Thursday, July 07, 2011

Cliffhanger

There were some interesting comments today by Warren Buffet, Chairman and CEO of Berkshire Hathaway, on the eurozone debt crisis.

In particular, Buffet gave this very apt analogy:

"The European situation is not solved... They've got a lot of work to do. When you have 17 countries that all have the same currency, and the yields on their bonds are all different, the situation is not solved. It's like 17 people holding hands and one guy starts walking towards the end of the cliff, and suddenly there's 12 people left and you have to start thinking -- do I want to be holding hands with this group?"

(This is also an analogy we've hinted at before on here)

We would add though, that it now looks more like these people have their hands handcuffed to each other and they're all looking around realising none of them brought a key...

4 comments:

Rollo said...

We must get away from the idea that the EU is 'saving Greece'. It is the opposite, the EU and the ECB are happy to destroy Greece to save their own artificial construct, the Euro.

Idris Francis said...

I agree with the comment, but however sorry I feel for Greeks at the moment, and others being lined up and blindfolded for the same treatment, the good side is that in destroying Greece and others, the EU is lighting the fuse of the bomb that will destroy the EU itself. And that is very, very, very good to know

Traders Psyche said...

Rollo - I am in total agreement with you in that the EU has no interest in the future fortunes of either Greece or the other 'failures' in the experiment. I do, however, think that while there is some interest in saving the Euro, these continued bailouts of the stragglers is more to do with saving the banks (again!) by borrowing money from those institutions that are supported by the citizens, giving it to Greece et al who, in turn, pay off their debts to the banks and institutions a.k.a 'the private investors'.

Anonymous said...

Problem with analogy used by Buffet: logic would suggest that the one guy walking toward the end of the cliff could be restrained by the 16 others and stopped, the attempt to do this is what we are witnessing, well at least an attempt to convince the one walking towards the cliffs edge not to let go! Letting go is simply not a choice the 16 other have.