The Euro is loosing buying power daily against other global currencies and flights out of the troubled Euro (to GOLD and the IMF’s SDR’s, NOT DOLLARS) are fueling global concerns for the economic future of the G-20 and the dollar.
The PIIGS (Portugal, Italy, Ireland, Greece and Spain) are also on the verge of economic implosion. This 20 member union does not have the deep pockets needed to support one failed economy (Greece) let alone 5 of its members. This house-of-cards has a huge global impact as all financial markets, which are now and forever interdependent, rely on each other for liquidity, financing and investment.
The crisis has become so critical that the IMF is convening next Monday May 11th to discuss some drastic measures to save the G-20. One topic of discussion, expanding the IMF’s SDR’s, this would hasten the replacement of the dollar as the world reserve currency. IMF meeting press release: http://www.imf.org/external/np/sec/pr/2010/pr10171.htm
The stock market took a wild ride Thursday loosing almost 1,000 points before finishing the day with a net drop of 347 points. The fundamental fears of a potential domino-effect economic collapse still remain in Europe and Wall Street’s blood pressure is spiked waiting for the next shoe to drop. 5/6/2010 Wall Street Journal, Market recap: http://www.marketwatch.com/story/us-stocks-struggle-data-retailers-in-focus-2010-05-06
The US markets and the dollar have real problems of their own and the possible European start, of a global financial meltdown aren’t making the dollar an attractive alternative. Gold is looking better with every market report.
CNBC video on the crisis in Greece and the economic fallout:
Watch for the press conference after the IMF meeting next week there is a lot riding on its outcome.
Assessment of the IMF & World Bank April Meeting
April 24th Bailout too Little too Late?
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Chief Market Analyst, ITM Trading