Is Spain About to Pull Europe Down with it?

To listen to the mainstream media, you would think Europe is about to enter some type of economic golden age, even though the situation in Spain is worsening, as the country reported its latest quarter saw the economy contracting more than it was estimated to.

As goes Spain so will go the EU, and so the idea that Spain's economic health getting worse doesn't count much to the clueless reporters, only shows how much of the koolaide they're drinking in an attempt to cover up the disaster of keynesianism, stimulus, debt, fascism and socialism.

All of these have converged and blended to create the economic disaster we're seeing around the world, one that is not even close to being solved, let alone recovering, as most in the media are asserting and reporting.

It's important to note that the irrelevant idea of market sentiment and the reality of how an economy is actually performing are two completely different things, with sentiment having no importance at all, other than to write headlines that are done to make people and politicians good about the disaster that is the global economy.

Spain's GDP dropped 0.7 percent from the third to the fourth quarter, plummeting the most in a year.

The only thing saving Spain and Prime Minister Mariano Rajoy from requesting another international bailout is a robust bond market to start the year. Investors have poured money into Spain to get the high yields offered by the country.

Unfortunately, that will do nothing to change the economy of Spain, which continues to contract, and is expected to for at least two more years, and probably more.

According to the Bank of Spain, the bond money isn't doing anything for what it identifies as "the real economy."

That's the correct assessment, as regardless of how strongly the bonds are selling, Spain's debt load continues to grow, making it the domino that could topple the region.

One bright spot in the entire mess is there are steps to cut back on taxes on entrepreneurs, which is one of the few smart moves coming out of the disaster. It should have been done long ago. But better late than never.

Other than that, there is little if any good economic news coming out of Spain, and there will be a time when it will request even more international loans, and when that happens the future of the country and the Euro zone will again put to the forefront where it belongs, as there is absolutely nothing going forward that suggests this will turn around any time soon.

It's amazing in light of this that the media continue to report Europe has turned the corner economically, when the key country of concern is getting contracting rather than growing. Only the investment in bonds keep the truth of this from going more public. That will probably end soon, and Spain will come back into the public eye where it belongs, so we can see a more accurate picture of what's really going on.

Any outlook or decision not including Spain as a major variable is one that is flawed and faulty.

EU Private Sector Faltering

The recent announcements by a number of corporations participating in the EU concerning slashing tens of thousands of jobs, underscores the reality that the private sector continues to struggle, even as governments had hoped they would help turn the region around.

Among those recently announcing jobs being slashed are UBS (UBS), which said it'll be be getting rid of a massive 10,000 jobs - which has already begun. Other major employers cutting thousands of jobs (aggregately) are ING (ING), Kloeckner, Ericsson (ERIC) and Bombardier.

A growing number of economists believe the next couple of years in Europe will see jobless rates jump to even worse levels than they stand at now. We probably won't know until around the summer months because these current layoffs won't affect data until about six to nine months after the layoffs are implemented.

The major problem in Europe is that governments have finally started to shrink a little, causing bloated staffs to be laid off, but at a rate that the private sector can't keep up with.

Of course it was never a reality that outrageous government debt and spending could be compensated for by the private sector after years of abuse, fraud, and unsustainable promises and practices.

People in some countries don't even think in terms of the private sector as a legitimate work environment because they've been brainwashed into believing government is the great healer of nations. Most are finding out too late that that is a fallacy, and since the private sectors of nations were weakened by these outlooks and effects, it's impossible in a short period of time to rectify all the mistakes that have been made, even if they wanted to.

It has taken far too long for governments in the EU to shrink, and they're no paying for that ongoing irresponsible mindset, as austerity is forced upon the nations of Europe, with a private sector not robust enough to absorb the people being released from work.

The good news is over time this will be positive for the private sector as workers and the rest of the people realize that governments can't provide for them in the ways that were promised. It's productivity that results in prosperity, not artificially created government jobs that provide ridiculous benefits the productive are asked to shoulder. Those days are thankfully coming to an end, as are outrageous union demands.

