Allow me to explain by sharing some very relevant quotes from a presentation titled Great Recessions – Lessons Learned from Japan made to the Center for Strategic & International Studies by Richard Koo, chief economist of Nomura Securities, which came to me via a client letter put out by Tim Price of PFP Wealth Management of London.

You can watch Koo’s presentation in its entirety by target="_blank">Full article here.

In Spain and Portugal

“Spain and Portugal are now at record wides, suggesting that contagion fears haven't been assuaged by Ireland's bailout," said Markit analyst Gavan Nolan. Five-year credit default swaps (CDS) on Spanish government debt rose to 350 bps, according to data monitor Markit. This means it costs 350,000 euros to protect 10 million euros of exposure to Spanish bonds. Portuguese CDS also hit a record at 545 bps.”

In Belgium

"Belgium could rank as the newest member of the soon to be renamed to PIGIBS debt bailout club, that could see its bond yields surge far higher than current rate of 3.70% over the coming weeks. target="_blank">The Casey Report. As you can see in the chart, the U.S. is no bonny lass either.

The next chart confirms that the PIIGS – along with the United States – are now on the periphery of the more dangerous limits of how far these measures can be stretched. The obvious point is that government deficits, which require money creation, have only a limited ability to improve an economic system. And, combined with a weak economy, are likely to create problems of their own. The PIIGS, and perhaps soon the United States, are hitting those limits.

But today we are focusing only on the eurozone; tomorrow our attention will likely be back on the United States.

So what should one make of the whole thing?

Well, I’d close off today with an eye-opening video of Nigel Farage, a member of the European Parliament, as he reveals the institution for the sham it is.

It is eye-opening because in it he is essentially accusing the European Council of being a bunch of liars and damning them as the statist scoundrels they are. In other words, whereas these meetings usually proceed based on dull protocols and institutionalized civilities, Mr. Farage delivers a stinging rebuke.

You can and should http://www.youtube.com/watch?v=Fyq7WRr_GPg&feature=player_embedded" target="_blank">watch it here.

To recap, what is required to keep the eurozone together at this point are:

• Big lies, delivered convincingly.
  
  
• A gullible bond market.
  
  
• Time. Lots and lots of time.
  
  
• An economic recovery.

Considering that the debt problems are not isolated but widespread in almost all of the world’s major economies, the nearly daily revelations about that debt and the knock-on gyrations that show up in CDS and bond markets should not be viewed as inconsequential or short-term in nature.

Rather, they are correctly viewed as a popping of the rivets on the hull of the SS Eurozone. The pressure is growing stronger by the day and, before this is over, the eurozone will break apart and sink.

That I am convinced that this is so comes from my firmly held belief – based on the data – that there is no way for the debt to be resolved with good money. Thus all that is left is the deceit that it can be. With that as official policy, the scam cannot continue for long.

Today it is the eurozone, but tomorrow attention will switch back to the poor financial shape of the United States – or maybe head around the globe to Japan, or even China. The only thing certain in this uncertain world is that this crisis is far from over.

Anyone that tells you it is, is lying.