Drive By Post: Time to Close Those Trades

 So here's what I see today as I scan the headlines and read my emails.

 1. Greece has broken through 1000% interest on 1 year bonds. I know loan sharks with better rates than that! I don't know how long the Central Banks can suspend reality, but I can't imagine it's going to last a lot longer. Full Disclosure, I expected a Greek default once they passed 150% so maybe 1500% isn't out of the question?

 2. Spain is missing big in it's mandatory financial targets so say's it's Prime Minister. They are asking for the EU and the ECB (and by extension the Fed) for a little slack. Thing is they missed really big so they arne't likely to get the slack they need. More austerity is going to be forced on them, which will likely lead them down the same road as Greece. Madrid in flames a future headline? I think it's likely. I also expect the Germans to play hard ball with Spain as they've learned a lot in their dealings with Greece.

 3. Portugal is in trouble. Their economy is sliding into the toilet and it's going to have a huge impact on Spain. I am honestly not read up enough on Portugal to be sure of their outlook, but I do know large declines in Portugal means Spain takes a hit as well.

 4. China is predicting a 6.6% decline on domestic growth from 8% to 7.5%. I expect the real number will be some what below 7%, though I'm not 100% sure China will admit to that. Not unlike everyone else, China fudges the numbers a bit to look good. With all the troubles in the EZ I expect China will see more declines in exports than they think. This spells a lot of trouble in China which is already having riots in it's far out regions. Rapidly slowing growth in China is going to be a bid deal for them.

 They are increasing military spending this year. I expect they know full well that they will have a lot of domestic issues to deal with and are looking to soften those troubles with more military employment, along with more troops to quell dissenters and such. Many are speculating it's for invasive purposes but I'm not so sure they will be able to maintain such a force outside of their borders for long.

 5. I've been waiting for years now for the UK shoe to drop. They are almost never in the headlines(Here in the states), and are often over looked for some reason. Fact is they are drowning in debt over there. They've upped the tax on those making over 150,000 pounds a year to some 50% (58% if you include the national health insurance)in an effort to pay down the debt. We all know what happened next right? No, you haven't heard? A lot of those high earners left for greener pastures. Switzerland and Ireland thank you UK for the contribution to their (much lower rate) tax coffers.

 So the UK raised taxes much too high, which punished the economy, which lowered tax revenue, which means they may have to raise taxes again? I'd suggest lowering the rate, cut out the tax loopholes (you guys have as complex a tax code as we do, both are ridiculous), and deregulate a little. Give the little guys some breathing room and they'll save the nation.

 6. The US. The situation in the US is much like the UK though we're slightly behind them in scale of debt (debt to GDP and/or per capita) and we have an edge with Dollar Hegemony. We've seen and heard some rumbling of tax increases on the wealthy here as well. I think it's less likely though. While the UK may not be in the headlines here I have to believe that those in the know are paying close attention to how things play out there.

 The most pressing issue in the US isn't the up coming elections, gas prices, unemployment, or any of those fudged economic numbers. It's Iran and Israel. That is such a complex barrel of shit I could write six articles on it and still not cover everything. Needless to say, I'm opposed to going into Iran except under the most dire circumstances. The cost of war in Iran is just too high economically, in lives lost, and in our standing in the world today.

 My advice? March is looking like a month to sit on cash and only take nibbles if you must play. Avoid buying debt at all costs unless the entity you are buying from has the cash and assets to pay off the debt. Lastly hold on to your socks, it's gonna be an interesting ride. That last one speak to the whole year I think.