The world's largest central banks yesterday acted to avert a liquidity crisis in Europe. It was a concerted effort.
There has been no explanation. But before the action the European banks were hardly given any dollar credits and perhaps it was to save one or more large European banks. Or even countries. The international community does not want a repeat of the Lehman Brothers' collapse. Partly in due to lack of liquidity.
To illustrate the nervousness of the financial markets before the action - I can mention that the German one year bonds were offered at an interest rate of -0.05 percent. The first time ever with an interest rate below zero. In other words investors were willing to pay the German state to keep their money safe for one year.
The collapse of one, more or all of the following: Greece, other PIIGS, The Euro in Southern Europe, the entire Euro, the entire European Union and perhaps consequent international financial collapse does not look unlikely in the eyes of investors.
Some collapse looks inevitable from where I am sitting as well.
At the moment, I can perhaps for the first time in my life say I am fortunate not to have a dozen million dollars to place somewhere. Putting them in a bank account or buying bonds of PIIGS countries would be out of the question. The risk of devaluation or even collapse is too high. You could then consider buying gold. But there has been sold more certificates of gold than the actual quantity of physical gold available. So unless you take possession of the physical gold - you could be in trouble. A run on gold is not entirely unlikely.
Perhaps betting on Germany not going bankrupt the coming year and paying for it - is not that crazy...
There has been no explanation. But before the action the European banks were hardly given any dollar credits and perhaps it was to save one or more large European banks. Or even countries. The international community does not want a repeat of the Lehman Brothers' collapse. Partly in due to lack of liquidity.
To illustrate the nervousness of the financial markets before the action - I can mention that the German one year bonds were offered at an interest rate of -0.05 percent. The first time ever with an interest rate below zero. In other words investors were willing to pay the German state to keep their money safe for one year.
The collapse of one, more or all of the following: Greece, other PIIGS, The Euro in Southern Europe, the entire Euro, the entire European Union and perhaps consequent international financial collapse does not look unlikely in the eyes of investors.
Some collapse looks inevitable from where I am sitting as well.
At the moment, I can perhaps for the first time in my life say I am fortunate not to have a dozen million dollars to place somewhere. Putting them in a bank account or buying bonds of PIIGS countries would be out of the question. The risk of devaluation or even collapse is too high. You could then consider buying gold. But there has been sold more certificates of gold than the actual quantity of physical gold available. So unless you take possession of the physical gold - you could be in trouble. A run on gold is not entirely unlikely.
Perhaps betting on Germany not going bankrupt the coming year and paying for it - is not that crazy...
