Last fall, this article pointed to signs of the tipping point for euro collapse. The key sign was what the global banking and financial market makers did with their money. They would pull out of risky markets and seek safe havens. This is now happening. The bond rates are diverging: the riskier countries like Greece, Italy and Spain, have to pay exorbitant rates to keep investors interested (no pun intended). The safer countries like Germany and Denmark, don't have to pay hardly any interest at all, because investors are flocking to their sovereign instruments. This past week the German Bund even went negative, meaning that investors were paying to park their funds there. And I we say investors, I mean primarily big money investors like banks.
That article was written over 6 months ago. Now the piper has arrived. Read today's article to see what is happening right now. George Soros believes that Europe has a three-month window to get it right before a serious collapse sets in. Even if Europe reacts correctly and shores up their system like we did in the fall of 2008 with TARP and other measures, this will likely usher in a double-dip recession. But if the Euro cracks apart and sovereigns like Greece, Italy and Spain simply default on their bonds because they just can't pay the interest, there will be shockwaves across the world. The US will not be immune and will take a big hit. But we will survive. At least until our own sovereign debt problem becomes the main actor on the stage.
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