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Euro-Zone Prepares to Print Trillions in Advance of Greece Debt Default

Stock-Markets / Global Debt Crisis Sep 27, 2011 - 08:46 AM GMT

By: Nadeem_Walayat

Stock-Markets

Diamond Rated - Best Financial Markets Analysis ArticleIt's not just the financial and economic world that's being turned upside down with fast changing events in motion that will impact for many years. Last week saw that maybe energy does not equal mass X the speed of light squared. Eeeek ! There goes Einstein's theory of general relativity and the past 100 years of physics (if true) over the event horizon and into a black hole, though the theory has always had something major missing which is why there existed the fundamental disparity between quantum mechanics and general relativity that maybe we will get much closer towards understanding if E=MC2 is busted.


Similarly the Euro-zone has reached the edge of its own event horizon of disappearing into a financial and economic black hole, the response to which is likely to be rampant Euro-zone money printing to monetize PIIGS debts that takes place following the orderly bankruptcy of Greece due to the impossibility of an economically contracting country being able to service an ever expanding debt mountain, a vicious cycle of ever higher debt to GDP triggering ever greater economic austerity, resulting in an even higher debt to GDP ratio as the economy contracts and the tax take falls.

Key measures being contemplated at the time of writing are :

  • Greece debt holders to take a 50% hair-cut i.e. cut Greece debt from Euro 340billion to Euro 170billion.
  • Cut the interest rate PAID on Greece debt, perhaps to even ZERO.
  • Expand the financial stability fund from 440 billion euros to at least Euro 2 trillion and perhaps even Euro 3 trillion by leveraging up by ECB money printing.
  • Re-capitalise the bankrupt European banks that would take a huge hit on a Greece default.

There are no ifs, or buts, Greece IS bankrupt, this is nothing new but something I have been repeatedly iterating for the past 2 years. A Greece debt default is now imminent because it CANNOT PRINT MONEY! It cannot PRINT EURO's therefore it cannot do what Britain, and the United States are doing which is to STEALTH DEFAULT by means of HIGH REAL INFLATION. You know it when you go to the super market to do your weekly shop and see that your money can barely buy 85% of what it could a year ago. There is HIGH REAL INFLATION in the UK right now! Far beyond the official CPI of 4.5% or RPI of 5% which in themselves are HIGH, well above government target of 2%.

Yes, I know you still hear the highly vocal the deflation fools, crying DEBT DELEVERAGING DEFLATION, which has shown itself to be a RED HERRING as there has been NO DEFLATION as I warned of now near 2 years ago (18 Nov 2009 - Deflationists Are WRONG, Prepare for the INFLATION Mega-Trend) , and January 2010 Inflation Mega-trend ebook (FREE DOWNLOAD).

The fact of the matter is that even bankrupting Greece that has seen its economy CONTRACT for 2 straight years under the weight of economic austerity without end but yet has has had INFLATION during the whole period, for instance the current INFLATION RATE for Greece is CPI 1.67%. As you can see if there is inflation where there 'should' be deflation then what is that telling you about the real state of the global economy?

So how do deflationistas respond to there having been NO DEFLATION during the past 2 years ?

One prominent deflationist states -

"In my model, falling prices are not a requirement for deflation."

This is what happens when analysts become detached from the real world.

Euro-zone is Following the Inflationary Money Printing Plan

My long standing view has been that once money printing starts it cannot stop whilst large budget deficits exist, and large budget deficits will continue to exist until economies start to grow in real terms at trend, which means that the eurozone is now about to begin playing catch up by rampant money printing both overt (QE) and covert (off balance sheet) that is taking place elsewhere in the world, notably the UK, USA and Japan. For the UK we only need to look at the inflation indices to see proof of rampant money printing at work as all governments have only one solution which is to stealth default by means of high real inflation which stands several points above official indices of CPI and the UK more recognised RPI i.e. rather than at 5%, real inflation as most people actually experience is nearer to 7%.

The Eurozone looks set to leverage the current 440billion financial stability fund to as high as Euro 3 trillion through means of smoke and mirrors borrowings to hide the truth from the general populations as to the inflationary consequences of what is a policy of stealth debt default means of high real inflation as it prepares to finance PIIGS debt write offs.