Because Europe has played far too long with countries that long ago should have decreased the size of government, now the forced austerity is pressuring private companies who must operate under actual market conditions, and not the illusory markets created by governments throwing debt-induced money around while being enabled by central banks and failing Keynesian policies.

Yet some foolish economists continue to say things like there must be growth in the "public" or private sector if some of the nations in the EU are to stay in it. What about limited government and downsizing don't these quacks understand? It's inevitable. These governments and their debt coming from endless spending and programs are through. In a relatively short period of time what they were before the sovereign debt crisis will no longer exist.

There will be governments still in place of course, but the bloated monstrosities they have become will gradually be shrunk down in size to the benefit of everyone but the parasites that used them to their advantage.

In the months ahead we'll see growing pressure in Greece, and probably Spain and others in the eurozone to start thinking in terms of abandoning the euro for their own currencies. That would result in some short-term pain, but over the long haul it would be the best for all countries in the region, as well as the rest of the world.

But if nations continuing to use their central banks as a rich uncle not willing to rein in a spoiled kid's spending don't change, this will extend across the globe, as the United States is hanging on by a thread, and with over $220 trillion in unfunded liabilities facing the nation, and China having taken up some bad Keynesian money creation habits, it may be only time before pressure rises on all of them.

Greece Poised to Vote on Austerity Measure

Even though the coalition government of Greece can't reach a consensus on required austerity measures from international lenders, putting off the vote for another week, there is no doubt a vote will soon come, as it is expected that some time next week draft legislation will be submitted for a vote.

Finance Minister Yannis Stournaras addressed reporters saying "All of the (draft legislation) will be submitted next week. I think there is no other way to do it."

The main battle among the coalition is between the conservative majority and the leftist representatives.

Greece won't receive any more loans unless an austerity package is passed by its parliament.

The much needed labor reforms associated with the austerity measures are being opposed by the leftist, who say they will vote against the package if they aren't thrown out.

Greece Prime Minister Antonis Samaras said this concerning the chaos he sees as following in there is no agreement in place, "The problem is not whether we (introduce) this measure or that measure. On the contrary: It is what we would do if no agreement is reached and the country is led into chaos."

As usual, the selfish Greek unions are lining up to protest the implementation of another set of austerity measures, being unwilling to make concessions that will be economically forced upon them whether they like it or not.

I'm not primarily talking about politically here, but the market itself will force the moves, as the economic practices of Greece, along with other socialist-influenced countries are unsustainable, and a more robust capitalist system (not crony capitalism) must be released through the governments and unions getting out of way and allowing economic liberty to come forward.

It is likely this is the last chance for Greece, no matter which way the vote goes, which will surely be to submit to the austerity measures required by the international lending community.

More importantly, Greece hasn't been forthright with its promises in the past, and even if they get aid this time around, it would be surprising if it ever happens again if they renege on it and continue on with their reckless spending and lifestyles at the expense of Germany, and to a lesser extent, other euro zone members.

Leftist and socialist political parties in Greece continue to act as if they can do what they want and still have access to international funds. Worse, they are still in denial of the fact the promises they have made and the concessions one have never been sustainable, and now the inherent weakness and failure of all socialist economic ideology and policies are again being revealed as unworkable. That's what this is really all about, and nothing can change the realities, no matter what is asserted or fought over.

The money has run out, and the lifestyles lived by Greeks and others looking to the government as their healer and provider, are finding out to their dismay that socialism and Keynesianism doesn't and can't work over the long term.

That is the reality facing all of Europe and America as well. And the sooner it is dealt with, the quicker the pain will pass and economic health will be the result. But since no one is really addressing the issue, even with a nod towards some austerity (it's a deeply ingrained mindset that is the real problem), in the end, until people change their attitudes towards being "owed" something by government and the productive people in the nations of the world, nothing will change.

Austerity will be voted in by the government of Greece. It's a major question as to whether this time around the austerity measures will be adhered to. Either way, this is just a temporary respite, and inevitably Greece will go bankrupt, with other countries following in its footsteps.

