europarl April 17 2013
European Parliament, Strasbourg, 17 April 2013
European Parliament, Strasbourg, 17 April 2013
The EU continues to flounder around as Cyprus, a country whose GDP accounts for just 0.2% of the Europe’s economy, has proven the truth behind all of the “solutions” thrown around by the ECB and EU politicians: that they really don’t have a clue how to fix the problem plaguing Europe.
Why is this?
Because at the end of the day, there is really only one solution to this whole mess: Default… both by the banks and by EU nations as a whole.
What happened to Wall Street in 2008? Banks that were over leveraged (meaning they borrowed far more money than they actually had on hand) went bust because the assets they bought with the borrowed money fell in value to the point that it erased the actual money they had on hand.
Think of it this way, if you borrow $30 for every $1 you actually own, and you invest that $30 in various assets, you only need those assets to fall 3% (0.03 * 30 = 0.9) before you’ve wiped out almost all of your actual money (the $1 you owned and which you borrowed the $30 against).
This is what took down Lehman. And it’s what is taking down Europe today. The entire European banking system is leveraged at 26 to 1. Lehman was 30 to 1, Europe as a whole is only slightly below that,
And where did they invest the $26 in borrowed money?
Major news hit the wires on Saturday March 16th. Cyprus, although a very small island in Southern Europe, is the next country to announce a bailout of their banks. European officials and the government in Cyprus worked out a deal in which depositors become part of the bailout: every depositor of a bank in Cyprus will be charged a “one-time fee” of either 6.75% (for deposit less than 100,000 euros) or 9.9% (for deposits exceeding 100,000 euros). Source: Reuters.
More facts related to this crucial event:
So far the news. The mission of Gold Silver Worlds is to give insightful background information which is not provided by the mainstream media. Please take the time to read the following 5 facts carefully. It explains that this horrific situation in Cyprus simply confirms the primary trend in which we are currently.
On the highest level, Wwhat we are witnessing right now is something very simple yet not visible to most people.We are in a primary trend, and one that is deteriorating. As Einstein said, nothing in this universe is moving with a constant speed. It is the same in finance: nothing goes up in a straight line. Trends develop over time in a disorderly fashion. Until the full effect of a trend is clear, you need to detect them by their (early) signals.
It turns out that the poster child for the European debt crisis is not actually poor at all. In fact, the truth is that the nation of Greece is sitting on absolutely massive untapped reserves of gold, oil and natural gas. If the Greeks were to fully exploit the natural resources that are literally right under their feet, they would no longer have any debt problems. Fortunately, this recent economic crisis has spurred them to action and it is now being projected that Greece will be the number one gold producer in Europe by 2016. In addition, Greece is now opening up exploration of their massive oil and natural gas deposits. Reportedly, Greece is sitting on hundreds of millions of barrels of oil and gigantic natural gas deposits that are worth trillions of dollars. It is truly sad that Greece should be one of the wealthiest nations in all of Europe but instead the country is going through the worst economic depression that it has experienced in modern history. It is kind of like a homeless man that sleeps on the streets every night without realizing that a relative has left him an inheritance worth millions of dollars. Greece is not poor at all, and hopefully the people of Greece can learn the truth about all of this wealth and chart a course out of this current mess.
I have written extensively about the nightmarish economic conditions that Greece is experiencing right now. Just check out this article, this article and this article. Since the depression began in Greece, the Greek economy has contracted by more than 20 percent. In April 2010, the unemployment rate in Greece was only 11.8 percent. Since then it has skyrocketed to 25.1 percent.
The government debt to GDP ratio in Greece is projected to hit 198 percent this year, and there are persistent rumors that Greece will be forced to leave the euro.
But all of this is completely and totally unnecessary. Greece is not actually poor at all. In fact, after you account for untapped natural resources, Greece is actually one of the wealthiest nations in all of Europe.
