- US Fed Reserve Is The Chief Debt Enabler!
by Bob Chapman, http://theinternationalforecaster.com/
Many european nations going to Greece, more euro crises on the way, a production slowdown is happening, Keynsian bromide one of many solutions, big banks buyers of debt, treasury bills soaking up an ever increasing wave of debt.
It 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.
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.
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.
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