Just like the failed USSR, which capitulated to the inability to implement communism and socialism, all other efforts to do so are also doomed to failure.

It doesn't work, and neither does crony capitalism or fascist government agreements and going to bed with businesses.

The free market is the only answer, and while it'll take decades to do so, it will emerge out of the ashes of government interference, fascism, socialism, and any other attempt to deal with economics and people.

Only people taking voluntary actions to interact with the businesses and people they choose to will cause an economy to survive and thrive - whether local, regional or national - and there will be no answer until that becomes the practice of people around the world.

The other major factor is the abandonment of government as the looked-for entity which is to heal and provide for people, which has led to debt that is impossible to pay off. The U.S. alone has unfunded liabilities of over $220 trillion. Yes the trillion is the correct figure. There is no way that will ever be paid off. A default is coming for the American government, and it's only a matter of what type of default, not if there will be a default.

There is no doubt a number of commodities will benefit from the ongoing debasement of currencies in major economic countries, and over time gold and silver will continue to rise in price, as investors realize the U.S. dollar and most other currencies are extraordinarily flawed.

Some gold and silver miners are set to soar, as are the price of silver and gold, which many will make a lot of money off of in the futures' market, with silver looked upon by many as being the probable best investment over the next decade.

In the end, there continues to be no real political will to tackle the spending and debt problem coming from out of control government, and until the economic conditions force governments to shrink and be much more limited and contracted to what their real purpose is, everything will continue to get worse.

Investors need to be aware of that, and make decisions accordingly.

Currencies and Central Banking

A lot of clueless or dishonest economic writers in the West at times attempt to make a big deal out of how China is "manipulating" their currency by pegging it at a certain level against the U.S. dollar. But the truth is Western nations are doing the same, except they're doing in a stealth mode that the general population doesn't understand.

The best example of that is the United States, Great Britain and the Euro zone, all of whom, via the U.S. Federal Reserve, the Bank of England and the European Central Bank (ECB), employ strategies to manipulate their respective currencies against one another and other currencies to keep the competition from being overly volatile, to the detriment of one currency against another.

That is done simply through inflating the currency, or in other words, through the printing of paper money, or the creating of digital money out of thin air. If one country does it, such as the the United States when the Federal Reserve announced its most recent round of quantitative easing by buying up $40 billion in mortgage-backed securities indefinitely, other countries will do it as well to ensure their currency doesn't become too strong against the U.S. dollar, which would be detrimental to exports in the country or region.

So if one currency gets weaker, the strategic response is to weaken the competing currency in order to order to keep a predictable balance between the currencies.

This is what maddens these dishonest countries concerning China, which is actually much more honest in its currency policy, announcing it right out in the open and pegging it to the up and down movements of the U.S. dollar.

The Japanese, British and nations of the Euro zone do the same thing, only through the mechanism of printing more money, rather than pegging their currencies to the U.S. dollar; the results are the same, but just hidden behind the smokescreen of money creation.

As those in power continue to strive for a one-world government and economic zone, these are the tools used to hide their practical agenda, as few people understand what's really going on and why.

Moves like this continue to strike a dagger into the heart of free markets, as currencies should be allowed to float freely against one another without government and central banking interference. That's where the markets will determine the outcome and response to it, not central planners who believe they can control the economic world.

The point is we must be vigilant and aware of what is happening and why concerning currencies, as they play a major part in any investment decision across a wide spectrum of equities and commodities.

Because central planners always will fail, eventually this will change as one important country or another decides to go their own way in order to protect their own interests. When that happens some of this currency scenario could quickly change. But for now, it appears there are some deals being made behind closed doors to keep some of the volatility out of the currency market.

Spain Will Tap Aid from ECB

The disingenuous and dishonest assertions by some in the Spanish government that they are thinking about not taking the bailout money from the ECB are ridiculous, as there is no doubt, regardless of the posturing of Spain, that they will keep on going as they are without aid, or take the route of getting a line of credit. Both ideas are ludicrous, and won't fly under the growing pressure from the eurozone for Spain to access the capital.

