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Comment by chailatte | Hacker News Reader

The bubble has burst.

- Greece has defaulted. After that, Italy/Ireland/Portugal/Spain/Austria/Belgium will soon follow, and France will be downgraded, and Germany will leave the EU.

- Japan is suffering -5% GDP per year. 70% of the nuclear reactors are offline. Rice/Beef/Vegetable/Water radiations have been reported.

- China's stock market just dropped 30%. The hidden banking crisis will finally surface and blow up alot of banks. The ugly inflation that follows will induce further unrest in a country of a billion people.

- US is about to have a series of downgrades. States and local munis will seek bankruptcies after downgrades. Hyperinflation will start. Social security, medicare will be wiped out.

All signs point to the second dip in the global economic depression.

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Things are bad, certainly, but let's not overstate. This reads like a very hyperbolic list of doomsaying to me.

China did not drop 30%. Predicting Austria will default is highly negative speculation. Hyperinflation in the USA? Not anytime soon. It is still the reserve currency, especially in oil, if not by merit then by default. What else is there?

Shit's getting serious, yes, but I think your list takes it too far.

Hyperinflation will start

I bet you a trillion dollars that it won't.

You have a cheery outlook... Can you provide sources for your points?

And I disagree with your statement of "[h]yperinflation will start":

"Treasury yields remain near historical lows. Investors are willing to accept negative real returns on American government debt out to 7 years. When it comes to perceived asset safety, few investments compare. And the worse things look, the better Treasuries look."[1]

1. http://www.economist.com/blogs/freeexchange/2011/08/american...

Austria will default? That seems very funny to me, but maybe you know more than me. I'm actually really laughing, what makes you think Austria is in any danger? I think you are being paranoid.

Those are some pretty bold predictions.

Germany is a net exporter and they gain by freer trade throughout the euro zone, so I doubt the will leave the EU. Will the leave the euro is another question.

Yeah, nobody is predicting the breakup of the EU, but a lot of people are questioning the value of a single currency with a multiplicity of national banks.

Rest assured, the Union itself is here to stay.

Right, and those national government banks do not have credible deposit insurance for national banks. So a bank run is possible. During the US crisis in 08/09 we had the Fed/Treasury complex insuring deposits and supplying liquidity which they can do in infinite amounts. Euro-zone nations are not sovereign and are at the mercy of the ECB. You underestimate the risk of a breakup, the Euro is broken.

I think its a good possibility. Germans feel they are subsidizing the Euro-Zone periphery countries. Now with the ECB having to continue to issue currency in exchange for bank liabilities and national government bank liabilities, Germany may perceive this as inflationary ( though it is probably not) and given German history ( Wiemar, etc) they are sensitive to this type of policy. As such, wouldn't it be much easier for Germany to leave the Euro than the reverse?

Greece has defaulted.

You're overstating that -- I smell a troll. Greece did not default.

China's stock market just dropped 30%

False. It dropped 3.9%, hardly a serious problem for the Hong Kong market.

After that, Italy/Ireland/Portugal/Spain/Austria/Belgium will soon follow, and France will be downgraded, and Germany will leave the EU.

Yes, and then the sea will turn to blood, the fields will be infested with locusts, the Moon will explode, and every human on Earth will break out with huge boils on their skin.

Soon we'll all be living in caves and hurling feces at each other.

You're overstating that -- I smell a troll. Greece did not default.

In http://www.telegraph.co.uk/finance/financialcrisis/8653634/G... I see Greece being described as having defaulted. Perhaps it is not publicly being called a default, but for all intents and purposes it is one.

Have the counter-parties insuring Greek debt paid up?

No. However Fitch put a "default" rating on Greek bonds, and there were headlines declaring a default.

The trick is that private parties are supposed to "voluntarily" forgive Greek debts. But they are negotiating with a gun to their head. And one way or another Greece won't be paying what it says it owes.

So some people call it a default. Others don't. But it is a pretty fine distinction either way.

China's stock market dropped 30% this year to date

So Europe's bank implodes. People will live normally, just with more austerity. Who said caves and feces?

What kind of bubble are you talking about? A tech bubble? Based on what -- three IPOs?

US is about to have a series of downgrades. States and local munis will seek bankruptcies after downgrades. Hyperinflation will start. Social security, medicare will be wiped out.

This sounds more like hyperbolic doomsday predictions than a likely outcome.

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