan is expected to enter into hyper inflation they have printed so much money over twenty years trying to stimulate their economy.

The UK & US have being following suit in particular the last few years. Question being asked are they going to stagnate for 20 years like Japan or go into a deflationary depression before turning & becoming a hyperinlfaitonary depression. Either way it is not good if you are not prepared.

Now people are talking about the end of the China boom. But on theother side people are talking of China selling those US bonds they own (recently they sold $34 billion in one day). China has being buying these to keep their own Yuan down against the US Dollar so they could export.
But now the US is not buying  as many exports anymore, China is now looking to dump the US bonds to lift the Yuan so their own people can now purchase  their own produced goods.

As they sell those bonds it weakens the US Dollar & in fact China are no longer the biggest holders of US bonds. Japan is, but even they are looking to sell. This requires the US Federal reserve to print more money to purchase more bonds there fore weakening the US dollar even more.

At some stage no one will buy US Bonds (apart from patriotic Americans) & that is likely to signal the end of the US dollar as it stands. Before that though we are likley to see the demise of the Euro, maybe the British Pound & it could all happen very quickly.