According to the Spanish government, the company is in the midst of contemplating on the economic direction it wants to go, but this is only for its population, which will resist the expected austerity measures that accompany access to ECB aid.

The idea that Spain will continue to borrow at the high rates it currently is in the bond markets doesn't pass the smell test, and the European Central Bank will surely be given permission to buy bonds in order to lower the borrowing rates of the country.

Those watching the situation don't believe Spain even has several weeks to wait, and its politicians are probably trying to wait until after the elections on this Sunday before caving and tapping into the aid.

Germany, as usual, has also attempted to position itself as against Spain being bailed out, asserting it has no need of one. Angela Merkel will attempt to make it look like she opposes it as well, but like in her past actions, will try to make it look like she valiantly fought against it, right up to the time she gives the go ahead for more bailouts to continue. Again, all of that is so the German people are made to believe she's battling on their behalf, while all the time already knowing and deciding that the bailout will happen for those countries in the eurozone that ask for it.

Investors and those affected by the decisions in the eurozone need to know that the game is completely rigged, and Draghi was telling the truth when he said he's committed to doing whatever it takes to save the euro and the eurozone. There is no question the majority of leaders in the EU agree with him, and support whatever it takes to get it done.

Standard & Poor's downgraded the credit rating of five major Spanish regions Wednesday, including Canary Islands, Andalucia, Aragon, Galicia and Madrid. That puts even more pressure on the country to take aid before investors start to sell of Spanish bonds.

Overall Spanish debt was recently lowered by Standard & Poor's to BBB-, only one step above investment grade ratings. Below that is junk status, which would make it much more expensive for the Spanish government to borrow capital. Bond investors, as mentioned, would flee from their bond holdings if that were to happen, which is a likely probability.

For now, Moody's (MCO) is also keeping its lowest rating on Spanish credit without cutting it down to junk status. It has a Baa3 rating on Spain.

Taking all that into consideration, there is no doubt Spain will get aid from the ECB. The market is simply waiting for that to happen, and when it does, gold and silver prices will get a nice bump.

Greece Won't be Repaying Debt

For those who really understand what's happening in the euro zone, it isn't surprising in light of the visit by German Chancellor Angela Merkel to Greece, that it highlights the fact that Greece won't be repaying its debt anytime soon, which according to the IMF, will climb to an astounding 171 percent of gross domestic product (GDP) in 2012 and 182 percent in 2013. 

The IMF adds that Greece won't be able to pay the five-year debt reduction target that was the foundation behind receiving the $130 billion euro bailout. The original goal of cutting the debt level of the country to 120 percent of GDP by 2020 is now considered an impossibility by the IMF. It says the existing debt will now need to be restructured. Some economists saw this coming even before the bailout was put into effect, and many in Greece continue to demand that the austerity measures required to receive the money be, for the most part, rescinded.

 Talking to CNBC, former deputy minister of economy and finance, Peter Doukas, said, "The Greek debt is not repayable at this point. The economy is too weak to afford a 300 billion euro ($387.9 billion) plus debt." "Perhaps now isn't the best time to talk about it, but very soon we're going to have to talk about rescheduling of Greece's official debt. It simply isn't repayable," Doukas added.

 Doukas concluded, "There's going to be an official debt haircut or restructuring or rescheduling of sorts. My feeling is that it needs to go 15 years further in terms of maturity and a cutting of interest rates by at least 1.5 percent." Personal incomes have plunged by 25 percent in Greece, and unemployment among young people has soared to 55 percent.

 The question now is if Greece can in any way be trusted. The outrageous obsession by some in the euro zone to keep the failing and tenuous region together appears to at this time, be willing to be done at any cost.

But Greece and other economically failing states have exposed the soft underbelly of the agreement, and it's only a matter of time before some of these states are required to take real austerity measures in order to get their loans, or they'll be forced to go back to operating economically using their own currencies.

 At this time the will to save the European Union remains strong, and some leaders will continue to take the misguided and immoral steps to keep it together no matter who it hurts. That can only go on for so long before outrage from the productive workers and markets that are more free than the failing socialists governments weighing on economic Europe, rise up and rebel against those parasitical states that continue to drain the coffers of the region.

