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Europe Doubled Its Debt

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One question I get a lot is how long has Sovereign Debt Defaults been going on. Just for the record, kings use to borrow from the temples. In Greece, the first recorded default in history took place during in the fourth century B.C., when 13 Greek city states borrowed funds from the Temple of Delos, which was probably the largest bank in the Ancient World. It was highly trusted and was at the top of donations to pave the way to good fortune. Delos was the birthplace of Apollo, which made it special. The league of Greek city states never made good on the loans and the temple took a 80% loss on its principal. The modern Greek defaults have been 1826, 1843, 1860, 1894, and 1932.

The good news, Greece looks like it will be a buy in 2013. We will be providing the Berlin materials shortly. Effectively, what politicians were not understanding when we warned that UNLESS the debts of member states were consolidated into one European debt, the system would be torn apart.

In all fairness to Greece, the Euro fell to 80 cents US at first, then rallied to nearly $1.60. This meant that the PREVIOUS debt of southern European states APPRECIATED doubling in real costs. It was not just a spending-spree. It was the DOUBLING of the real nominal value of the debt that they had to pay. Sorry, but they got screwed with the Euro all because politicians thought they could not sell a nationalization of debt for Europe and just started with the currency.

Europe needs a single phone system more than a single currency. Your phone costs on roaming are outrageous. They need serious tax reform to be competitive. Then countries like Germany and Switzerland tax you based on what you made the year before and if it was less, well you have to wait for a refund next year. This is devastating to those who lose their job. They still have to pay taxes as if they were earning an income. Governments are borrowing from the poor and do not have the decency to give them any interest.

There are a lot of inefficiencies that have to be cleaned up. Next year 2013 will be very interesting indeed.

YES – those who attended seminars will receive the year-end Reversals in major markets next week.