www.armstrongeconomics.com
QUESTION:
I have a question, you wrote :
“Those in Europe who have a position in cash, it may be better to
have shares or a private sector bond or US Treasury. Given the policy in
Europe of no bailouts, leaving cash sitting in your account could
expose you to risk in the months ahead.”
For example, if one has a trading account with a bank, is leaving
cash in the bank’s trading account immune to potential seizure indicated
in your comment?
Appreciate your clarification,
AP
ANSWER:
The
risk in Europe is that there is no true rule of law. On the one hand,
there is this policy of no bailouts for that would mean money could
cross borders. Then there is the rising socialism which is turning into
real hatred of the rich.
There is no definitive answer. Europe will do whatever it has to do
when the time comes shy of doing the right thing. I have written before
when Italy could not meet its debts on short-term paper, they simply
decreed that your 90-day paper was now a 10-year paper.
Governments can do whatever they desire. We have no recourse against
governments. No private company could act in such a manner. This is one
primary reason why I believe governments should be prohibited from
borrowing. People are fools for buying their paper and always expecting
that this time will be different.
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