 Those wanting to use Europe as the stepping stone for a new world order know this could set them back for many years if it fails now. They are doing everything to ensure it doesn't, but the fallout from those efforts could trigger even more problems than the fall of the EU, euro and euro zone would bring.

At this time is appears it doesn't matter to those attempting to lead this attempt at a global coup.

Why Metals, Energy Look Attractive Going Forward

With the misguided commitment from major central banks around the world to "stimulating" the economies of the countries or regions they are based in, especially the euro zone, United States and Japan (China will probably stimulate soon), it predicates the probability that energy and base metal commodities, along with gold and silver, should push up in price over the next several years, with some possibly extending even longer, such as in the case of silver.

Even if there is a further global economic slowdown, the fallout from the stimulus efforts will start to point to resources and resource companies as one of the few viable places to place one's capital.

As measured by inflationary pressures, oil, gas and other commodities get more attractive as the U.S. dollar falls in value, as it will continue to do as money continues to be created out of thin air.

The caveat will be how much competing currencies fall in relationship to the U.S. dollar.

Successful commodity investors in the near future will be those who properly analyze the valuations of a particular commodity; getting in before it begins its upward run in price.

Some commodities at this time are overbought, while others are still available at a good price.

For example, natural gas appears to be at, or close to a bottom, so there is, for the most part over time, only one place to go, and that's up.

And even if there is still a little room to move down, the price of natural gas for long-term investors is very attractive, and those entering now should reap significant rewards over the next several years.

Oil on the other hand may be in for some rough times, as it may be on the opposite end of the spectrum, possibly ready to pull back significantly after years of high prices.

The geopolitical situation will weigh more on the prices than other factors, as many energy companies have improved operations to the point where there is a lot of oil available at lower costs than in the recent past.

So with the certainty the Europe and the United States will continue to inflate through fiat money, and Japan continuing on the course it set a couple of decades ago, there is little reason to believe a number of commodities won't continue to be among the best performers going forward, especially in precious and base
 metals, as well as in some energy segments.


 

Jim Rogers Doubtful of QE3

Billionaire investor and commodity expert Jim Rogers says he's not convinced the Federal Reserve and Chairman Ben Bernanke will implement another round of quantitative easing, saying they would "look like fools again."

"QE1 failed, QE2 failed, so I'm not so sure they would announce QE3, because they'll look like fools again," said Rogers.

He already thinks that's the case with the introduction of the Draghi plan for Europe, which was ruled as being in line with the constitution of Germany Wednesday by its Federal Constitutional Court.

Rogers concluded:

"We're all going to pay a horrible price for this in a year or two or three," adding that it's only a tool that is "unanimity towards mutual destruction" by the West.

Although it's almost a surety that the Federal Reserve will implement QE3, the ruling that the European Stability Mechanism can be implemented in the euro zone does make it possible that Bernanke will wait until later in 2012, or maybe early 2013 before launching QE3.

If Europe hadn't acted, Bernanke would have been under even more pressure than he is to stimulate the economy, even though it has proven to be a waste of money.

Rogers is correct concerning the consequences of the actions of central banks around the world, which continue to go deeper into debt as countries raise their debt ceilings and spending to unsustainable levels.

Over time commodities will thrive in this atmosphere, as prices will rise if stimulus continues, and they'll also rise because little in the way of new production is being entered into by commodity-producing companies because of the slow economic growth.

It's a win/win for commodity investors either way. Rogers recommends looking for commodities that are trading lower for best results, as commodity prices in many segments have been soaring lately.

Jim Rogers Says Euro Zone To Pay 'Terrible Price'

Billionaire investor and commodities expert Jim Rogers said in an interview on CNBC today that the euro zone will pay a "terrible price" going forward no matter if the European Central Bank (ECB) launches a large acquisition of bonds or not.

