Thursday, April 29, 2010

Gold, Crude Oil & Canadian Dollar

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The Greek bailout may cause a domino effect in other European nations. This bailout could be akin to opening Pandora's Box, especially given that this bailout is funded by other euro-zone members with debt problems of their own, which is likely to make the problem worse if contagion spreads.

This past weekend, The Wall Street Journal reported that Greece is not alone. Italy is forecasted to have a higher debt-to-GDP ratio than Greece, and several other euro-zone nations will reach 80% ratios by 2014:
Forecast of 2014 debt-to-GDP ratio*

*Source: Ernst & Young

At Friday's G20 meeting of finance ministers and central bank governors in Washington DC, concerns about Greece were paramount, but everyone seemed to ignore the other euro-zone debtors and the U.S. The U.S. debt-to-GDP ratio is forecasted to reach the same range as France, Ireland and Spain (80% to 100%) by 2014, but the U.S. has the advantage of borrowing at super-low interest rates, at least for now.

Despite the incredible amount of news about Greece's sovereign debt problems last week, The Financial Times warned that "America's disastrous debt is Obama's biggest test." >>READ STORY The resulting rise in U.S. interest rates could result in the world's biggest credit crisis and potentially the collapse of the U.S. dollar.

Dennis Gartman of "The Gartman Letter" weighs in on the Canadian Dollar & gold.