Stocks and currency prices crashed in Italy earlier this month, again, as the country continues to hemorrhage money and threaten to leave the Eurozone. Many hedge funds are making a profit on this, or at least trying to, as Europe continues to crash. Quoting a recent New York Times article:

From 2010 to 2012, a parade of investors, deeply skeptical about the eurozone’s ability to hold together, wagered that the bonds of debt-plagued countries like Greece, Ireland, Italy and Spain would keep falling. It became a self-fulfilling prophecy as pension funds, mutual funds and banks sold these suddenly risky securities.

Yep. As Lew Rockwell correctly pointed out many years ago, the big banks have their foot on Europe’s neck, and are continuing to slowly crush it. And what is Europe’s leaders and voters doing about it? Embracing more big government socialism and importing millions of third-world immigrants.

Great. I’m sure that will work out well.

For hedge funds that were wagering on a new Italian debt crisis, the market turmoil was a profit bonanza. And they are betting there is more to come.

Hedge funds have been building up their short positions for months, betting that Italian bonds will face another bout of selling pressure once investors recognize that the new government might consider taboo topics such as adopting a currency other than the euro and restructuring Italy’s debt.

Yep. Countries collapse, citizens get screwed, and a few of the super-rich get richer. This is exactly what eventually happens to cultures that worship government power the way the Europeans have for most of human history. And now this zeitgeist has been exported to the US. Cool.

The Continentwide fire sale was halted only when Mario Draghi, the president of the European Central Bank, put in place an aggressive program to buy the bonds, which made their prices soar and their interest rates fall.

Now, as the E.C.B.’s bond-purchasing program draws to a close, the same strains that prompted the earlier bout of selling — weaker countries running up potentially unsustainable debts — are showing again.

This precisely is why I call it Suicidal Europe. Europe is doing exactly the things that will destroy itself, over and over again. It’s even worse than what the USA is doing, which is saying a lot.

Near-bankrupt Italy’s response to all of this?

In Italy, for example, the new government is promising an aggressive spending program to spur the country’s stagnant economy. The populists are not deterred by the fiscal restraints imposed on eurozone countries by Brussels.

“These people feel very strongly that deficit limits make no sense,” said Jens Nordvig

HA!

Yeah! Let’s spend even more money and do more socialism and go into even more debt! That will fix everything!

Watching Europe implode is like watching an insane man dying on the operating table, repeatedly stabbing himself with a small knife while laughing hysterically.

It really is amazing to watch. We have the very rare opportunity, not experienced by most humans who have ever existed, to watch a once great civilization, Europe, actively destroy itself. It will die not because of external threats, wars, barbarians, Nazis, or aliens, but because of itself; its own insane and suicidal voters and politicians. It’s a dumpster fire of historical proportions.

My advice, as always, is to not get mad (which is useless), not try to stop it (it can’t be stopped at this point), but instead get far away (both literally and financially), grab a lawn chair and a lemonade, and watch the show from a distance.

It truly is the greatest show on Earth.

14 Comments on “Europe Continues Its Decline; Italy May Go Next

  1. News flash: The US has more debt than all of Europe combined.

    Also: European countries differ greatly in debt. The most socialist  scandinavian ones, have some of the lowest debt (both per GDP and total, but total is unfair due to low number of citizens).

    Don’t get me wrong  I agree that we are all fucked, but the US is even worse off if you look at the numbers.

  2. Since reading Hazlitt’s book any time a government “Intervenes” economically I just laugh.

    Very few governments know what they’re doing these days.

     

  3. News flash: The US has more debt than all of Europe combined.

    News flash, the USA has a much more productive work force, a growing GDP (yours is declining), has the world’s reserve currency, doesn’t have negative interest rates, and doesn’t have the immigration quagmire you guys have.

    Caleb is right, we’re all fucked but Europe is fucked first.

  4. we’re all fucked

    Haha you guys keep saying “we” are fucked. I’m not fucked… and you don’t have to be either if you follow my lifestyle advice.

    Whether or not you’re fucked is up to you, not whatever bullshit country you live in (USA and pretty much all of Europe are included in the category of “bullshit country”).

  5. Caleb, on the Blackdragonblog you have written two posts with book recommendations about Alpha mindset, business, marketing, etc.

    Could you do a similar list on this blog that focuses on the best books about understanding the world from a libertarian perspective? A list featuring books from people like Ayn Rand, Henry Hazlitt, Roland Baader, Ludwig von Mises, or whoever inspired your political worldviews.

    That would be cool.

  6. And what is Europe’s leaders and voters doing about it? Embracing more big government socialism and importing millions of third-world immigrants.

