Remember, the Fundamentals

Video – Europe Hits Global Corporate Sector – WSJ.com.

Decreasing corporate profits mean decreasing tax revenues. These tax revenues are ultimately what pays those sovereign bond coupons. The Eurocrisis is rapidly approaching the day of reckoning. Today, it was put off some by Draghi’s comments, and tomorrow it might be delayed by increased central bank manipulation.

These countries are running out of money at an increasingly rapid rate. Whatever forecasts are floating out there for PIIGS debt needs for the rest of the year are wildly optimistic. Eventually, the ECG will have to print money to buy these PIIGS bonds, and this will signal the endgame.

Advertisements

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s