Rogers said: "These guys have been saying the same old garbage for a long time. It's not a game-changer - it's good for the market for maybe a month. The debt keeps going higher and higher and eventually we'll all going to pay a terrible price."

As for what he considers a misguided idea for investors to get back into buying some riskier assets because of the announcement, he said this:

"It's not an opportunity to make money for me. This is not good for the market and it's not going to last. Every three or four months they have a summit and they say: Ok guys, everything is ok now. The market goes up. But we're getting a little tired of this and the market is getting a little tired of this," Rogers noted.

As for the commodities bull market Rogers has predicted and continues to assert will last for a long time, he said this:

"The bull market in commodities will end some day - but some day is a long way away.

"Commodities have been correcting for a while. Now everybody knows they're throwing money into the market, and history tells you that when they do this the way to protect yourself is to own real assets whether it's silver or rice. If the world economy gets better, I own commodities because there's shortages developing. If it doesn't they're all going to print money. It's the wrong thing to do, but it's all they know to do."

There is also a growing belief that the Federal Reserve is poised to introduce another round of quantitative easing in the United States, and the central bank of China is also believed to be ready to provide more stimulus in its slowing economy.

Over the long term, when added together, it'll be a powerful impetus for numerous commodity price increases.

Silver Wheaton (SLW) CEO Says Silver Will See More Pressure

In an interview, Silver Wheaton (NYSE: SLW) CEO Randy Smallwood said he believes precious metals, including silver, should remain under pressure over the short term because of the ongoing economic crisis in Europe.

“Any strength that comes into the dollar impacts silver." Consequently, over the short term they will “probably see a bit of pressure in the short term,” concluded Smallwood.

Because commodities are acquired in U.S. dollars, those residing outside the United States will pay more for precious metals when the dollar strengthens.

Commenting on the financial health of silver miners, Smallwood added that they're having difficulty acquiring capital because of the fall in price of silver.

The problem is the type of capital being made available via loans would dilute the equity of the miners, something they don't want to participate in.

Smallwood didn't say anything in regard to this, but it does make one wonder if this is an excellent time for Silver Wheaton to enter into more streaming agreements with the miners because of the tight lending market.

The faltering euro zone is also connected to this, as European banks were the top lenders to the miners, and with the challenges there they've tightened up their lending.

Over the long term, because of the growing industrial demand and uses of silver, along with the lower recycling rates, Smallwood says he's extremely "bullish" on the metal over the long haul.

Silver Wheaton closed Tuesday at $27.92, climbing $1.03, or 3.83 percent.

Silvercorp Metals (NYSE:SVM) Falls on EU Debt, China Fears

Silvercorp Metals (NYSE:SVM) (TSE:SVM) got clobbered today, along with most precious metals companies, as the overall sector plunged, with traders taking profits and growing concerns on how the Europe debt crisis and inflation problems in China will have an effect on demand for raw materials.

China is especially a concern for Silvercorp Metals, which operates solely in the middle kingdom, and uncertainty as to how deeply China will take measures to battle inflation. They've already raised interest rates, and have introduced more regulation into the property markets.

The issue is demand and nothing else, and Europe and China are major markets to have both potentially decline in demand at the same time, which could very easily happen.

Silver producers like Silvercorp Metals can be hit hard because it's used in so many products, which if cut back, could decrease demand in a big way, along with earnings.

Silvercorp was down over 8 percent at the close, but has regained some of that in electronic trading.

Joy Global (Nasdaq:JOYG) Plunges On Export Concerns

The economic mess in Europe continues to pull down manufacturers, and Joy Global (Nasdaq:JOYG) dropped over 7 percent on Friday to $50.59, although they've gained some of that back in after hours trading.

What driving the prices of Joy Global and competitor Caterpillar (NYSE:CAT), is the impact the bailout of the socialist, welfare nations in Europe is having on the euro, which has resulted in the U.S. dollar strengthening against it, wreaking havoc on earnings, which are under pressure.

There is nothing that can change the collapsing euro, and as the money is poured into the European nations, it'll continue to fall in value, with a growing number of analysts and economists thinking it won't survive in the years ahead.

