Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
A Simple Way to Preserve Your Wealth Amid Uncertainty - 11th Aug 20
Precious Metals Complex Impulse Move : Where Is next Resistance? - 11th Aug 20
Gold Miners Junior Stcks Buying Spree - 11th Aug 20
Has the Fed Let the Inflation Genie Out of the Bottle? - 10th Aug 20
The Strange Food Trend That’s Making Investors Rich - 10th Aug 20
Supply & Demand For Money – The End of Inflation? - 10th Aug 20
Revisiting Our Silver and Gold Predictions – Get Ready For Higher Prices - 10th Aug 20
Storm Clouds Are Gathering for a Major Stock and Commodity Markets Downturn - 10th Aug 20
A 90-Year-Old Stock Market Investment Insight That's Relevant in 2020 - 10th Aug 20
Debt and Dollar Collapse Leading to Potential Stock Market Melt-Up, - 10th Aug 20
Coronavirus: UK Parents Demand ALL Schools OPEN September, 7 Million Children Abandoned by Teachers - 9th Aug 20
Computer GPU Fans Not Spinning Quick FIX - Sticky Fans Solution - 9th Aug 20
Find the Best Speech Converter for You - 9th Aug 20
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Saving The Eurozone, Will it Work?

Politics / Global Debt Crisis Oct 29, 2011 - 03:01 AM GMT

By: Bob_Chapman


Best Financial Markets Analysis ArticleIt is now clear to the most casual observer that the world’s monetary and financial system cannot function without massive amounts of additional money and credit. That means the system no longer functions the way it should. Europe really doesn’t know what to do and neither does the Fed and the Bank of England. The exception is throwing more money at the problem and keeping interest rates near zero indefinitely. Many US, UK and European banks are insolvent. The real estate market continues to deflate throughout Europe with the exception of Germany, which never really rose in price. Again, there are no solutions offered to solve this problem. Just as there are no solutions elsewhere. These conditions tell us the euro has serious problems to face as does the pound and the US dollar. You have to then say to yourself against what. Each currency has its own problems, thus, the only alterative is to measure each currency versus gold and silver. These are the true benchmarks, and when compared over the last 11-1/2 years, versus nine major currencies gold and silver on average annually have appreciated more than 20%. That tells you anyone holding currencies has been a major loser.

In the US and the UK banks are insolvent as well, because books are market-to-model, not to market and many carry two sets of books. Without a total audit one does not know the actual condition of these financial institutions. Market players and investors do not want to know the truth, because they cannot handle it. It means it is the end of the game – it’s over. That is why Wall Street and the City of London casts a blind eye at all the government manipulation going on. They go with the flow hoping the system will keep functioning.

Americans and others have been sold a bill of goods concerning US supremacy in the business and financial worlds, which means they have been propagandized since WWII. It is beyond the capability of most Americans to understand that they have been sold one lie after another and they bought it hook, line and sinker. Even if they discover the truth making seminal changes is very difficult. Thus, you can have 70% of people over 65 years old that have discovered the truth that are generally incapable of acting on it. The 25% of these retirees that have investable funds are frozen in the headlights and few make the necessary changes to hold on to their assets. If their assets remained static inflation is destroying their purchasing power year after year. Some will switch into gold and silver related assets, but very few. Good people who have led exemplary lives could lose most of their assets if they do not make changes. Once the system goes down there will be no way back. Ask the people who didn’t listen in 1929.

Now that Europe has a new formula to ostensibly save the euro zone and the EU we can for the time being take a look at other problems. We find many smaller and medium sized banks cannot payback TARP funds. That means some of them may be approaching insolvency. We also notice that the FDIC for some time no longer issue late Friday updates on bank failures. Municipalities are having major trouble and that will continue. It is taking a little longer than expected for these entities to head into bankruptcy. Many know the government is broke, so it is no longer a secret. Those who feel safe in an FDIC bank account had best think again. The FDIC is broke and if they had to pay off billions they could not, unless Congress gave them more money to do so, which the Fed would create out of thin air, and cause more inflation. The public’s shocked and in denial and that state will only change gradually and eventually these Americans will pull their funds out of the system and put the proceeds into gold and silver coins, bullion and shares.

That means they will be able to function when checks, debit and credit cards no longer work.

We are entering a time of falling currencies, as more and more money and credit are created to save the system and the power centers of the Illuminists. Now that for now Europe has been saved, al the elitists have to deal with is the fallout from QE 3. That should occur soon. That is why the PPT is still trying to keep gold and silver down. It won’t matter, because gold and silver will still go higher.

After 5-months of dithering, Europe has finally put together a temporary deal to save Greece, the euro zone and perhaps the EU.

Bondholders, mostly banks, accepted a 50% write down on Greece debt. This deal was offered two years ago, but the banks and Germany refused the offer.

The funds available are $517 billion, which will be elevated by use of derivatives to $1.4 trillion. That should last a year dependent on how much money insolvent members will need. We call this temporary, because of a fast slowing economy and the needs for new lower interest loans by Ireland and Portugal. If our original estimate for the six countries is correct this exercise will have to be done three more times over the next two years. Not one of these bankers and politicians dare look down the road at the future. The problem has not been solved; it has just been extended.

The deal includes recapitalization of Europe’s banks and a larger role for the IMF.

