Sinbob,
Feeling a little QE coming out of Europe this weekend? As I see it, there are two scenarios which could develop...neither of which are good.
First, Greece gets bailed out...once and for all. The "comprehensive plan" that our friends Sarkozy and Merkel are talking about will not include a "haircut" for bondholders. It will include a 100% loss of investment for bondholders. It has already been determined that a 50% haircut will not be sufficient. Why do you think Greece was willing to spit in the faces of their own people today by implementing more austerity??? Oh, by the way...if Greece gets debt forgiveness, get ready to include Portugal, Italy, Ireland, and Spain. Total bill??? In my calculations, in the neighborhood of $2T Euros. Since most of bondholders of Greek debt are European banks, they will get DESTROYED and shareholder value will be wiped out. Can anyone else say, "European TARP???" Get ready for "too big to fail" European style. Now...who else thinks that Mr. Bernanke has another round of QE ready to go to counter the metoric rise of the USD on this news??? Good for AU/AG...bad for the world.
Second, Greece gets their next installment (sorry, I didn't know how to spell tranche???) of bailout money, and Sarkozy and Merkel say that theire has been no "comprehensive plan" as of yet, and the can gets kicked...again.
Which scenario will happen??? If I knew that, I'd be a millionaire next week! ;)