Joy Global is especially vulnerable to these circumstances because they do close to 50 percent of their business overseas.

This will unfortunately change the fortunes of the company, which has a tremendous year, with a range of $27.92 - $65.93 for its shares.

Marc Faber: Boot Greece!

Marc Faber said recently the European Union should boot Greece out of the European Union, and any other country which refuses to operate within the parameters laid out by the EU.

Talking to Bloomberg, Faber said, "The best would be to kick out Greece and the countries that abuse the system. They didn't have the fiscal discipline that was essentially imposed by EU."

Attempts to paint Greece as unique to the EU is ignored, as the threat of sovereign debt contagion is real, and there's little that can be said to convince us that things are different than that reality.

Jim Rogers has called for the EU to just let Greece fail, as another way of dealing with the situation, in order to show they are serious about the euro and countries adhering to the guidelines put forth.

Until government is limited, central banks closed down, and the culture of entitlement dealt with, there is very little that can be done to change things, the reason this is only the beginning of the sovereign debt crisis, which threatens to engulf the world.

Portugal Credit Downgraded by Fitch Ratings

Portugal Sovereign Debt

Fitch Ratings downgraded the long-term credit of Portugal from AA to AA-, reinforcing the depth of the crisis Europe and the euro continue to face.

Pierre-Oliver Beffy, chief economist at Exane, said sovereign risk will continue to be an issue in the region for another 5-10 years. Beffy added, "We think that the Fitch comment is very lagged and reflects the adjustment of rating to lower growth outlook in countries where austerity plans are implemented."

Almost everywhere I read this has attempted to be made to look like an irrelevant event, but in fact it's extremely important, not simply as a reminder of the problems facing Europe and the euro, but as a mirror of the reality of the depth of those problems.

We probably haven't even began to see the consequences of the problems in Europe yet, and that's not only in reference to Portugal, Italy, Ireland, Greece and Spain. Other countries are struggling as well, although that's not as easy to discern on the surface as the more obvious PIIGS are.

Portugal Sovereign Debt

George Soros Betting Against Euro

George Soros and Euro

George Soros is swooping in like a vulture on a carcass with the euro, as the currency expert who has made the vast majority of his fortune betting on currencies, is looking to make another killing by betting against the euro.

Via his Soros Fund Management company, Soros is putting a huge amount of resources to generate what will eventually be an extraordinary sum of money made from the euro crisis stemming from the PIIGS in southern Europe: Portugal, Ireland, Italy, Greece and Spain.

Soros isn't alone though in his hedge fund focus, as others are salivating to get into what looks like one of the surest bets around to make a once-in-a-lifetime deal on.

George Soros and Euro

Commodities: US Dollar Strengthens

As Europe is starting to be hit hard by a weakening economy, central banks dropped lending rates in hopes of spurring investment. In response, the U.S. dollar strengthened today against the British pound and the euro. That won't keep the collapse of the U.S dollar from happening.

While the move by the European Central Bank of cutting its benchmark rate by 50 basis points was as expected, dropping it to 3.25 percent, the Bank of England shocked investors with an extraordinary cut of 150 points, bringing rates down to 3 percent. The Swiss National Bank dropped rates by 50 points to 2 percent.

ECB President Jean-Claude Trichet said in a Reuters Television interview that a cut next month is a possibility, depending on the circumstances faced.

"I didn't exclude a further cut in December, depending on the data, depending on the information that will be gathered, depending on the projections that we could examine at the time, including of course the staff projections."

Analyst believe the rates for the ECB will drop to 2.5 percent by the middle of 2009.

Trichet added that while it looks like inflation will fall below 2 percent for 2009 for the Euro zone, oil and commodity prices will determine if that will be the reality. In October inflation dropped to 3.2 percent from its high of 4.0 percent during the summer months.

The European Commission isn't expecting any economic growth in the region over the next year.

All the ups and downs of the U.S. dollar, and the press alerting us to when it rises, won't keep the greenback for collapsing sometime soon - the U.S. dollar could collapse in 2009.