This comes on the heals of the realization that if the banks did not write off 50% of Greek debt, Greece then face total insolvency, as did the banks. This shows you the tremendous grip the bankers have on European politicians. This also sets the stage for Greek bailout two. The first was for $154 billion; the second will be for $182 billion for a total of $336 billion. Of the second tranche the IMF will supply $3.8 billion. It should be noted that recently the ECB, European Central Bank, bought $237.3 billion in Greek, Irish, Portuguese, Spanish and Italian bonds to keep the bond market from collapsing. In addition outside money will be pursued. France’s Sarkozy is talking with Chinese leader Hu Jintao for assistance. In addition banks will have to raise $150 billion by June 30, 2012 to reach core capital reserves of 9%, after writing off sovereign debt holdings. In the interim no dividends or no bonuses. Incidentally, of that $150 billion, $36.7 billion must be raised by Spanish banks and $20.7 billion by Italian banks.

What is of great interest in this deal is that German politicians have sold out 65% or more of the voters and the High Court has said nothing about the extension of the new legislation that includes the German gold reserve being used as collateral in case Germany cannot fulfill its obligations. That won’t go over well in Germany. Many House members will not be returning after the next election.

Another factor is will Ireland and Portugal ask for a 50% reduction in debt, not just lower rates? We guess some are more equal than others.

We might also ask, what happens if the derivative market comes unglued? In the case of Greece its debt is projected to reduce Greece’s debt to GDP to 120% by 2020. You can’t make up stuff like this. This projection is worthless.

Mr. Sarkozy of France is seeking funding from China. Europe is China’s biggest export market. It will be interesting to see if they participate and on what terms.

Greek PM George Papandreou said the government will buy shares in some Greek banks in a nationalization process. After restructuring the shares would be sold on the open market.

The bank write downs of 50% on their Greek holdings means $3.7 billion debt insurance contracts won’t be triggered according to the International Swaps and Derivatives Association. The amount is interesting. The street said the number was $75 billion; we say $150 billion. As we said long ago, a deal had to be made to save the NYC legacy banks.

As we mentioned Ireland and Portugal may want the same deal Greece received. The bankers took a 50% loss. Why shouldn’t Ireland and Portugal expect the same? At the least they should receive cheaper interest payments on aid, and longer to repay it. Why is it acceptable to write down Greek debt, when the Irish pay private bankers’ debt? The IMF says Ireland’s debt will be 18% more than GDP in 2013 or $280 billion. The bottom line is that the ECB had best deal with these problems quickly, or they may have a couple of tigers on their hands.

As Europe’s problems and another downgrade of US credit looms, even though in a manipulated market, the issue of unpaybable debt doesn’t go away. Almost everywhere we look problems are being extended and thrown into the future. How long it will take for the world monetary system to collapse no one knows, but it is inevitable.

Various solutions have been offered and even if some were adopted this past week they are never going to be enough to change the course of the future. Creating more debt cannot solve debt problems and Europe’s bankers know that. All their moves are to save the financial system and nothing is done to save the economic system. The elitist Illuminists are only interested in saving their power base from which they control the world.

As we pointed out in the last issue chances are very good, that interest rates will be lowered by the ECB now that Mr. Trichet is gone.

The failure of Dexia two weeks ago should strike the beginning of a long line of new formations of good bank bad bank creations. In this case all the good assets stay in Dexia and the bad assets are shunted into a companion bank run by the government, so that Dexia can survive and that the public is allowed to take the losses. There will be scores of banks, not only in Europe, but in the UK and US; that will follow this template until they are all merged, eliminated or nationalized. Ring fencing or circling the wagons won’t work. It only puts the unpayble debt burden into the future, so that citizens can pay for the excesses of the bankers.

No one has as yet told us where the latest $500 billion swap by the Fed went. We did see the ECB wildly buying Italian and Spanish bonds and somehow found funds to start another round of bank loans. During that time frame miraculously Wall Street banks made bail out loans to EU banks. These are the same NYC legacy banks that control 70% of US banking, that would not lend to small and medium sized US businesses that create 70% of new jobs. Interesting observation we’d say. That is further proof that these mega money center banks have had little inclination to help the economy recover. All they are interested in is profits and how big a share of the banking market they can capture.

If Greece defaults a number of banks will follow it into bankruptcy not only in Europe and England, but in the US as well. The only thing that can save the EU is a compromise by Germany, and if its politicians sell out to the New World Order banks then the CDU will be out of office for the next 12 years. As this conflict goes on the euro rises in value in anticipation of a deal, if only temporary. This is similar to the Dow, which just rose from 10,500 to almost 12,000 on the inside information that there soon would be QE 3.

Currency debasement is the name of the game worldwide. That tact showed up in England and in the ECB, as they poured funds into their economies two weeks ago.

The key to Germany’s monetary ascendancy, which has gone somewhat unnoticed by the media and western politicians over the years, has proven the power of the German people and their economy. We saw first hand the progress through the 1950s and 60s, which was based on sound monetary and fiscal principals. Even though Keynesianism and Socialism was stuffed down Germany’s throat they eventually took another path laid out by Ludwig Erhard and Wilhelm Rapke, which produced a sound currency and they cast aside all of the financial demands of their occupiers, who still happen to be in Germany. These events set the stage for the success we have seen over the past 50 years. The allies were outraged that Germany could and would do something so successful. By 1955-60 they were leading Europe again and it has been so ever since. The entire West was incredulous, as Germany became the leading European economy, as it emerged from the rubble. Now Germany is the nation that must save Europe from collapsing. The formula being demanded by the US and their mouthpieces is more leveraged debt, which the Germans know won’t solve the problem. Germany’s Merkel as you have seen, has gone along with the program. We’ll see what the voters think after the next election.

Global Research Articles by Bob Chapman

© Copyright Bob Chapman , Global Research, 2011

Disclaimer: The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of the Centre for Research on Globalization. The contents of this article are of sole responsibility of the author(s). The Centre for Research on Globalization will not be responsible or liable for any inaccurate or incorrect statements contained in this article.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules