Now THAT'S Italian!

November 14, 2011
	The briefing was updated yesterday and can be found in The Briefing Room. I mentioned last week that we didn't have much going on within our economy so the reporters could focus on Europe, and that they did.  Italy has risen to the forefront and caused our market much volatility this last week.  They have a lot of their debt coming due this next year and since they don't have the money to pay it off as it matures, they need to borrow more to make the payments.  Unfortunately, their credit isn't very good anymore and the credit card company (the market) is increasing their rates.  It is said that if their rate gets to 7% then they will go broke.  It hit 7% this last week.  They say Italy is too large to save, rather than too large to fail.  The reason Italy's debt is only at 7% is because the European Central Bank is the one lending them money (maybe because the actual market doesn't want the default risk?). What some say was a draft of the actual letter, Standard and Poors released (accidentally) a notice that France was being downgraded from AAA status.  If (when) this occurs for real, then the bailout fund for Europe is worth no more than the paper it is written on (since it is only IOU's in the first place). More comes to surface regarding the Greek bailout.  As it turns out, the banks voluntarily (under coercion) forgave 50% of Greece's debt to them.  At the same time, the International Monetary Fund, European Central Bank and others who forced the bank's hand, didn't forgive ANY debt that Greece owed THEM.  This means that the public is being told Greece can now afford their new package, when in all reality their total debt only decreased by 20 or 30 percent rather than 50.  Some well informed people believe 90% will need to be forgiven before Greece can grow their way out of their mess. Ireland's banks went bust and their people were stuck with the bill.  They just paid the European's $1 Billion dollars of interest and aren't happy about it.  It isn't fair they got stuck holding the hot potato and are looking to toss it at their first chance.  They know their chances are coming as other Countries begin to fail. The way out of this mess?  Either years of recession and depression in most of Europe as they rebalance all this debt OR talk the European Central Bank into printing more money.  The ECB is in Germany and so far has absolutely denied they would EVER do this.  This situation reminds me of when we left the gold standard.  We first made a rule that we would only print X amount of dollars compared to the value of our gold reserves.  Then when we needed more than that,  we changed the rule.  This happened 4 times before we simply took away any rules as to how much we could print.  Look where it has gotten us today. I have quite a busy week, so I'm going to end this here.  This week could be interesting as Italy has found a new leader.  So far, the market is pointing downward to begin the week as it digests this news and the news that Germany absolutely won't allow countries to issue joint government bonds (similar to printing money). Please read the briefing this week.  It breaks down the technical aspects of the market  as Europe throws us to and fro. 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