|
Anyone following along on the
world debt crisis can see everybody is broke. And the speculators are betting
on who goes down first then second and so on. That is a TON of money betting
on more financial chaos destabilizing markets. The Central banks have done
everything they can to combat it and they are falling behind now. Its about
over, this several year hiatus from the financial crashes of 2008 and 2007.
I cannot imagine the people at
CNBC going on air live day after day tracking this chaos.
Gold and oil are
steady
The only market which is
showing some rationality is oil and gold. Gold especially. Every other market
is infected with hundreds of billions of carry trade money. So – no logic,
only speculation and big swings. Even silver is getting jacked around because
it’s so speculative (always has been – you might want to shift some silver
into gold as gold is not so wacky).
But following along on
markets, everything is speculation now, and has leverage. And the Credit
Default swaps market (bets on credit and bonds of all types) is rampant. They
are betting on who will go bankrupt first, and this is over entire countries
now! They are betting on the end of the world! Every time the CDS market
panics, another $hundred billion bailout is voted in.
Remember the flash crash? Did
anyone mention that the next day the first huge multihundred billion Euro
bailout was voted in that weekend by the EU. They were given a huge threat.
That flash crash was not an accident. Did u hear anyone being investigated?
Have you heard of ANY bankers other than like two getting jailed for all the
losses around the world in massive fraud? Nope. They are all walking! They
are all bold as hell and they are all connected with organized crime! Yes.
Half the bankers are organized crime.
Who is the next
carcass?
So everyone with billions to
bet is jumping on the sickest carcass, the only end can be a total collapse
of each country in turn financially. The weakest ones first. When the Shit
hits the Fan, the biggest carcass out there will be the USD and the USA. The
only money big enough to withstand these attacks are government treasuries
with public money, and this is running out! Try getting the US to do another
bailout of $800 billion now with the US budget crisis. That type of effort is
history. So where is the money going to come next? Probably from a massive
stock crash. And another bank panic. And add a Euro crisis on top. A nice
multilevel cake of financial doom.
Euro is right on the
edge
We are on the verge of another
Euro crisis right now; Greece (whose people are notorious for not paying
taxes) is holding a gun to Germany and France’s heads. If each new country in
trouble is not bailed out, Credit Default swaps (bets on credit about to go
bad) drag down every major bank in civilization except maybe the Namibia bank
which only has ten dollars net anyway.
But the other banks in
Germany, the US, and France, all will go down if either Greece or Spain crash
hard. And they will too. The biggest problem Greece has is they don’t pay
taxes and the government is effectively running its entire self on loans from
whoever get held up in each installment of the next bailout, and the next and
the next…so far a two year long story.
Euro headed for
existential crisis
So, Greece WILL go down and
the feared international bank crisis will unfold once again. It’s only a
matter of time. I would bet the Euro has an existential crisis within two
years. So will the USD. We have two years left max. The next solution will be
a global money system or at least one for the entire West, and one for the
Asians. I would bet ten to one that all the tax deferred savings in the
Western countries will be tapped for the last final bailout.You’ll be forced
to buy US Treasury bonds. You will see. (People don’t get what tax deferred
means. It means that when you take out the money you pay the tax then, not
when you earned the money, hence they can just raise the tax rates for those
withdrawals, and…to boot, to even get the tax exemption, you will be forced
to buy ‘qualifying tax deferred investments’ – you know what that means or do
I have to spell it out for you?)
No way out
In other words, Greece and the
EU is hostage to this crisis. So is the Euro. Now let’s ask a question, what
will be the outcome of this situation? Will the Euro survive another summer
and not go under? Such a question of the Euro going down has to send shivers
through all Europe.
So who goes first, the Euro or
the USD? I bet the Euro. The US has its own problems but we can still borrow
a ton of money – so far.
In the latest Fed bailout,
Greek CDS holders were bailed out again by the US and other countries. If not
Greece would have imploded already. So, the CDS markes get to bet on the
demise of Greek bonds, but their losses are guranteed against by the public,
or else the entire world bank system collapses! Nice.
We need to think what would
happen if Greece did not get bailed out again. Because the day is coming when
the next bailout of Greece or especially Spain, is going to fail. Then we get
the chickens all around the world coming home to roost. That will be mega
bank crisis number 3 (the Bear crisis of 2007 is number 1, the Lehman crisis
in 2008 is number 2).
Bear, then Lehman then
- Greece
The Greek thing is bad enough
that even China was jumping into their debt markets in recent weeks buying
the debt because if they didn’t the Euro was crashing. In other words, the
entire world is now hooked
together in a common fate, a debt spiral that is bankrupting
everybody, and the only sources of credit left, frankly the US Fed, is all
that stands between our savings and a 4000 point stock crash, to begin with.
If your money is in stocks
it’s a sitting duck. There are stocks that I like and but we are waiting for
a stock correction at least before we consider buying. That leaves things
like gold and gold stocks and cash savings for now.
USD rally
If the Euro were to crash the
USD would continue rallying (we called the USD bottom on April 25) and this
would cause pressure to unwind markets because the USD has been the carry
trade currency of choice since about 2006. Which means that all that borrowed
stock money invested by banks in the stock markets will want to come out. (In
the Fed market support operations like QE, the banks borrow money at a half
percent and buy stocks, the Fed intended this to support stocks, when the USD
rises they have to unwind those trades).
Ultimately, the US credit
ratings will get downgraded (noises to that effect already by rating
agencies) and US interest rates will rise. Ultimately credit which has kept
markets from crashing will disappear, and the USD will face its first
existential crisis. In that case we estimate the first shock to the USD would
be a 30 pct. haircut in FX markets. That is almost impossible to imagine.
This IS coming.
Usually, other central banks
will step in to stop the USD from falling. But this time, there is much less
money to throw at the problem. The world is on the brink of another bout of
financial chaos, only this time it won’t stop with some emergency bailout.
And the problems are much bigger now.
The interesting thing is that
the USD is rallying, but the reasons are there. The Euro is in so much
trouble, I am amazed that it’s even over par with the USD. The only banking
system that is working is the US related one. Tell me that is not the case as
the Fed bails out foreign banks every week? This is not reported now. The
China bank system is a joke and not ready whatsoever for the coming crash
there.
A very disturbing trend is
stories that China and Russia have divested much of their US Treasury
holdings. They did this as the USD rose recently. Perfect timing.
****
|
