DEXIA: Europe's First Domino?

October 10, 2011
	This week's briefing can be found in The Briefing Room. Does the name Dexia sound familiar?  If not, it should.  This huge European bank has assets greater than the entire Greek banking system and larger than the combined assets of all the banks bailed out in Ireland over the last couple years.  Dexia was the world's largest lender to municipalities.  Now it is being dismantled under a bailout plan after its funding evaporated.  In my humble opinion, this is the first domino to fall. Germany quickly promised to work something out so their failure wouldn't cause all the dominos to begin falling.  They said within the next 2 or three weeks they would have a plan.  This promise has caused our markets to catapult up 2.5% this morning.  Wow.  Really? Angela Merkel on the Size of Greek Debt Problem The problem with this promise?  They have been working on this problem for two years already.  It isn't like the U.S. where a few committees can gather and make a decision.  There are many sovereign Countries involved with each having its internal politics to work through.  Unfortunately, politics is the easy part of the problem.  The greater problem is the system needs about 6 trillion Euros to resolve the debt crisis.  How much do they actally have?  400 billion. Before your eyes glaze over from these large numbers, lets get a feel for the difference between 400 billion and 6 trillion.  We will begin with a mere million.  If you had a million dollars, you would have a dollar for every second for 12 days.  A billion dollars would be a dollar for every second for 33 years!  A trillion dollars is a dollar for every second for 33,000 years!!!  If you do the math, you will find the bailout pool available is only about 7 percent of what they need. "Won't you be able to bail out one problem child at a time?"  It would be nice if you could simply bail out Greece and then recover a couple years and then bail out Spain, etc.  However, when a parent bails out one of their children, the other children want to be treated fairly and equally.  All these countries in trouble are waiting for the first deal to be made so they can jump on the band wagon.  It seems like human selfishness would rather see all of Rome burn than give up an "entitlement". Because of the above, I believe this pop in the market, that came from a new lower level, will fade quickly and join the rest of the downturns that have rocked our market.  The bright side?  The market doesn't care what I think! In this week's briefing Don points to a potential shift occuring in the momentum of this current down trend.  If he is right, we may have an opportunity to make some money soon. For those of you who missed the live webinar, you can watch it here.  This is about an hour and a perfect way for someone to get a feel for our investment approach. For those of you who might not understand who Don Miller is and his capabilities, spend 50 minutes watching this video (episode 6) and you will know why he is managing YOUR portfolio. 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