Well its the last day of the month and the world economy standing in the mid of year 2012. Lets try to pull the events by connecting the dots and see where the world is :
1) After months weeks years of posturing and denial Spain and Cyprus formally requested aid from Europe bailout funds. More so they have officially confessed to their insolvency and the insolvency of their banking system.
Spain 10 year bond yield breached the worst level and it touched the 7% in return many od the Spain bank ratings got junk by Moodys

2) Over in the US, the city of Stockton, California filed for bankruptcy this week… the largest so far, but certainly a mere drop in the proverbial bucket.

3) JP Morgan, considered to be among the few ‘good’ banks remaining in the US, conceded that the $2 billion loss they announced several weeks ago might actually be more like $9 billion.

4) The Federal Reserve reported yesterday that foreigners are reducing their holdings of US Treasuries.

5) Countries from Ukraine to Kazakhstan to Turkey announced that they have purchased gold in recent months to bolster their growing reserves.

6) Chile has joined a growing list of countries that has agreed to bypass the US dollar and settle all of its trade with China in renminbi.

7) China has further announced plans to create a special zone in Shenzhen, one of its wealthiest cities, to allow full exchange and convertibility of the renminbi.

8) World banking regulators from the Bank of International Settlements to the FDIC are proposing that gold bullion be treated as a risk-free cash equivalent by commercial banks.

So… what we can see from this week’s events is:

– European governments are insolvent
– European banks are insolvent
– US governments are heading in that direction
– Even the best US banks are not as strong as believed
– Foreigners are abandoning the US dollar and seeking alternatives
– Gold is money

Just by observing casually we can connect the events as the economies are so much integrated now.  The overall structure is crumbling now .

Need of an hour rational thinking and cautious steps with good faith towards saving the economies.