According to Bloomberg, there is a massive amount of gold in Greece. This recent economic crisis has accelerated the approval of mining activity, and it is now being projected that Greece will soon be the number one gold producing country in all of Europe…
Gold mining is gathering momentum after Greece began what it called a “fast-track” approvals program. The Canadian and Australian companies said their projects will add about 425,000 ounces by 2016, worth $757 million at the Oct. 5 spot price, to the 16,000 ounces the country produced in 2011.
“There’s clearly evidence that Greece has woken up to the potential of their mining industry,” said Jeremy Wrathall, chairman of Perth-based Glory Resources. “Politicians increasingly realize that a pro-mining stance is appropriate due to job creation potential.”
Greece, which is also fast-tracking state property sales, is set to overtake Finland as the continent’s largest gold producer within four years, as regulators in Athens sign off on mines kept on hold for more than a decade by red tape and environmental rules.
Many are the events, signals, and telltale clues of a real live actual systemic failure in progress. Until the last several months, such banter was dismissed by the soldiers in the financial arena. But lately, they cannot dismiss the onslaught of evidence, a veritable plethora of ugly symptoms of conditions gone terribly wrong and solutions at best gone awry and at worst never intended in the first place. My theory has been steady from the TARP Fund scandal and the Too Big To Fail mantra of deceit. The plan all along since the breakdown began in September 2008 has been to preserve power, to maintain intact the insolvent banks an operational crew of zombies, to aid the financial sector bound in Wall Street, to pay benign neglect to Main Street and businesses (expect for symbols like General Motors), to expand the propaganda of a fictional recovery, and to maintain the endless wars. The wars serve two purposes, to enable significant fraud from overcharged services, and to hold open the gateways for sizeable money laundering flows into the Wall Street banks, those hollow structures that closely resemble a coke addict with dark teeth, wretched bones, wasted organs, lost attention, and a listless gait. The Greek showcase is coming to a neighborhood near you in Western Europe and Great Britain, soon to feature debuts across North America. No, the United States is not immune from the horrors of ruin since its marquee billboards read Zero Percent. It only means the wrecking ball works from the inside out, serving as the central needle in the Black Hole. An outline of the End Game can be written. This article is not comprehensive by any means. But it serves as a decent posting on an outhouse wall. Consider the following as musings in observation of Uncle Sam on death row. They bear no logical flow, just random concepts.
Operation Twist cements ZIRP and closes the door on any Exit Strategy. Nothing exists in the twist of substance, a mere shift of the shell game movement. The most powerful effect of a maintained Zero Percent Interest Policy is that it ensures a systemic failure with capital destruction, rising costs, falling profit margins, and deterioration in the US Economy. It guarantees growing federal deficits without any potential of resolution, and finally a USGovt debt default. Just one year ago, the travesty of political failure was in full view with the Super Committee charged with spending reduction. It folded like a cheap tent. Deficits have been written in stone. The nation has moved from a permanent housing decline and lost legitimate income (factory exodus to China) as principal cause for systemic failure, to a failure based upon capital decay and absent profitability. Absent legitimate income fostered rot from within. The US Fed in its growing desperation (hardly infinite wisdom) has been attempting to control the rising cost structure by means of a steady concerted effort to render deep harm to final demand through economic damage. They will succeed, but cause a downward spiral that cannot escape the powerful clutches of capitalism gone into reverse. The central bank clowns will win a USTreasury Bond rally to bring about the final collapse all in a Black Hole. As the 10-year TNX yield zips below 1.5% and heads toward 1.0% in the future months, as the recession gallops along and enjoys recognition, the systemic failure will be more evident.
From December 2011 to April 2012, the Dollar Swap Facility released $3.2 trillion for European bank aid. It accomplished nothing, since their banks are a field of Greek-like ruins still. The money went into the LTRO funds, the ill-planned knucklehead Draghi plan. The banks bought overpriced government bonds, lifted in value by the Euro Central Bank itself. The same banks are worse off than before the application of LTRO funds. What irony! Draghi has no credibility left. Harken back to 2009 when a similar Dollar Swap Facility released over $1 trillion to the same European banks. It solved nothing either. The tragedy is accentuated by the realization that central bank clowns learn nothing, attempt the same vacant solutions, only to repeat their errors at a later date. The public seems incapable to recall the past failures, holding out hope. Now we hear of a possible $2 trillion plan to recapitalize the European banking system. In Weimar terms, this is pocket change.Counting the US fixes, the London fixes, and the previous DSFacility, the total is closer to $6 trillion already wasted in a massive debasement series of whiffs. So another $2 trillion is pissing in the wind of Weimar flatulence, the stench to be noted by next year.
