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Message: Jeez ... More BAD News ....
Europe is about to get UGLY!!!
On October 25th, we put out the following article, "Euro Alert! This Will Not End Well, DUMP anything Europe, Euro Zone in Danger of Massive Collapse." The days that followed was a massive rally around the world as political leaders thought they had postponed the sovereign debt crisis for a few more months.
The deal was an obvious Greek default, private bondholders were going to get screwed, and the worst part was even after the planned default proposal, Greece would have still been insolvent.
However, even as the market rallied, the bond market wasn't fooled and we knew there would be serious trouble ahead for Greece, Europe, and global markets.
The Bear Market
Just to be clear, bull markets DO NOT move like this. The more violent the rally, the more certain we are that the bear market has continued. Nothing moves a market like short coverings, however in the end, the fundamentals haven't changed.
In the past 3 months, the market has rallied on nothing but rumors and false hope.
- 2 major rallies from rumors that QE3 was going to be announced
- 2 major rallies from a Greek solution
As noted in our October 25th Euro Alert!
Overall Europe is in very bad shape when you take a look at the books.
- Nations like France and Italy spend more than 14% of their GDP just on pensions to retired government workers.
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European banks are leveraged 25 to 1, that's double of even U.S. banks!
- In order for EU nations to pay for their unfunded promises of national health care, pensions, and other social programs, each EU nation would need at least 400% more than their current GDP!
- Germany, the so called economically strong nation in the EU, has unfunded liabilities of more than 7 trillion Euros, with their official debt to GDP ratio at 78%. However, when you actually include what they really owe, debt to GDP is 284%.
- Even German ex-central banker, Axel Weber, has warned that Germany is much worse than people believe.
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They live beyond their means, especially the southern nations. Greece, for example, has increased salaries for state officials by 76% since the introduction of the Euro, wages overall have increased by 42%. The easy credit and low interest rates have given fiscally irresponsible nations a false sense of how much debt they can afford.
- Spain and Portugal will not meet their deficit reduction targets this year or ever, in our opinion.
- Italian Government is on the brink of collapse.
- We are getting reports that bank runs in Greece have already begun, one report stated that this morning over 5,000 customers lined up in order to make withdraws. Up to half are transferring their wealth out of the country.
- Official debt for financial companies (excluding derivatives) in Europe is 23 TRILLION!!! That is 43% more than the entire European annual GDP!
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?
Expect more updates to follow on Europe, the U.S., and specifically the U.S. Treasury market later this week.
Expect more updates to follow on Europe, the U.S., and specifically the U.S. Treasury market later this week.
2012
There are permanent forces at work here, the entitlements of democracy, a debt based monetary system, and the rich vs. the poor.
In December, we will be releasing a special 2012 predictions report that is sure to shock some of you. Let's just say if you are feeling a little blue, our predictions should put you over the edge.
One of our predictions that we feel we should discuss right now is that western democracies will turn more and more violent. Civil unrest due to long term unemployment and austerity measures will likely set the mob off. We should get a break going into the winter as it will simply be too cold for long protests. However, come February, we believe a fire will spread across European nations and the United States.
Why are we telling you this now before our 2012 predictions report comes out next month, because we want you to have time to act on this information just in case we are wrong and civil unrest breaks out in 2011.
The math is ugly, high youth unemployment + peak government + fiat currency + a 100 years of dumbing down society + mob rule = Civil chaos.
Think about it for a second, when you see thousands of people in Oakland, LA, and New York City having protest sleepovers, do you think those people are calling in sick in the morning? No, these people are the casualties of a society that has too much government micro-management in their lives, a currency that is created by banks, and a system that encourages its citizens to get into debt.
More on that next month. Until then, make sure if you live close to a city you have at least 1 month of food and water stored, as well as a plan to protect yourself and your family. We are not conspiracy theorist, we are realists. Yes we love spotting future trends and trying to make a profit, but we also know that it is always prudent to prepare for the worst. If civil unrest was to cause transportation disruptions or looting, then we want our members and their families to be safe.
Our staff members here at our office have a 1 1/2 year supply of food and water at all homes.
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