What can’t be paid, won’t be paid

Recently in the news:

The Chairman of the US Federal Reserve, Ben Bernanke, made an unprecedented TV appearance on 60 Minutes last night. (WashingtonPost.com)

President Barack Obama will take his economic strategy to Jay Leno's comic couch on Thursday in the first appearance by a sitting U.S. president on a late-night TV talk show. (Source.)

Here is what they will NOT tell you:

What can’t be paid, won’t be paid.

The total American debt of $75 trillion ($250,000 for every American man, woman and child) is too great to ever be repaid in full. As a nation, we can’t pay our debts; not all of ‘em; not even most of ‘em. Individuals are currently holding [paper] debt instruments with a number like “$10,000,” “$100,000” or “$1 million” written on them and believe that those pieces of paper are assets actually worth their declared face value. (Source.)

Those waiting to hear the "D" word from economic experts, talking heads and TV anchors before taking action will most certainly regret their indecisiveness.

By the way, Anglo American has sold its remaining 11.3 percent stake in South Africa's AngloGold Ashanti for around $1.3 billion to Paulson & Co, the hedge fund run by John Paulson. You know, John Paulson, the same guy who shorted subprime two years ago and made an unearthly fortune.

Trust me . . . "This is your captain speaking, everyone remain calm, everything is under control."

UK: the next Iceland?

The top five U.K. banks have $10 trillion of [debt] assets and their [UK] GDP is only $2.13 trillion. The whole country could fall into the ocean. The top five U.S. banks [debt assets] represent only about 60 percent of GDP by comparison. Source

What is the capital of Iceland?
Answer: $25

"asking an economist to predict the future is like asking the Christmas turkey what's for dinner on Christmas: based on its entire lifetime of experience, the turkey expects to be fed on Christmas, not to be eaten. As far as the turkey is concerned, Christmas is a black swan-type event." Source: Taleb

Europe in trouble

Europe’s banks face a $2 trillion dollar shortage
European banks face a US dollar “funding gap” of almost $2 trillion as a result of aggressive expansion around the world and may have difficulties rolling over debts, according to a report by the Bank for International Settlements.

Europe's economic situation:

• Eastern Europe, along with Russia and the Ukraine, are toppling over the edge. Austria, whose banks have lent them €230bn (75% of its GDP) will go with them.
• Eastern Europe owes $1.7 trillion, $400 billion is due this year.
• Russia has a $500 billion tab it may not be able to cover.
• 60% of Polish mortgages are in Swiss francs, against which the zolty was just halved.
• Hungary, the Balkans, and the Baltics are in the same boat.
• Nearly all this debt is owed (and won't be paid) to Austrian Belgian, Greek, Italian and Swedish banks.
• In addition, Europeans hold 74% of the nearly $5 trillion of emerging markets' debt.
• The German economy will shrink nearly 10% this year, so Berlin will not be rescuing anybody either, not even partners Greece, Italy Ireland, Portugal or Spain.
• The coming economic stress is the stuf that makes for pitchforks in the street.

Source: http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/4623525/Failure-to-save-East-Europe-will-lead-to-worldwide-meltdown.html (as summarized by CKMichaelson at http://ckm3.blogspot.com/)

Meanwhile Ukraine's gross domestic product has contracted by 20pc over the last year, apparently worse than early Bolshevism or the Stalin famine . . . if Ukraine defaults on its foreign debt – or lets its private companies default on their dollar and euro loans – it will lead to near instant contagion through much of Eastern Europe.

Source: http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/4691850/Ukraine-must-be-rescued-from-tragi-comedy-for-Europes-sake.html

"This is your captain speaking, everyone remain calm, everything is under control. "

Cheers