When the paper mache artisans start talking about a total of $10 to $12 trillion for Western Europe, the United Kingdom, and the United States combined, then they will be seriously planning a banking system recapitalization. They prefer the futile incremental approach, with the proviso of not liquidating the big banks. The hilarious factor is that even $10 trillion would not work, but it would indeed buy another couple years, maybe three years. So if an alcoholic has the Delirious Tremens, the consensus stupidity calls for feeding him a higher proof Jack Daniels whisky and from a vat for intravenous application, which will revive him, when a mere few liters would not. It is utterly amazing that Bernanke and Draghi are given any respect at all. This is utterly absurd, since the wrong-footed solution is going to be simply higher volume of what does not succeed in reviving the system. WHEN THEY START TALKING ABOUT BIG BANK LIQUIDATION AND A NEW GOLD-BACKED MONETARY SYSTEM, THEN EXPECT SOME TRACTION. But such a plan would involve plowing the system under and removing the bankers from power. Until then, plan for a bigger killing field. The great tragedy is that the killing field is the entire Western monetary system, attached at the hip to the Western Economic system. Witness the gradual collapse.
If the Basel castle dwellers decide to make Gold a Tier-1 asset, banking capital adequacy ratios would be adjusted by a dictated order. In response to the global banking crisis, based upon paper foundation turned toxic, the Basel rule changes have aggravated the banking woes. As rules are tightened according to assets held and their type, the move could potentially be favorable toward Gold. New encouraging rules that declare Gold to be a reserve asset could result in between 1700 and 2000 tons in purchase. Think of it as bank ballast in a storm of toxic seas. The issue is the so-called Basel III rules. The ultimate central bank is on the verge of declaring Gold to be a Tier-1 asset for commercial banks with 100% weighting. Curiously, it is currently a Tier-3 category with just a 50% risk weighting. Like gold is only half money, how absurd!! It took a 50% downgrade of sovereign bonds to bring about such progress. They are set to increase the amount of capital banks also must set aside, a double win potentially. The incentive away from Gold toward risky assets such as stock, currency, and debt-related assets resulted in disasters. A category upgrade in Gold would effectively drive up its value relative to other competitive qualifying assets. By elevating Gold to a bank reserve asset, stability would enter the equation, since the yellow stable metal moves inversely to the risky paper assets that have crumbled. Gold is ideal as it bears no credit risk, and has no counter-party risk, only theft risk (due to desirability) and shell game risk (from certificate games).
My first experience with a physical euro was mid-December 2001 when I travelled to Europe for preliminary discussions with potential partners for the startup I ended up launching later that year. First stop: Germany. Bank showcases were filled with euro feel-good agitprop. Euro bills and coins would enter circulation on January 1, and this was part of the long-running campaign to persuade Germans to surrender their Deutsche marks. People had some apprehensions, and some wanted to retain the D-Mark, but my business contacts were gleeful: the euro would become the dominant reserve currency in the world; oil would be priced in it.
To celebrate this unique moment in history, I entered a Deutsche Bank branch and bought several euro Starter Packs, as they were called in good German. The clear plastic pouches cost DM 20 and contained all denominations of euro coins. I handed them out as souvenirs when I came home. Here is the one I kept:
The following year, the euro was in every Eurozone wallet. OK, people were bitching. Things had gotten more expensive. Little but highly visible things. Merchants rounded up. An espresso in Germany might have cost DM 3 but then sold for €2, instead of €1.50 as it should have.
