RichardNamon.ComNamon Photo

  Home Page

This is Richard Namon, Sr.'s personal web site. It presents my opinions on subjects of general public interest, and is not intended to promote any business. This site will share my experience and knowledge with others.

 

 

While the US economy is showing moderate improvement, as part of a globalized economy, US investors should consider the following:

As of this time (February 8, 2012 -12:40 ET) little has changed regarding Greek debt since the comments below were written. Yes, the EU has 'found' more money to lend, but that alone does not solve the Greek problem. It has become clear that Greek accounting made it appear Greece was financially equal to EU members when it was admitted, but it wasn't. To avoid a Greek bankruptcy the EU and the US are injecting more money into their economy as loans to keep Greece from defaulting on its debt. It's always a bad idea to lend money to someone to pay for debts they can't afford. To solve the immediate crisis, private bond holders are being asked to accept less for their bonds than they paid for them in the hopes of getting something back in the future. For me, that's bankruptcy! By reducing what is owed and with new loans, Greece is expected to 'do better' and pay it all back. Somehow the lenders have fallen into an illogical trap. How can a lender take an inefficient business and make it profitable without having full control of the business? In this case the EU believes controlling the Greek budget will do that. Regardless what is signed on paper, the Greek people will not let outsiders run their country as long as it is a democracy. They will elect new politicians to undo any agreement they do not like - that's what democracy is all about. As long as it has a national sense - Greece will remain Greece before it will be a subsidiary of the European Union. For that reason, the only question is not if Greece will default, but when. After all, would you let lenders (i.e. China) come in and tell congress what it can and cannot spend money on? I think not.

January 16, 2012

Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said Greece is heading for default. He didn't say how s

January 18, 2012

The following worries me and should worry you. "NEW YORK (CNNMoney) The World Bank Wednesday slashed its 2012 growth forecasts for both emerging and developing economies from its estimates of only six months ago, and warned the world is on the cusp of a new global recession that could be as bad as the crisis four years ago. It warned that an escalation in Europe's sovereign debt crisis, a new oil shock, or a "hard landing" in one of the larger developing economies could trigger a global economic downturn. The bank added that the risks of those events makes even the bank's lowered growth forecasts "very uncertain." A meltdown in financial markets triggered by the sovereign debt problems in Europe poses the greatest immediate risk, according to the report. "An escalation of the crisis would spare no one," said Andrew Burns, manager of global macroeconomics and lead author of the report. "Developed and developing country growth rates could fall by as much or more than in 2008 and 2009.""

Today Germany, Europe's largest economy, lowered its economic growth forecast for 2012. Earlier last year Germany's growth forecast for 2012 was 1.8%; in October 2011 it was lowered to 1%. Now the prediction for this year's growth is 0.7%. For all of 2011 the Federal Statistics Office reported a growth of 3%. While this doesn't mean a recession for Germany, it indicates a likelihood of an EU recession

Also, the IMF said it is looking to raise up to $500 billion in additional lending resources, including a $200 billion commitment that euro area governments announced last year. The new target is based on the IMF's estimate of $1 trillion in potential global financing needs in the coming years. US Federal Reserve Banks share would be about $100 billion! I don't recollect the EU coming to our aid to save Lehman Brothers and other financial institutions in 2008.