Financial & Economic Crisis Lessons From History

Top secret documents reveal America's 1930's plan of war against the Red Empire, but America's foe in this war was not the Soviet Union or Japan, it was not even Nazi Germany, plan red was code for an apocalyptic war with Britain and all its dominions. The plan emerged from the Great Depression amidst the rise of evil regimes at a time when even some in America had been seduced by dark forces.

"I am speaking to you from the cabinet Room of 10 Downing Street, this morning the British Ambassador in Washington handed the American Government a final note stating that unless we heard from them by 11 o'clock that they were at once to withdraw their troops from Canada, a state of war would exist between us, I have to tell you now that no such undertaking has been received and that consequently this country is at war with America."Prime Minister Chamberlain

In the 200 years since the American Revolution, the United States and Great Britain have moved from enemies to firm allies. This documentary follows military experts and historians as they work through the top secret 'War Plan Red' to see how a hypothetical battle between America and Great Britain might have unfolded.

First broadcast at 20:00 20 Sep 2011 - Available until 20:00 19 Sep 2012

The Lesson From History?

Wars follow economic depressions, and the enemy may not be who you think it will be. Whilst we can discount a war between America and Britain today, after all the red empire now only exists in the history books. There remain several candidates beyond the usual suspects.

To the North is Canada (for which the US has been actively planning to invade for close on 200 years), to the South is Mexico (there have been several wars of conquest already), To the West is China and to the East is Africa (the past decade has seen much action).

I think we can discount Europe and Russia, ..... for now as likely the forces of these military blocks could be utilised in an 'Allied' attack on China as one empire rises and another empire declines.

Now what usually happens the politicians coupled with the intelligence agencies who's primary function is to spread misinformation and propaganda via the mainstream media will seek to demonise and dehumanise the Chinese into a new evil empire, to build up a fever of nationalism in the general population so that they will be eager to lay down their lives on mostly the basis of lies just as countless have fallen for the Iraq threat propaganda and many of whom still continue to believe the lie that somehow Iraq was behind Sept 11th stockpiled with invisible WMD's that were an imminent threat to America and the West.

Economic Depressions are dangerous because they provide easy fuel for the politicians to inflame nationalism with the ultimate conclusion is to mobilise the millions of unemployed towards war on a scale that would make Iraq and Afghanistan look like a picnic. Therefore those that rightly criticise the bailouts of banks and even whole countries and the inflationary stimulus spending (including yours truly) need to contemplate the broader picture beyond monetary considerations in that these fiat paper printing actions are mere tips of an ice-berg of what could follow if trends were allowed to proceed towards their logical conclusions, because just as all countries are trending towards debt default bankruptcy and an hyperinflationary panic event (loss of confidence in fiat currency), all countries are also trending towards their own destruction as we repeatedly see but yet fail to acknowledge i.e. Iraq destroyed, Afghanistan destroyed, Libya, Egypt, Syria, pending....?

The continuing trend of economic stagnation is stoking the fires of paranoid nationalism that will ultimately result in the need to create enemies to be dealt with for which the prime candidate at this point in time is the emerging China superpower, though when paranoid nationalism lets rip anything is possible, anyone can become 'the enemy'.

The War on Terror and the stripping away of many civil liberties and freedoms so that anyone that does not agree with the military machine must therefore be a traitor, which has created the backdrop for the next phase for the militirisation of America as the only growth industry appears to be the military industrial complex which requires expanding budget deficits and an never ending stream of new enemies to justify its expansion. Watch out for The Patriot Act II, then III, then The Traitor Act I. At the end of the day the enemy will morph to become the general population.

Will Greece Leave the Eurozone ?

On face value Greece appears on the fast track towards economic collapse and war with its neighbours (Macedonia ? Turkey? Albania? ), so I can well understand why the Euro-zone will try its hardest to not let it leave because they understand that it would open Pandora's box that has kept ancient hatreds in check and thus so far succeeded in preventing a Europe wide war for over 60 years, which is the primary purpose for the creation of the European Union, to anchor Germany down to such an extent so as to prevent Germany from starting its third World War which would result in the annihilation of Europe and much of the rest of the world.

If Greece does leave the euro-zone we may well look back on such an event as the spark that ignited World War III, which means that despite the severity of the current crisis Greece probably won't leave the Euro-zone even when it does go bankrupt as the 50% hair-cut implies.

So Greece WILL default on its debts AND REMAIN in the Euro-zone.

How Could Greece Go Bankrupt and remain in the Eurozone ?

The problem with Greece is that it's Government and population have become lazy by spending well beyond their means (not helped by their gambling banks). The first thing Greece needs to do is to cut its budget deficit, it needs to wipeout the welfare state that it could never afford, this is the purpose of the austerity measures, to reduce the burden of the public sector that is acting like a noose around the Greek state, the debt is not the problem, the debt is the stick to beat the Greece economy into a competitive state so that it can grow, because the debt will be defaulted away, but this will only work if the economy becomes competitive.

Secondly the debt interest burden needs to be slashed, this is what debt default and fixed low ECB bailout interest rates will succeed in delivering, i.e. the ECB will likely continue to subsidise Greece interest rates on new debt at well below the market rate for many more years. As long as interest payments continue to be rolled over into new debt, then this will ensure that interest payments are spent within the Greek economy rather than sucked out of the economy, these twin forces should eventually result in igniting economic growth as it will leave Greece with a lower debt interest burden and a more competitive economy. However it may take a several more years of several more hundreds of Euro-zone billions pissed down the Greek drain to get to that stage, given the current lack of competitiveness of the Greek economy as a consequence of the inability to devalue wages via exchange rate adjustments.

Thirdly, Greek and other exposed european banks would have to be fully recapitalised by the ECB (nationalised) to ensure that they do not go bankrupt during a Greek debt default and similarly repeat the process with other PIIGS banking sectors. The effect of preventing the eurozone's worst run country from leaving the Euro-zone will hugely strengthen the Euro (a major buy signal!) as it would imply other potential bankrupting PIIGS would also similarly have their debt written down without triggering a collapse of the Euro-zone currency block.

This could mark the first of a series of periodic debt write offs that could take place every few years in response to the recycling of budget deficits into debt rather than debt interest leaving the PIIGS as wealth from Core Europe is transferred to Peripheral Europe until a system of transfer payments is formalised in the form of the permanent financing of a large part of Peripheral State deficits to the point where economies are able to compete across the Euro-zone in terms which generally means significantly lower wages for peripheral european workers.

The Decline of the West and Rise of China?

Many argue that debt crisis is a symptom of the west being in terminal decline to be soon replaced by the likes of China or that a clash of civilisations is taking place between the West and Islam. However these are flawed arguments that ignore the reality that the East has not been able to compete against the West for over 400 years due to myriad of fundamental reasons that go far beyond debt and deficits which encompass systems as a whole that include innovation, relatively free political systems and free market competition.

If the European Union is today seen as being a fundamentally flawed entity, it then still is far more robust than the system that operates in China which is at far greater risk of imploding than the EU or the US. In fact rather than witnessing the rise of the East we may soon be witnessing the Peak of the East.

The answer as to why is staring us literally in the face, in that China, and large swathes of the Islamic world are WESTERNSING, i.e. their system CANNOT compete against the WEST but instead are being forced to CONVERT to the WESTERN MODEL in virtually every aspect, and it has to be EVERY aspect, because any element that does not replicate the Western Model will leave such nations at a comparative DISADVANATGE and if it cannot compete then ultimately as GDP per capita converges will stagnate ultimately resulting in economic collapse.

In recent months we have been witnessing the Islamic world in revolt, they want freedom of expression, freedom of thought, economic freedom from corruption, they want free elections, they want to WESTERNISE. The masses don't want Islamic Sharia Law, they want a WESTERN model of laws for which they are literally willing to die for by the thousands as we have see in Libya and are seeing in Syria.

So all the academics that write reams of books about the decline of the West have it completely wrong ! The West WON 400 years ago! Since which time the trend has been to assimilate the WHOLE WORLD into a Global Western Civilisation.

The West's Greatest Enemy is the West Itself

The clash of civilisations is nothing more than propaganda, the reality is that the real enemy the west faces is not China or Islam but rather western politicians that are attempting to strip away what has made the west great, namely they wish to diminish capitalism in favour of socialism through the bailout of bankrupt banks and nations, when the lessons of countries going bankrupt such as Iceland show that it is infinity better to experience a couple of years of pain than die a slow lingering economic death like Japan.

Therefore crisis are a good thing, we need crisis, we need recessions we need to clear the decks of all of the froth that has been built up and most importantly we need to inflate the debt away that will be soon forgotten during the next boom so the UK and US have it right, print money and inflate the debt away, the Euro-zone is collectively walking up to this reality.

Stock Market Euro-zone Crisis Correction Over?