By then, I’d moved to Belgium—without feel for what things had cost beforehand. What I did notice was how easy, cheap, and fast transactions were with Eurozone countries. I was too busy building a company to worry about birth defects and fatal flaws of the monetary union that covers not only the 330 million people in the Eurozone, but another 150 million people in Africa whose currencies are pegged to it, and maybe 20 million people in other countries with currency pegs. And for nostalgic reasons, I would like the euro to survive.
But that may be wishful thinking. Every day brings new developments that raise my doubts further: turns out, even counterfeiters have lost confidence in the euro.
In fact, the euro counterfeiting bubble has collapsed. The ECB, in its biannual reports on euro note counterfeiting, documented the bubble and its demise, which by the way, parallels in timing, if not in magnitude, other bubbles, including the Wine Bubble [read..... Ouch! The Wine Bubble Blows Up].
After a fairly steady period through 2006, euro counterfeiting jumped 70% to its peak in the second quarter of 2009. Alas, following on the heels of the financial crisis, the Eurozone debt crisis began to gnaw on periphery countries, and counterfeiters lost confidence along with the rest of the financial markets. By the first half of 2012, counterfeiting had crashed 44%. And not much but thin Alpine air appears to be underneath it.
The big headlines, last week, would lead you to believe the European debt crisis is on its way to being fixed. Reggie Middleton of BoomBustblog.com says, “Europe is insolvent,” and nothing is fixed. Middleton contends, “Collapse in Europe is absolutely unavoidable. It’s a foregone conclusion.” Why should you listen to this entrepreneurial investor?
He has made many stunning calls. He said Bear Stearns was insolvent when its stock was trading for well over $100 per share. He warned about Lehman Brothers and predicted the financial crisis of 2008 long before they happened. Now, he says, “Europe is coming to the end of the road very soon,” and a “system crash is the only way to fix the problem.” Greg Hunter goes “One-on-One” with Reggie Middleton.
The European debt crisis seems to get worse every day with no real solution in sight, just bailout after bailout. This may look like it is an effort to save heavily indebted countries, but it is really all about saving insolvent banks. Charles Biderman, CEO of TrimTabs.com, says, “. . . what we need is a central bank wipeout, which I think we really need to clean the decks so we can go forward and prosper as a globe.” Biderman predicts the Euro will fail, and we are in for strong inflation and deflation–at the same time. Greg Hunter goes one on one with this investment pro to get his take on what’s going on now and what to prepare for in the not-so-distant future.
There has been plenty of calamitous news surrounding the European debt crisis. Greece is insolvent. Spain just got a big bank bailout, and Ireland wants a new bailout deal. No matter how bad it looks in the EU, Paul Craig Roberts says the problems in Europe are “nowhere near as big as the ones here.” The U.S. is printing massive amounts of money to paper over the mess, but it won’t work. Roberts says a collapse of the U.S. dollar could happen at any moment. It could be triggered by any number of things such as war or a derivatives meltdown. When a former Assistant Treasury Secretary (under the Reagan Administration) and a PhD in economics sounds the alarm bell, people should take cover. Dr. Roberts says, “The cliff dive we are experiencing in housing isn’t over,” and precious metals prices are “being suppressed.” Roberts says, “Gold prices should be rising. Why? Because the debt is rising.” What is the reason why Dr. Roberts thinks the suppression game has gotten so intense? Dr. Roberts says, “The fact that they are driving the price down suggests to me the situation is getting more desperate.”
Greg Hunter interviews Paul Craig Roberts one on one about these subjects and more.
Is Israel preparing for war? It was reported, this week, that six reserve battalions were called up because of increasing tensions on both the Syrian and Egyptian borders. The Israeli government gave the okay for an additional 16 more reserve battalions if needed. A battalion can be as many as 1,200 soldiers. In Syria, the White House says it’s time to try another tactic because the cease-fire is constantly being violated by the Assad government. It did not say it was going to resort to military action.
