Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
US Coronavirus Infections & Deaths Trend Trajectory - How Bad Will it Get? - 2nd Apr 20
Silver Looks Bearish Short to Medium Term - 2nd Apr 20
Mickey Fulp: 'Never Let a Good Crisis Go to Waste' - 2nd Apr 20
Stock Market Selloff Structure Explained – Fibonacci On Deck - 2nd Apr 20
COVID-19 FINANCIAL LOCKDOWN: Can PAYPAL Be Trusted to Handle US $1200 Stimulus Payments? - 2nd Apr 20
Day in the Life of Coronavirus LOCKDOWN - Sheffield, UK - 2nd Apr 20
UK Coronavirus Infections and Deaths Trend Trajectory - Deviation Against Forecast - 1st Apr 20
Huge Unemployment Is Coming. Will It Push Gold Prices Up? - 1st Apr 20
Gold Powerful 2008 Lessons That Apply Today - 1st Apr 20
US Coronavirus Infections and Deaths Projections Trend Forecast - Video - 1st Apr 20
From Global Virus Acceleration to Global Debt Explosion - 1st Apr 20
UK Supermarkets Coronavirus Panic Buying Before Lock Down - Tesco Empty Shelves - 1st Apr 20
Gold From a Failed Breakout to a Failed Breakdown - 1st Apr 20
P FOR PANDEMIC - 1st Apr 20
The Past Stock Market Week Was More Important Than You May Understand - 31st Mar 20
Coronavirus - No, You Do Not Hear the Fat Lady Warming Up - 31st Mar 20
Life, Religions, Business, Globalization & Information Technology In The Post-Corona Pandemics Age - 31st Mar 20
Three Charts Every Stock Market Trader and Investor Must See - 31st Mar 20
Coronavirus Stocks Bear Market Trend Forecast - Video - 31st Mar 20
Coronavirus Dow Stocks Bear Market Into End April 2020 Trend Forecast - 31st Mar 20
Is it better to have a loan or credit card debt when applying for a mortgage? - 31st Mar 20
US and UK Coronavirus Trend Trajectories vs Bear Market and AI Stocks Sector - 30th Mar 20
Are Gold and Silver Mirroring 1999 to 2011 Again? - 30th Mar 20
Stock Market Next Cycle Low 7th April - 30th Mar 20
United States Coronavirus Infections and Deaths Trend Forecasts Into End April 2020 - 29th Mar 20
Some Positives in a Virus Wracked World - 29th Mar 20
Expert Tips to Save on Your Business’s Office Supply Purchases - 29th Mar 20
An Investment in Life - 29th Mar 20
Sheffield Coronavirus Pandemic Infections and Deaths Forecast - 29th Mar 20
UK Coronavirus Infections and Deaths Projections Trend Forecast - Video - 28th Mar 20
The Great Coronavirus Depression - Things Are Going to Change. Here’s What We Should Do - 28th Mar 20
One of the Biggest Stock Market Short Covering Rallies in History May Be Imminent - 28th Mar 20
The Fed, the Coronavirus and Investing - 28th Mar 20
Women’s Fashion Trends in the UK this 2020 - 28th Mar 20
The Last Minsky Financial Snowflake Has Fallen – What Now? - 28th Mar 20
UK Coronavirus Infections and Deaths Projections Trend Forecast Into End April 2020 - 28th Mar 20
DJIA Coronavirus Stock Market Technical Trend Analysis - 27th Mar 20
US and UK Case Fatality Rate Forecast for End April 2020 - 27th Mar 20
US Stock Market Upswing Meets Employment Data - 27th Mar 20
Will the Fed Going Nuclear Help the Economy and Gold? - 27th Mar 20
What you need to know about the impact of inflation - 27th Mar 20
CoronaVirus Herd Immunity, Flattening the Curve and Case Fatality Rate Analysis - 27th Mar 20
NHS Hospitals Before Coronavirus Tsunami Hits (Sheffield), STAY INDOORS FINAL WARNING! - 27th Mar 20
CoronaVirus Curve, Stock Market Crash, and Mortgage Massacre - 27th Mar 20
Finding an Expert Car Accident Lawyer - 27th Mar 20
We Are Facing a Depression, Not a Recession - 26th Mar 20
US Housing Real Estate Market Concern - 26th Mar 20
Covid-19 Pandemic Affecting Bitcoin - 26th Mar 20
Italy Coronavirus Case Fataility Rate and Infections Trend Analysis - 26th Mar 20
Why Is Online Gambling Becoming More Popular? - 26th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock Markets CRASH! - 26th Mar 20
CoronaVirus Herd Immunity and Flattening the Curve - 25th Mar 20
Coronavirus Lesson #1 for Investors: Beware Predictions of Stock Market Bottoms - 25th Mar 20
CoronaVirus Stock Market Trend Implications - 25th Mar 20
Pandemonium in Precious Metals Market as Fear Gives Way to Command Economy - 25th Mar 20
Pandemics and Gold - 25th Mar 20
UK Coronavirus Hotspots - Cities with Highest Risks of Getting Infected - 25th Mar 20
WARNING US Coronavirus Infections and Deaths Going Ballistic! - 24th Mar 20
Coronavirus Crisis - Weeks Where Decades Happen - 24th Mar 20
Industry Trends: Online Casinos & Online Slots Game Market Analysis - 24th Mar 20
Five Amazingly High-Tech Products Just on the Market that You Should Check Out - 24th Mar 20
UK Coronavirus WARNING - Infections Trend Trajectory Worse than Italy - 24th Mar 20
Rick Rule: 'A Different Phrase for Stocks Bear Market Is Sale' - 24th Mar 20
Stock Market Minor Cycle Bounce - 24th Mar 20
Gold’s century - While stocks dominated headlines, gold quietly performed - 24th Mar 20
Big Tech Is Now On The Offensive Against The Coronavirus - 24th Mar 20
Socialism at Its Finest after Fed’s Bazooka Fails - 24th Mar 20
Dark Pools of Capital Profiting from Coronavirus Stock and Financial Markets CRASH! - 23rd Mar 20
Will Trump’s Free Cash Help the Economy and Gold Market? - 23rd Mar 20
Coronavirus Clarifies Priorities - 23rd Mar 20
Could the Coronavirus Cause the Next ‘Arab Spring’? - 23rd Mar 20
Concerned About The US Real Estate Market? Us Too! - 23rd Mar 20
Gold Stocks Peak Bleak? - 22nd Mar 20
UK Supermarkets Coronavirus Panic Buying, Empty Tesco Shelves, Stock Piling, Hoarding Preppers - 22nd Mar 20
US Coronavirus Infections and Deaths Going Ballistic as Government Start to Ramp Up Testing - 21st Mar 20
Your Investment Portfolio for the Next Decade—Fix It with the “Anti-Stock” - 21st Mar 20
CORONA HOAX: This Is Almost Completely Contrived and Here’s Proof - 21st Mar 20
Gold-Silver Ratio Tops 100; Silver Headed For Sub-$10 - 21st Mar 20
Coronavirus - Don’t Ask, Don’t Test - 21st Mar 20
Napag and Napag Trading Best Petroleum & Crude Oil Company - 21st Mar 20
UK Coronavirus Infections Trend Trajectory Worse than Italy - Government PANICs! Sterling Crashes! - 20th Mar 20
UK Critical Care Nurse Cries at Empty SuperMarket Shelves, Coronavirus Panic Buying Stockpiling - 20th Mar 20
Coronavirus Is Not an Emergency. It’s a War - 20th Mar 20
Why You Should Invest in the $5 Gold Coin - 20th Mar 20
Four Key Stock Market Questions To This Coronavirus Crisis Everyone is Asking - 20th Mar 20
Gold to Silver Ratio’s Breakout – Like a Hot Knife Through Butter - 20th Mar 20
The Coronavirus Contraction - Only Cooperation Can Defeat Impending Global Crisis - 20th Mar 20
Is This What Peak Market Fear Looks Like? - 20th Mar 20
Alessandro De Dorides - Business Consultant - 20th Mar 20
Why a Second Depression is Possible but Not Likely - 20th Mar 20

Market Oracle FREE Newsletter

Coronavirus-bear-market-2020-analysis

Europe's Economic Crisis: Portugal, Ireland, Spain, Italy and Belgium Following Greece

Economics / Eurozone Debt Crisis Mar 15, 2012 - 04:31 AM GMT

By: Bob_Chapman

Economics

Best Financial Markets Analysis ArticleIt isn’t over until it is over. Of course, we are referring to Europe and its version of 1984. We find it profound that the bankers, politicians and bureaucrats of Europe can do what they have done with a straight face. Investor had a haircut shoved down their throats and the ECB, the European Central Bank and the IMF were exempt.


How does that work? That is because some are more equal than others. There is no question this will be a defining event for the European and world financial system. We did see a partial default, but only because the derivative creators, the ISDA, had to make one, otherwise their derivative business would have collapsed. No one will deal with an insurer or a bookmaking operation that doesn’t pay off and constantly arbitrary changes the rules. Needless to say, such machinations are out of sight of the public, because 99% of them certainly do not understand derivatives.

Greece is on its way to its next crisis whether it be via austerity, demonstrations or a military coup. In all likelihood Greece will be followed by Ireland, Portugal, Belgium, Spain and Italy. It will also be interesting to see if bank deposits return to Greek banks. They probably wont and there will be great difficulty affecting any kind of a recovery. The Greek people through all of this have been left out of the equation.

As we mentioned in the last issue the leaders of the euro zone spent three years attempting to avoid such an outcome, but obviously underestimated the depth of the Greek and other country problems. It will be interesting to see how ISDA members handle the $3 billion plus in derivative settlements, or will we ever be privy to them? Whatever European thing was in the solutions it was certainly flawed and failed policy. Almost all politics and very little forward thinking. An avoidance of meltdown and purging only to face the music in six months to a year. Certainly a pyrrhic victory, when the allocation of funds comes up far short of what is needed. What can these people be thinking about, and what will Germany say this week when they expose the fact the new ESM, successor to the EFSF, is unconstitutional in Germany. In addition, these solvent European nations that have lent these funds in behalf of their taxpayers have got to reveal to them just how much they are on the hook for up until now. Are these people dumb enough to believe that austerity, lower wages and higher taxes bring prosperity? The whole scene is surreal and unrealistic. We also wonder what they think about the ECB and the IMF being excluded from Greek and other losses. The voter has to believe they are living in cloud coo-coo-land.

The deal that was structured for Greece holds the law in contempt and it will be litigated for years. Why would investors want to invest under these circumstances? The rules are what they say they are at any given moment or juncture. Are other nations going to be willing to follow the same path? Every promise of the bankers, politicians and bureaucrats was broken. In the end investor losses were 70% or so. They should have taken 100% losses, but that is neither here nor there, the point is everyone was deliberately lied too. Greece was not a one-off case and the financial markets are well aware of that.

We wonder how the ECB is going to off load $290 billion in toxic bonds? Who will de dumb enough to buy them? As an example the Portuguese GDP could fall more than 5% in 2012. That could translate into 50% losses and a public debt burden of 118% of GDP in fiscal 2013. Their state owed debt takes this up another 10%. That is worse than Greece. Keep in mind a very little known fact, and that is that Portugal massaged their deficit last year, by taking 3.5% of GDP from private pension funds. Citizens of all nations play close attention. This theft is going to be a way of life for all bankers and politicians. They are all going to steal your retirement, so get ready for it. That is why we have been recommending all citizens in the US to exit all retirement funds that they can. In five months the IMF decides whether Portugal needs more money. Of course they will need more money. Portugal cannot now raise funds in the open market at reasonable rates, so the IMF has to step in with the EFSF. How will this fit with Spain and Italy? Not very well we imagine. All this means bondholders in the bonds of these countries will be sellers not buyers, which will place the ECB and the IMF in a desperate situation. Europe’s problems have years to go.

Just to show you what shape European Central Banks are in they owe the ECB $650 billion. In addition if Greece had or does leave the euro zone in the future they will owe the solvent euro players another $125 billion in payable debt. A debt that will be far worse six months to a year from now. This means Germany will use the next bailout to say no, especially that the ESM won’t be available to them, or so says their Supreme Court. We believe Germany wanted to take the loss and move on a year ago, but the bankers demanded no. Their dream of world government is still alive and more important than the EU financial system. Then again, we are told the Mediterranean is one vast deposit of natural gas. If so, then perhaps Greece is being held on to in order to access that gas and be less dependent upon Russia. As we had said so often since the early 1990’s the EU and euro zone are doomed.


Greece stands no chance of recovery due to the inadequate funds rendered. Then there are the CDS payouts of some $3 billion, which will make things more difficult for other nations in the same predicament. The recapitalization of Greek banks is an insult to economic intelligence. They’ll need twice the funds offered just to reach the 9% capital requirements. Greek pension funds will get ravaged, probably retaining 25% of former value. We see a coalition government on May 1st and that puts into question the future of the bailout deal just completed. Greece is going to be subject to 20% budget cut on top of what has already been cut. This deal engineered by the bankers is the worst of all worlds. It will cause serious EU problems for years to come.

Some months ago we wrote that there is about $70 billion in Greek CDS. Cut it in half and the losses could be $30 to $35 billion, not the $3 billion quoted from the industry. The question than arises will the counterparties be able to pay off? We will find out soon enough. There will be few winners and how far will the carnage reach? The deal structured was not at all voluntary for Greek creditors. It was extortion along the lines of the Spanish Inquisition. That is no way to conduct business. Then look at the social issues and possibility of a coup. Then there are the racist aspects putting hate squarely on the table. The northerners do not like southerners in the Latin south.

As we mentioned earlier Portugal is headed in the same direction as Greece. No growth and no change of any kind. Italy and Spain will have to be bailed out like the others. Then there is the dark dirty secret that is France that follows close behind. These problems are going to go on and on and on.

Theinternationalforcaster.com

Global Research Articles by Bob Chapman

© Copyright Bob Chapman , Global Research, 2012

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 http://www.MarketOracle.co.uk - 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