    An interesting possibility is debt repudiation. When a country simply says, “Fuck it, we are simply not going to pay off our bonds, and what do you intend to do about it?”

    The bankers will tell you that this is a certain road to ruin. The truth is that countries that do it recover their economies shortly thereafter. “But no-one will lend such a country money ever again!” – ridiculous. Of course people will.

  7. Could you do a similar list on this blog that focuses on the best books about understanding the world from a libertarian perspective?

    I honestly haven’t read that many libertarian books beyond the usual basics; much of my research has been online. But a post about how I became a libertarian would be a good idea. I’ll add it to the list.

    An interesting possibility is debt repudiation. When a country simply says, “Fuck it, we are simply not going to pay off our bonds, and what do you intend to do about it?”

    The bankers will tell you that this is a certain road to ruin. The truth is that countries that do it recover their economies shortly thereafter. “But no-one will lend such a country money ever again!” – ridiculous. Of course people will.

    Yeah I more or less agree. Several South American countries have done similar things and the world didn’t end.

    The point, though, is to stop getting to the point where this is necessary. You don’t see small-government countries like Hong Kong with this problem.

  8. Seconding the “how Caleb became a libertarian” idea. Would love to see more posts from you regarding your specific take on libertarianism and past authors (if you ever do get a chance to read up).

    I intend to follow as much of your advice as I reasonably can, but I was thinking about joining up with federal law enforcement. Would this necessarily destroy my future capacity to be location-independent like you? Do you have any advice to give to somebody who’s looking to join border patrol and potentially the FBI in that aspect, preferably something other than “just don’t”? I’m in my early 20s right now, if that helps any.

    Thanks.

  9. I intend to follow as much of your advice as I reasonably can, but I was thinking about joining up with federal law enforcement. Would this necessarily destroy my future capacity to be location-independent like you?

    If you stuck with it long-term, yes. Doing so would make you an employee and employees (i.e. slaves) are not location independent.

    Do you have any advice to give to somebody who’s looking to join border patrol and potentially the FBI in that aspect, preferably something other than “just don’t”?

    “Just don’t” and then focus on either starting a business or getting a temporary career in marketing or sales.

  10. In all honesty I think most most of Southern Europe is fucked.

    Hey Caleb, not now because the election hasn’t really kicked into high gear but do you think we can get an Analysis of California when it’s closer to Gubernatorial Election in November 2018?

    Essentially Jerry Brown abdicating the throne an Prince Gavin Newsom becoming the new Governor..

    This really will be the final push to Fuck California into declining and the Whole World will be watching. He wants to raise taxes, block the repeal of the Gas Tax, and sorts of Fuckery..

    Although I don’t have much more faith in the Republicans and we still will eventually decline it’ll be a lot better if Republican John Cox wins..

    California is fucking pissed at the Democrats, just like with 2016 we maybe in for a big surprise this year.

  11. but do you think we can get an Analysis of California

    No. I don’t care about California. It’s fucked, and perhaps the worst state to live in financially.

  12. Incorrect!! Not Perhaps Caleb it is the worst State in the Union financially to live in!

    100% Correct California is as good as Fucked.

    Female Wise though.. in So Cal I’d say it’s one of the best locations in the Union (IMO) and it’s flanked by Lake Havasu, Vegas, and Mexico

  13. Incorrect!! Not Perhaps Caleb it is the worst State in the Union financially to live in!

    No, it’s perhaps. New York state is a dreadful state to live in financially and could very well be as bad or worse than California. Other NE states like Vermont, New Jersey, etc are also quite horrible financially.

  14. Hmmm, there’s one bright light in Europe that contrarian Alpha 2.0s might be able to take advantage of in the near future.

    Poland.

    The Poles have taken charge of their future, refuse to play along with EU bullshit, and have an economy that has been growing at a steady rate since 1989. They have the lowest public debt in Europe, indeed, one of the lowest in the world. They have almost no uneducated fundamentalist Islamic migrants.

    They have economic free zones where starting a business can be done quickly, and with the lowest corporate tax rates in Europe. They are churning out scientists and engineers who are excellent (I can vouch for this, have worked with many.) You can get shit done in Poland. Fast.

    And Polish women.

    They’re still located in the middle of a collapsing mess, but for nimble entrepreneurs who want to make hay while the making is good, Poland might be a great place to work in a sane European country.

    There actually is a Polish citizenship by descent program for people from Polish emigrant families, which enables you to get a Polish second passport, but it’s not simple:

    http://nomadcapitalist.com/2014/05/01/get-polish-citizenship-descent/

    People might find this video interesting:

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