A top Russian general threatened to strike NATO missile-defense bases in Eastern Europe before they are operational. It is not clear whether he was talking for the Russian government or just out of line. At any rate, it is an interesting look inside the thinking of top military commanders in Russia. President of France Nicolas Sarkozy is 6 points behind in the latest poll. His competitor, François Hollande, is anti-austerity. This will only add to the uncertainty in the Eurozone debt crisis. Spain is the latest country to plunge into trouble, and Italy is not far behind. Egon von Greyerz, the head of Matterhorn Asset Management, says the situation we are going into is “much worse than 2008.”
Finally, back here at home, lots of soft numbers coming out about the economy in housing autos and unemployment. The economy looks like it’s rolling over, and the signals coming out of the Fed are coming down to printing more money to keep the banks and the economy from going under. I think lots more money printing is a sure bet in an election year—damn the inflation. Greg Hunter’s USAWatchdog.com brings you these stories and his analysis in this installment of the Weekly News Wrap-Up.
Plenty of financial news was made last week which gave us lots of questions for Karl Denninger. It seems almost every week, there is a major story coming out of Wall Street, Washington D.C. or from the other side of the Atlantic. Greg Hunter talks to Karl Denninger of Market-Ticker.com to get some answers. Denninger is no stranger to covering the real financial news the mainstream media (MSM) won’t touch. According to his bio, “Mr. Denninger received the 2008 Reed Irvine Accuracy In Media Award for Grassroots Journalism for his coverage of the 2008 market meltdown. In 2011, Wiley published his book “Leverage,” detailing the causes of the 2008 financial collapse along with analysis and policy prescriptions for the future.”
The world saw another Greek debt deal hammered out where 95% of bondholders voluntarily took a 75% loss. Is the European debt crisis behind us now, or are other financially troubled countries such as Portugal, Spain and Italy going to want the same deal? One tip-off might be the Chicago Mercantile Exchange (CME) has also voluntarily stopped its derivative clearing house operation in Europe. CME acted as a clearing house for many kinds of derivatives including credit default swaps (CDS). CDS are basically insurance for things like sovereign debt that turns sour. What reason would the CME have to suddenly stop doing business in Europe? CME’s slogan is “. . . where the world comes to manage risk.” Maybe the company is managing a little risk of its own? There was, also, big market moving news on the results of bank stress tests done by the Federal Reserve. Are they really good tests or more of a PR ploy? Is the economy stronger today than before the 2008 meltdown?
Denninger thinks the EU debt crisis is far from over, real estate still has a lot further to drop and America is heading for another financial crash “before the end of the year.”
Video interviews with newsmakers and experts are going to be a new segment featured on USAWatchdog.com. We had some technical problems with the video on our side during the recording, but the audio was so good, we thought you needed to hear it. The site is a work in progress, and we are constantly working to improve. Please enjoy the interview.
Yesterday, a short but ominous press release was issued at the Commodities Futures Trading Commission. It said, “At the request of CME Clearing Europe Limited (CMECEL), pursuant to Section 7 of the Commodity Exchange Act, the Commodity Futures Trading Commission issued an Order on March 13, 2012, vacating the registration of CMECEL as a derivatives clearing organization.” In plain English, the Chicago Mercantile Exchange (CME) no longer wants to be the clearing house for European derivatives. The derivatives market in Europe must have been very lucrative for the company. After all, just the credit default swap (CDS) market is reportedly worth $50 trillion globally. (A CDS is a form of insurance. If there is a default, the debt is paid by the entity that sold the insurance contract.) I ask myself, why would the CME willingly stop being the clearing house for this profitable and large market?
Just last week, it was reported there was a new Greek debt deal where 95% of the bondholders voluntarily agreed to take nearly a 75% loss on Greek debt. CNBC reported, “Greece successfully closed its bond swap offer to private creditors on Thursday, opening the way to securing the funding it needs to avert a messy default on its debt, according to several senior officials. . . . The biggest sovereign debt restructuring in history will see bond holders accept losses of some 74 percent on the value of their investments in a deal that will cut more than 100 billion euros from Greece’s crippling public debt.” Buried in the CNBC story was this little tidbit that said, “That would potentially trigger payouts on the credit default swaps (CDS) that some investors held on the bonds, an event which would have unknown consequences for the market.”