The Euro and the Mainstream Media

Here is a comprehensive if not overly pessimistic piece on Greece, the euro and the current state of global debt.

I'm a bit disturbed by the lack of mainstream media attention to this issue. I receive virtually all of my news from Yahoo! Finance and Bloomberg.com, but will periodically check CNN.com and other similar sites to get a more bird's-eye view. There has been nothing on these sites about this issue. I find it eerily reminiscent of mid-2008 period when things stared heating up and most journalists were not attempting to get to the bottom of anything but instead screaming, "What the hell is going on!" and "This is what's going on this is whose fault it is!"

I understand the MSM's hesitation to get involved. It is a very complex, complicated issue, is quite technical and probably boring to most people, and doesn't, as of this moment, directly affect Americans, unlike say the fall of Lehman and Bear.

But that doesn't erase the fact this is an extremely serious situation that deserves attention. If you are looking for more info, the blogosphere has been doing an excellent job over the past few months.

Where Do We Go From Here?

I've been following the global economic situtation pretty closely over the past few weeks and the one thing that seems clear to me is that no one has any idea where we are headed. I think it's easy to just throw out a prediction that everyone will forget in fifteen minutes, but if you really want to see what people believe, check out where they've plopped their money. Last week I shifted 15 - 20% of my holdings from an S&P 500 tracking ETF to VXX, which tracks the VIX (in theory). Pretty much I'm paying 89 basis points for insurance against any future collapse, which I think is entirely possible.

My rationale for this move is for the most part the debt situation in Europe. Carment Reinhardt is not enthused by what is going on there. Arnold Kling reinforces her thoughts, though doesn't go into much substantive detail. The latest news is Greece will be bailed out by the EU, but what will this mean for the Euro? Already record shorting is being done on the currency.

A couple of months ago I bought gold anticipating some sort of situation like this. But the flight from the Euro has not gone to metals, and in particular gold as many anticipated, but instead to the dollar. This needless to say has adversely affected gold, driving it down during a time when all the fundamentals say it should be shooting up! I may looking at UUP to play and hedge off this development (I'm still long gold), but that party may soon be over too. I just don't know.

We live in strange times indeed.

Thoughts on the Future of the Global Economy

Rob recently provided some thoughts on the Russian economy and the global economy.

I'm not sure I have much to add. If there is anything I've learned while following the events of the past two years it's how little I actually know. I think Nouriel Roubini (Dr. Doom!) does a good job summarizing where we are now [on a global scale] and where we may be headed.

Here are two very general questions that I think will play an enormous role in determining the future global economy:

1. What will the proper role of the Fed and central banks be?

2. What does the future hold for modern finance? More to the point, how is finance going to be regulated? How will private firms and eventually the entire private market react to such regulation?