Greece, Spain, Gold, and the Dollar

The writing is now on the wall, sky written and all over the financial pages of the world. According to most knowledgeable economists, Greece is set to implode, regardless of its inability to reach an agreement to restructure its debt.Steve Hanke, professor of applied economics at Johns Hopkins University, stated in a Bloomberg interview that “...the game is completely over. All the calculations are nonsense and have been since day one. Since the crisis began the money supply has been shrinking and the economy is going to implode, no matter what they do in the short run.”The money supply in Greece has shrunk an average of 16% over the last few months, meaning that there is just no money for debt repayment, and their idea of restructuring is to have 70% of their debt forgiven, with the remaining 30% being issued as bonds with interest as low as 4%. Underwater U.S. mortgage holders should have thought of that three years ago!Meanwhile IMF Managing Director Christine Legarde is running around the world’s crowded theaters shouting “FIRE!” perhaps rightly so, as she is seeking out US$1 trillion for the coming years to help stabilize the most troubled nations, as well as $500 billion in new loan resources that will be needed in the first quarter of 2012. While all this is happening on the world’s financial stages, the once shiny new Euro has lost 3.5% of its value, and the formerly doomed U.S. $ has risen a staggering 7.1% against a basket of currencies.The situation in this Iberian nation has not gotten any better since the regime change. After coming to power, Mariano Rajoy decided that he was to be the ultimate authority overseeing the struggling nation’s economic chaos, dividing the responsibilities of the finance ministry between Economic Minister Luis de Guindos and charging a former Lehman Brothers banker Cristobal Montoro with the budget. Neither of them are cabinet ministers as in previous administrations, but then I would not really trust a former Lehman Brothers Banker with the small change in my pocket.The country’s economy contracted some more in the last quarter of 2011 and is forecast to shrink an additional 1.5% in 2012, but my feeling (personal opinion) is that by the end of the year, the full impact of the worldwide recession that  Madame Legarde of the IMF is rightly forecasting will drive that figure closer to 5%. The Yellow Metal and the DollarWith and additional rise of 0.5% in the value of the U.S. $ yesterday, January 24, the price of gold eased back a similar amount, dropping $9.90, with oil holding relatively steady at around $100 per bbl. The drop in the yellow metal is the most in a week, driven by the steadily improving picture presented in the U.S. economy, with unemployment dropping and new jobs created. But this is, after all, the month where the Florida primary is on everyone’s mind, so it is certain that the U.S. government figures will look rosy and continue to do so until the elections on November 6. I can’t wait for all the stump speeches to be over, and this insane run of debates to end.As a note to my readers: Please start following my more personal opinions on Voices From Exile, a site where you will be able to post your opinions regardless of your outlook on current affairs. I am looking forward to even controversial contributions, where you may insert links to your favorite sites (non-commercial) to share your sources of information and engage in some lively, informed debate. Join me there. It will be on an irregular basis for starters, but will grow with time.Where the grapes are starting to look really nice![image: The Parthenon, via Wikipedia]I encourage you to write to me, jamie@expatdailynews.com with any questions or suggestions you may have, and if necessary, we can establish a voice communication via Skype. Disclaimer: I am not in any travel related business. My advice is based on my own experiences, and is free of charge. (Donations accepted). It is always my pleasure to act as a beneficial counselor to those who are seekers of the next adventure.Jamie Douglas is an Adventurer, Writer and Photographer with an amazing array of Nikon equipment, and a lifetime of experience traveling and documenting. To contact him for assignments, email: jamie.douglas [at] yahoo.comSee more expat articles by Jamie at

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