Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: EL KABONG!!! who wrote (27960)	1/27/2003 12:36:53 PM
From: energyplay	Read Replies (1) of 74559

Kerry - With the government bond portion, they just print more money, hence no default risk. Higher rattes are likely to mean higher Euro/dollar rate. Probably more to the point, European rates are considered high now. It's always useful to consider all the possible options. The events that could send the Euro lowewr and then rates higher would be something like a very bad event in Europe, causing money to move to Norht America, and the ECB raising rates to defend the Euro. Possible events would be - 1) Coup in the Russia and resumption of Cold war type situation. Since Putin is from the military & intelligence forces, it's hard to see this happening. 2) Some sort of physical or environments diasater in Europe - like Chernoble. 3) Politcal crisis in Europe - either revolt against Euro, massive scandal, or something else. Europe has survived most scandals. A German revolt against the Euro might do it, but doesn't seem to be in the immediate future. More likely possibilites - 4) Attack on Europe with WMD by Iraq, Pakistan, Iran , or terrorists. More likely than I would like. 5) Problems with Europe's large Muslim populations. This is tied to 4). Muslims could demostrate / riot over restrictive security measures. Non-muslims could start attacking them. Muslims might start randomly attacking non-Muslims (this has already happend with some riots in the UK) Politicians may not do anything effective, and part of the population could react badly to the inaction. My expectation is that some combo of 4 & 5 is a real risk. A reason to own gold ;-)

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