Germany
Stocks fell dramatically today, but gained back most of their loss. Fears of the European situation caused the fire sale, as well as North Korea tensions.
Bonds continued their downward interest rate drive – nice while you can enjoy it.
The Dollar stayed still, and oil/gasoline fell a little more.
Gold recovered most of its recent loss and now sits at $1200/ounce.
In today’s news……
LIBOR rose – for the past 13 days straight. The 3 month Libor sits at 0.53%, and hasn’t been seen since just prior to the US financial meltdown in 2008. Does this LIBOR rise foretell a new financial meltdown? With increased Libor comes decreased lending. The upward direction is very ominous of bad things coming.
Gold – Europeans have always liked gold, and are buying so much gold right now, and selling so many Euros right now, that they alone are pushing the price of gold up. Nice is you own some. Remember that Gold is the only currency that can’t be printed at a whim.
Tonight’s Dinner Conversation…..
Germany – that country in the middle of Europe that dominates the economy of all Europe. You can bet that Germany has been very unhappy with the EU trying to fix the Greek problem by telling Germanys what they need to do – lend lots of money to Greece. Germany has gone along with the EU because it was in its best interest as long as the economies of Europe were growing. But, now the fall is coming of GDP in Europe.
What can Germany do about this dilemma? Well it IS pushing its weight around right now and having the rest of Europe follow its lead. Germany believes it should be leading all of Europe as it provides the economic stimulus for all Europe – a natural feeling. However, what are the German’s options?
- Drop out of the Euro and reinstall the Mark. That would be the end of the EU as we know it, and would destroy the Euro as well.
- Kick Greece (and others?) out of the Euro until they prove they can balance their fiscal budgets. A real possibility in my opinion, but not for a few years from now.
- Re-align the nations of Europe into different groupings. In other words, drop the EU, and go back to multi-national groupings as was the case before WWI and WWII. This seems very ominous to me.
- Pick the natural partner nation. France is a good choice as it provides a good market for German goods.
- Join with Russia to form a new alliance. Russia provides energy to Germany today, and Germany can provides goods to Russia.
Regarding a German/Russian alliance, there is one big problem in between them today, and it is called Poland. Poland has put itself in the US camp, and provides a thorn in the side of Russia today. Germany has always wanted Poland as proven by its first major attack in WWII.
President Obama backed out of the deal to put Anti-Ballistic Missiles in Poland as agreed by President Bush. That was a shock to the Poles, and made them very unhappy. What wasn’t reported was the the US promised to deliver Patriot anti-ballistic missile systems to Poland, and those were delivered last week. This is a very big thorn in the side of Russia as Poland flies the latest F-16 fighter jets, and with Patriot could easily have a superior air defense system than the Russians. I consider this a strategic positioning of the US, and could have much more foresight than most political actions.
My point of this dialogue is to watch Germany as the Euro crisis plays out, and remember the Germans have always had great ambitions. Also remember that we have many military bases in Germany today – what will happen to those???
Here are the last numbers for today:
Dow Jones 30 Industrial – 10,044 (down 23)
10 Year Treasury Bond – 3.16% (down 0.07%)
Euro – $1.2351
Gold – $1199 (up $5)
Oil – $69.96 (down $0.25)
Gasoline – $1.93 (down $0.04)