For investors crisis present opportunities to accumulate at bargain basement prices with a view to protecting ones wealth in inflation mega-trend proof assets such as dividend paying stocks, commodities and housing. You buy when no one else is willing to buy and sell when everyone else is buying. We had our bust in 2008 into 2009 and are clearly still nowhere near the end of the recovery / boom cycle.

The past 2 months have been extremely volatile for the stock market with the market flipping as much as 5% on several days. However despite this my last analysis and concluding forecast trend for the Dow has proved even more accurate than I thought possible at the time as the below graphs illustrate (07 Aug 2011 - Stock Markets Panic Crash Continuing, Is the Stealth Bull Market Over?):

My strategy all along has remained constant as iterated several times in articles and comments that I have viewed the series of panic lows as opportunities to accumulate more for the long-run in target stocks. Where the panic sell offs have cycled through sectors as most notably witnessed in the severe sell off in the metals and mining sector during the past few days.

So what's next ?

Well, that should be it, times up for the correction that was anticipated to end by about now, and I have seen little to change this expectation, after all there is now plenty of bearish sentiment out there courtesy of the perma-fools that tell people to SELL right at market bottoms which I am sure look set to contribute towards igniting a powerful stock rally for which there will be plenty of reasons published as to why stocks have rallied AFTER the market has risen.

I will seek to map out a probable trend for the the next few months in my next article, ensure you remain subscribed to my always free newsletter to get this in your email in box.

But look, its simple, they print the money, it floods into stocks and other assets. The money printing is perpetual i.e. for ever, as long as you value invest i.e. are leveraged to the effect of the money printing then you can't really go wrong! Unless you listen to the perma-fools, academics and the journalists, which unfortunately means approx 98% of the media your exposed to.

Deflation ? Deflation is a delusion of delusional minds - as the earlier example illustrated.

Your Inflation mega-trend investing wealth protecting analyst.

Source and Comments: http://www.marketoracle.co.uk/Article30666.html

By Nadeem Walayat

http://www.marketoracle.co.uk

Copyright © 2005-2011 Marketoracle.co.uk (Market Oracle Ltd). All rights reserved.

Nadeem Walayat has over 25 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of three ebook's - The Inflation Mega-Trend; The Interest Rate Mega-Trend and The Stocks Stealth Bull Market Update 2011 that can be downloaded for Free.

Stocks Stealth Bull Market Ebook DownloadThe Interest Rate Mega-Trend Ebook DownloadThe Inflation Mega-Trend Ebook Download

Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication that presents in-depth analysis from over 600 experienced analysts on a range of views of the probable direction of the financial markets, thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

© 2005-2017 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Robert Baird
27 Sep 11, 16:24
Inflation

Hi Nadeem,

I work for a major US manufacturing concern in the UK and my mill manager informed me this very afternoon that our input costs have risen 16% over the last 12 months alone. This will definitely be finding its way onto the shelf prices.This gives some idea as to the extent of underreporting of inflation in the official figures. It staggers me that these prominent deflationists who in other respects seem very bright cannot get their heads around the idea that our glorious leaders will just tap as many noughts into the computer that they require to square the circle. Constant statements like " The Fed cant stop this" followed by ever more tenuous definitions to justify ever shakier theories are making me gasp. Our credit based monetary system is such that deflation just cannot and will not be allowed to happen. Also totally agree with your call on China. Most of what they have built will probably fall down in 5 years anyway because watered down cement isn't that strong. Many thanks for the articles and an excellent site.

Regards, Robert Baird


raj
27 Sep 11, 17:02
omg

http://www.youtube.com/watch?v=lqN3amj6AcE&feature=share

Nadeem,

Please can you give your opinion on this clip,

Thanks

Raj


Nadeem_Walayat
27 Sep 11, 17:10
3 years

The guy says he has been dreaming of a crash for 3 years.

How many times has he bet on a crash only to be stopped out ?

Yes, people should protect your wealth, especially savers from banks going bankrupt as I last covered in June.

I also see that the FTSE is now 5% higher than since he spoke.

Best.

NW


Daniel Rodrigues
27 Sep 11, 21:05
Bonds Deflation

Hi Nadeem

If inflation is rampant why are government bond yields so low - in the US and Germany 10y yields are at all time lows and are almost like Japans, a country that has suffered deflation.

