The Sovereign Debt Issue Is Being Way Over PlayedI am notsuggesting at all that the PIGS problems are not serious, they are.However, the thing everyone is missing is that the EU cannot allowthese minor countries to drag down the budding economic recovery,nor can the US Fed. The European bank and the IMF, with the help ofBernanke, will find ways to shore up these economies and nobodywill go into insolvency. The huge jumps in CDS rates on the PIGs isway overblown, and just a bunch of traders who do not see the bigpicture once again. Europe and the US cannot let these countriescollapse, or we risk radical left and right wing regimestaking them over, and that would then be real problems. Thatwas how Fascism got started. That is the real issue, and not bondratings. You need to look at the real geopolitical and relatedissues when assessing how these events will play out, and why theywill not be allowed to blow up. The real risk in the wholefinancial crisis is the future of capitalism, and preventing theradical left or radical right from using it to gain major politicaladvantage and a replay of Hitler. The other issue many arenot realizing is that the GDP of these countries really is not allthat relevant. Portugal and Ireland could fall into the ocean andnobody would even notice. Greece the same, other than some greatvacation spots would be gone. The GDP of Greece and Portugal isless than New Jersey. Spain is just $1.4 trillion, or thereabout. Italy has not had a real functioning government since WWII,so why is anyone upset by what they do. There is nothing new there.They run their country in their own screwed up way, and that willprobably never change. Somehow they manage to keep going.TheEuropean banks exposure to securitized debt, bad real estate loansand derivatives was vastly greater than to these meaninglesscountries. So let's not worry that the European economy iscrashing-it is not. If France, Germany and the UK start to crash,then you can get worried, but the PIGS are not taking down themajor banks nor the EU.If you want to be concerned, worry aboutCalifornia, New York, New Jersey and many large municipalities.They are much larger than the PIGs as to economic impact, and theirirresponsible spending of the past years and their labor contractsand pension liabilities are really something to be worried about.To fix their problems they will have to raise taxes, fees and othercash generators. That impacts you. Property taxes have to go up.Sales taxes have to go up. Income taxes at all levels of governmentwill go up. Lending for new development will remain almostnon-existent for a couple of more years.Focus on what reallymatters and ignore all of the silly emotional rhetoric aroundGreece and the other noise.

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Joel Ross

Joel Ross began his career in Wall St as an investment banker in 1965, handling corporate advisory matters for a variety of clients. During the seventies he was CEO of North American operations for a UK based conglomerate, and sat on the parent company board. In 1981, he began his own firm handling leveraged buyouts, investment banking and real estate financing. In 1984 Ross began providing investment banking services and arranging financing for real estate transactions with his own firm, Ross Properties, Inc. In 1993 Ross and a partner, Lexington Mortgage, created the first Wall St hotel CMBS program in conjunction with Nomura. They went on to develop a similar CMBS program for another major Wall St investment bank and for five leading hotel companies. Lexington, in partnership with Mr. Ross established a hotel mortgage bank table funded by an investment bank, and making all CMBS hotel loans on their behalf. In 1999 he formed Citadel Realty Advisors as a successor to Ross Properties Corp., focusing on real estate investment banking in the US, UK and Paris. He has closed over $3.0 billion of financings for office, hotel, retail, land and multifamily projects. Ross is also a founder of Market Street Investors, a brownfield land development company, and has been involved in the acquisition of notes on defaulted loans and various REO assets in conjunction with several major investors. Ross was an adjunct professor in the graduate program at the NYU Hotel School. He is a member of Urban Land Institute and was a member of the leadership of his ULI council. In 1999, he conceived and co-authored with PricewaterhouseCoopers, the Hotel Mortgage Performance Report, a major study of hotel mortgage default rates.