The European Union’s economic collapse unfolding in Portugal, Iceland, Ireland, Greece and Spain (PIIGS) has both a positive and negative impact on the United States. As conditions deteriorate in Europe, investors are fleeing to the perceived safety of the American dollar. While the strengthened dollar helps the United States (especially in purchasing foreign oil), it makes us less competitive in the world market and gives a feeling of false security concerning the state of our own economy.
The truth is that the United States has even worse economic conditions than most of the European Union. Our debt, lack of political leadership and unemployment are offset by one fragile tool that will soon expire: the ability to print money at will. The M1 money supply and stimulus programs by the Federal Reserve are only extending the eventuality of an economic collapse. As of today, our debt to GDP ratio is 98%: comparable to Portugal.
Read the excerpt below to see the analogies with United States. The United States prints more money and manipulates the unemployment figures as we sit back and wait for the Republican Party to save us. The administration’s solution to this crisis: raise the debt ceiling (again), redistribute the entire federal employee pension fund and increase taxes on the “rich”.
How long will PIIGS fly in the United States? Until we stand up and fight for our future.
David DeGerolamo
Dennis Gartman: PIIGS Will Go Bankrupt Within 18 Months
It was only last week that the parliament of Greece agreed to greater austerity, clearing the way for another bailout and sending world markets higher in the process.
But now, it’s almost as if the Greece austerity vote never happened.
Italy and Spain CDS blew out on Wednesday with investors growing ever more worried that these two nations will be the next hotspots in Europe, with leaders doing little more
than chasing the EU’s financials woes from one nation to the next.
…
In fact he [Dennis Gartman] tells us that he expects “all the PIIGS will go bankrupt.” And not 10 or 20 years from now. Gartman says prepare for it to start happening “sometime over the next year and a half. But they’re all going to go.”
…
“The debt that they have is unsustainable,” he says. “And the wrong thing to do is increase taxes, which is what they’re doing.”
Gartman couldn’t agree more. He doesn’t see how increased taxes can possibly benefit
these nations when they’re facing unemployment as high as 20%.