Sure money printing is inflationary, but having a huge debt load that you can't service is deflationary.

Cheers

Dan


Nadeem_Walayat
28 Sep 11, 01:53
Bonds

Hi Dan

Because the governments are printing money and buying bonds (forcing banks to buy government bonds).

The Bond market is very artficial, in fact most markets are artificial to a degree because of government interference.

This is setting the scene for an hyperinflationary panic event.

Imagine the end game when the only buyer of government bonds is its central bank, yes you would have low interest rates but the currency would be in free-fall against hard assets (as other currencies may also be in freefall).

Best

NW


Paul_B
28 Sep 11, 02:19
Euro is Toast

I've finally had it with the Euro and am selling everything I have that's euro-denominated. The single currency (a flawed concept right from the start) has become a total fiasco recently with one emergency meeting after another and still no resolution in sight. I don't care what they agree by the end of this week, for I have seen the writing on the wall. The problems are too intractable. Sterling might not be another Swiss Franc, but at least it's a *real* currency that is neither over-valued nor going to disappear overnight. Sterling's my temporary lifeboat as I jump out of the Euro Titanic. Best of luck, everyone!


Dave
28 Sep 11, 03:55
Depression

I don't get it, how can you suggest there may be a depression and inflation ?


Nadeem_Walayat
28 Sep 11, 05:45
Inflationary Depression

An inflationary depression.

Government statistics are bogus, inflation is higher than they state and economic activity is lower.


raj
28 Sep 11, 11:27
china/ emerging markets/ property

Nadeem,

you have been putting money in china and emerging markets as a major bull, however you now seem skeptical. also how can you protect your wealth if the banks go down, they will take us with them, all of us with mortgages etc,

Cheers


Nadeem_Walayat
28 Sep 11, 15:38
china bull

Hi

I am not skeptical of china's growth story because it is playing catchup to the west i.e. convergence of GDP. I am skeptical of China beating the west because for it to do so it would need to fully become a western country in virtually every respect which means the end of the communist party, something that could prove very bloody and disruptive to economic activity.

Best

NW


Carlos
29 Sep 11, 09:30
They also control the US currency?

Hi Nadeem,

I agree with you the markets are manipulated via money printing. Nevertheless any country that has printed money exponentially have seen their currency devalued. How those this apply to the world reserve currency?

In addition why would the US be different from Japan this time?

Thank you in advance for your explanation,

Carlos


Nadeem_Walayat
29 Sep 11, 09:59
US Japan

Hi Carlos

Japan has a shrinking population, what are the revenues and costs in terms of per capita ? Is it deflation one sees or inflation ?

Japan is still correcting the preceding inflation because the Japanese government did not allow the system to be cleansed of bad investments/ debts.

At the peak the Japan bubble had Tokyo valued at more than the whole of the United States, therefore it had a LOOOOONG way to drop.


Carlos
29 Sep 11, 10:10
US-Japan Parallel

Hi Nadeem,

So you believe that the US government is allowing the system to be clean of bad investments/debts? From my understanding all the bad debts are still in the books of either the banks or the Fed.

Regards,

Carlos


Carlos
29 Sep 11, 11:27
US JAPAN

Hi Nadeem,

From my understanding all the bad investments/debts are either in the US banks or the FED.

Could you please elaborate about the US currency devaluation impact?

Thank you,

Carlos


sachin
29 Sep 11, 14:03
Njoy your comments more than the article

Hi Nadeem ,

Anaother fantastic article .

I njoy your replies to comments more than article as they are more personal and direct ! Thanks for them .

I will also cherish your china illustraion as one of the lesson of lifetime .

Sachin


James
29 Sep 11, 23:39
Money printing is perpetual?

Hi Nadeem,

Why do you believe that money printing is perpetual? I would be interested to know your logic on this.

Thanks,

James


Nadeem_Walayat
30 Sep 11, 12:33
Perpetual Money Printing

Politicians get elected by buying votes with promises the country cannot afford. Once elected they achieve this by printing money / debt that results in inflation.

Which is why auserity in Britain and the USA is an illusion, as I will cover in my next article, though have already stated this numerous times over the past few years, which is why there has been no net repayment of debt in the UK.

Best

NW


Nadeem_Walayat
30 Sep 11, 12:35
bad debts

Hi

Bad debts are being inflated away. All currencies are in free fall against one another which gives the illusion of rising currencies but in reality is just volatility in the differing rates of decent.

