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Message: EURO ALERT !!!
Euro Alert!!!
Today's news (out of Europe): Banks and bondholders may be forced to write down 50-60% of Greece debt which should send shock waves across the banking sector and global markets.
European banks are leveraged 25 to 1, that's double of even U.S. banks! To give you an idea of just how bad this is, Lehman was leveraged 30 to 1.
However, the most important thing to remember is the 25 to 1 leverage number is based off of what the banks say their asset values are, now does anyone honestly believe that the banks are being honest with these numbers?
Total official debt for financial companies (excluding derivatives) in Europe is 23 TRILLION!!! That is 43% more than the entire European annual GDP!
Questions Investors Should be Asking Themselves
How long until investors loose complete faith in the EU and jump ship?
IF, and it's a very big IF, governments try to recapitalize banks, this will lead to a domino of downgrades and even more chaos in Europe. Will Europe collapse or print print print?
Charles Hugh Smith put it best yesterday when he said, "The dominoes of debt are toppling in Europe, and there is no way to stop the forces of financial gravity."
For the past 2 years, we have seen crisis and postponement in Europe, fake fixes, proposals, and speeches from European leaders.
The trend of March 2010 to August 2011 was that when the Greece crisis was on the front pages of the news, global markets went down and gold and silver went up. This trend was broken in September, but as of today, it appears to be back in tact, perhaps the trend was only broken due to the huge run up in silver and gold during the summer.
Or perhaps it was that certain powers that be didn't want $2,000 gold and $60 silver in the face of a Euro collapse. Either way, it appears the trend is back and the demand for physical metal is overwhelming the fractional reserve gold paper trading and leasing supported by the biggest banks on earth.
As far as the timing, the powers that be have showed an incredible ability to postpone the inevitable, however, with economies slowing and stimulus increasingly unpopular with voters,
In our opinion, the dominoes have begun to fall, first Greece, then the banks, then the Euro.
The great sovereign debt crisis of 2012 has begun. Are you ready?
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