1930's Moment Just Ahead?

January 23, 2011
	The briefing will be posted this evening and can be found in The Briefing Room. Christine Lagarde, The Chief of the International Monetary Fund, said this morning that we are at a "defining moment" and must "save the world from a downward economic spiral" in order to avoid a "1930's moment."  Tomorrow the IMF is expected to report decreased expectations for world growth for 2012. This comes on the heels of a failed meeting of Greece with its bondholders over the weekend.  They parted ways without agreement.  The IMF wants the private bondholders to take a 50% loss on the bonds while the European Fed would take no hit at all.  On top of that pain, they want the private investors to lend Greece money at less than 3% interest, which would only intensify the pain.  So far, they won't agree to do this. If Greece doesn't make an agreement soon, they won't get the next round of bailouts and be forced to default.  If this occurs, then the CDS' will kick in (insurance against default).  Unfortunately this insurance is underwritten by the same banks that are already bankrupted due to the sovereign debt crisis.  If this happens, the dominos would begin falling quickly.  If Greece CAN make a deal, then the CDS' are not implemented because the 50% loss is due to an agreement rather than a default.  This would prolong the pain for yet another day.  Sound like politics? We experienced the fallout of Greek and European turmoil in the second half of 2011.  We can expect a whole lot more during 2012. Lagarde doesn't think there is enough private investment money willing to lend to Greece, Portugal, Italy and Spain.  All these countries have debt maturing now and need to replace it.  The lack of willing investment is causing the interest rates to be higher than the countries can afford which only makes the curret situation worse.  She would like to print more money and lend it to them at cheaper rates than the market is willing to do.  Unfortanely Germany will have none of these shenanigans.  It will be interesting to see what happens.  We captured gains in our portfolios this last week since it looked like this week could possibly take them away from us.  We do this at the risk of the market continuing upward, but we would rather put a guaranteed return in the bank when risk is greater than reward.  Please check out the briefing room for further details of our thoughts and positions. I apologize for not sending an email last week.  My brother's wife passed suddenly last Thursday morning.  Cherie and I took off for Colorado as quickly as we could gather everthing together.  The funeral was Tuesday and we were back in Wisconsin late in the week.  I was the "officiant" of the funeral which was a first for me.  My brother and his wife were closer than any other couple I have ever known.  Viola, you will be missed. Have a great day!! John Norquay CEO PivotPoint Advisors		In order to view the graphs and charts in our newsletter, please click the link at the top of your email to "always show images from PivotPoint Advisors" Resources Check out our Youtube Channel  Like our FaceBook FAN Page We manage money inside 401k plans. Know anyone who may want to use us? Click "Forward to a friend" (immediately below) to share this newsletter with friends you think may appreciate our services. Forward to a Friend Twitter Subscribe to the Weekly Briefing Report Unsubscribe Update Subscription Preferences View Email In Browser