Best

NW


Paul_B
01 Oct 11, 03:18
Unstable Currencies

Nadeem, I'm sure you meant to say "gives the illusion of *stable* currencies." Check 'em out versus gold over time for a truer picture.


Sam
01 Oct 11, 09:25
US dollar index rise, for how long?

Hi Nadeem

The US Dollar index is on the rise again which has a bearish impact on stocks and commodities (they say that they are negative correlated).

The index is at 79.5 levels right now with possible resistance at 80-81 levels.

What direction do you see the US dollar index moving over the next couple of months and long term? I was initially of the opinion that USDX would weaken but then it has gone up due to the termoil in Europe. Not sure what will happen now...

Your expert thoughts please...

Regards,

Sam


Geof
02 Oct 11, 11:24
Perma bull

Nadeem

You keep attacking the perma bears but are you not the twin opposite, a perma bull ?

Settign many up for huge losses by always pumping the bull side?

Geof


Nadeem_Walayat
02 Oct 11, 17:38
perma ...

Geof its good to be always skeptical and make up your own mind,

Ive placed my bets and the risks are all mine.

Best

NW


mike
03 Oct 11, 15:55
strengthen the euro?

Id like to give a counter argument, that if greece defaults and stays in the euro will not mean that everyone breathes a sigh of relief that everyone can default and stay in the euro for one reason ... the germans wont pay for it, they will leave the euro very very quickly. Let the ECB print money and issue euro bonds to their hearts content but without germany. Id like to also suggest that france will quickly follow them. This scenario will devalue the euro by at least 50%


Jas Singh
03 Oct 11, 17:35
Silver

Hi Nadeem

What is your view on Silver?

Best regards


richard freeman
04 Oct 11, 03:35
dow 10650

Nadeem,

Your chart has a line drawn around the 10750 mark for Dow.

Would be interested to read your thoughts on Dow now that it has closed below that level.

Rich


Nadeem_Walayat
04 Oct 11, 06:03
Silver / Dow

Hi

I own no gold or silver and not looking to accumulate, so no reason for analysis.

Dow, not phased by current sell off, will do analysis when time permits.

My focus is housing, banking crisis gives cash buyers much leverage in current UK housing market.

Best

NW


Martin
04 Oct 11, 14:23
Probable Trend for Markets

Hi Nadeem,

When can we expect your next article? The indexes have broken through some key support recently, and the recent sideways movement is starting to look more like consolidation than bottoming action. Your analysis has been very accurate during this bull market and I would agree that all the current bearishness could set us up for another quick rally, but it's hard to ignore the probability of another recession and ensuing bear market. What is your take on the idea that the US is starting a recession?

Thanks,

Martin


Nadeem_Walayat
04 Oct 11, 15:06
Analysis.

Hi Martin

It takes time to do the analysis and come to a probable conclusion, approx a full week.

My eyes are on the banking sector as I have £1+ mill sat in cash.

Which outweighs a few % on long-term stock positions where the objective is growing dividends.

Best

NW


Toby
04 Oct 11, 17:12
Banks

Nadeem, if you have what you describe as "sat in cash" in the banking system then it cant be described as "cash" its just digits that may or may not be there tomorrow. Im not suggesting you have but I would struggle to sleep at night if i had over 20% of my wealth in the banking system.

Also surely you have room for a tiny bit of physical metal out of that cash? im no gold bug etc, but to have a little physical cant be a bad thing, can it?

Nadeem I wish you had a daily blog, you're so refreshing in your analysis and opinions.


Nadeem_Walayat
04 Oct 11, 20:53
Cash

The real risk of loss is about £250k, balance is protected / covered.

I have emergency measures / plans whcih could reduce the risk by about 50k instantly and to zero over 3 working days as I covered back in June, perhaps its time to update and repost that artice....

Best

NW


toby
05 Oct 11, 03:53
Emergency measures

Nadeem,

I would love to hear what emergency plans you have in place. One thing i would worry about if the worst comes to the worst and some banks collapse is the que of people waiting to get there government protected savings could be chaotic, whilst anarchy starts to rule the streets. By the time the savers get there government protected savings it could be to late as real hyper inflation has taken hold and food etc will have gone through the roof. (this is my very worst worst case scenario im not predicting it)

I have read all your previous articles and all your analysis and opinions have helped me to form mine. Thanks for all your work. I would subscribe to any sort of access to more of your insights, have you ever thought of doing anything like that?

All the best


Paul_B
05 Oct 11, 07:59
Bank Liquidity Problems

I bank with one of the largest German commercial banks (not Deutsche, by the way) and have noticed something rather worrying about the way my money was being handled. Smaller transfers of a few hundred euros would, as ever, go through no problem, but the last few major transfers involving sums in the low hundreds of thousands have stalled and no one at the bank has been able to explain to me exactly why they didn't go through. Following a solid week of much stress I finally demanded they return all my money in cash, which they reluctantly did - once again after more delay than one might feel comfortable with.

I'm just mentioning this because people are assuming that the danger is principally in the French banking sector, which could easily not be the case. No one knows. Plus when does a liquidity crisis become a solvency crisis? If I have to hold cash now it's notes in a safe. Banks are scaring me. Those holding physical precious metals at home right now are probably best protected overall.


Dan C
07 Oct 11, 09:52
House price growth - The right area

Hello Nadeem

You have previously talked about buying in the right area can mean the difference between stagnant grow, and 10% YoY growth.

What attributes do you look for when buying a property in the 'right area'.

Best regards

Dan


Nadeem_Walayat
07 Oct 11, 23:16
houses

The right area?

Lots of criteria such as crime, school tables, economic social grouping ie. education levels, earnings, density of builds, overall quality and maintenance of neighbourhood properties environmental issues, i.e. out of flood planes, quality of neighbouring areas, area property ceiling values.

What else ?

amenities, traffic, noise levels, green spaces, the list is pretty long.

The best way to find out is to go and spend several hours walking around the target area's then you soon see get the real story. I.e. one of Rotherhams best areas has several flaws that effectively puts a ceiling on it which those looking online would not be able to recognise.

Best

NW


Chartrambler
09 Oct 11, 06:26
another fool ?

http://blogs.thisismoney.co.uk/2011/10/house-prices-to-halve-and-worse-for-the-ftse.html


Sharif
09 Oct 11, 13:25
Greece and the Eurozone

Hi Nadeem, would be interested to get your opinion on this video analysis by Stratfor re. Greece potentially leaving the Euro, and the break fund that would be needed (also includes text transcript):

http://www.stratfor.com/analysis/20110928-portfolio-preparing-greeces-failure


chris
12 Oct 11, 08:37
Analysis

Nadeem,

I am curious to see your DOW targets for the remainder of 2011 and early 2012.

Thanks.


Nadeem_Walayat
12 Oct 11, 13:47
Dow - Analysis

I know, I have 5 draft articles sat on my comp... housing is even more overdue, but making money comes first... I will be completing an article on the banks and quantitative inflation next.

Dow - the script is for the market to trend to new bull market highs this year, it has 3 months so plenty of time.

Best

NW



14 Oct 11, 09:05
STOCKMARKETS

Dear Nadeem,

Obviously the market is composed of views of all participants and their subsequent actions. And participants cannot be right all of the time, therefore the need for trade and money management.

EWI (Bob Prechter) is continually stating and actively looking for THE TOP in the stock markets. How do you reconcile your overall bullishness with EWI bearishness.

I have no axe to grind with either camp as I am a day trader (max 5 day move with no positions over the weekends).

Kind regards

Shahbaz


Nadeem_Walayat
14 Oct 11, 09:55
Analysis

Hi

Why would I need to reconcile anything ?

I am not influenced by any analyst, including myself!

I don't know what they conclusion will be until I have completed the analysis, the answer is not always what i want to hear because of existing positions but that is what probability favours.

My main focus is in protecting and growing wealth, to which the key is money management, forecasts are road maps but the pain and reward comes from money management.

My immediate focus is on the bankrupting banks, I really need to get these draft articles completed and shifted out onto the web ELSE they will become out of date !

Best

NW


Graham
14 Oct 11, 11:38
Too many views

Nadeem

It can be confusing when your site posts views that you clearly do not agree with, why not only post articles for those that you think are right ?

Graham


Nadeem_Walayat
14 Oct 11, 12:23
Market Oracle

The Market Oracle is modelled on the Oracle at Delphi.

The reason why the Oracle at Delphi became the centre of the ancient world for near 1000 years is because it was the primary location for the exchange of information and opinions where there would literally be thousands of people at anyone time congregating from all over the ancient world, this important factor is often overlooked in the movies.


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