Tuesday, July 12, 2011

The Beginning of the End of Europe

Reminder: The second Week in Words web seminar is this Thursday, at 9:00pm EST. It is of course free to all. The registration link is here. Hope to see you there! —GL
Yesterday, the European contagion spread to Italy and Spain. The sovereign debt of those two countries swooned—for no discernible reason.

No discernible reason whatsoever: The Italian and Spanish bond markets just sort of . . . plopped, like when a learning-to-walk toddler suddenly plops on his behind? Exactly like that: For no reason whatsoever.

Please select the straw you think
broke the back of the eurobond markets.
The only conclusion that I can draw from this Monday swoon is that we’ve hit the tipping point: This is the start of the eurozone endgame. It is now only a matter of time before the eurozone breaks apart. Therefore, get back in your seats, buckle up, and brace yourselves good—‘cause it’s gonna be a bumpy ride.

Let me explain my thinking:

For those of you who somehow have missed out on this movie: Europe has been in trouble because the nations of the periphery—Portugal, Ireland, Italy, Greece and Spain, the so-called PIIGS—have massive sovereign debts which they simply cannot pay.

Regardless of how the debt of the PIIGS got to be the size that it is, none of them can survive without cash: Cash to maintain their government services, and cash to pay off their debts.

In the case of all the PIIGS, they need more debt in order to raise the cash they need to pay off the old debt. They are simply not generating enough revenue to survive.

What do you call it, when a borrower has to take out more loans to pay off the maturing debts? A Ponzi scheme. ‘Nuff said.

Greece was on deck for more loans to pay off the old loans. The International Monetary Fund (IMF), the European Council (EC) and the European Central Bank (ECB) had put together a bailout package, coupled with Greek promises of austerity and higher taxes, as well as a complicated contraption to roll over some of the maturing Greek debt.

In the Grand Scheme which is the European Union, Greece is a bit player: It’s GDP is roughly a couple of percentage points of the whole eurozone—nothing to get into a twist over.

But the IMF, the EC and the ECB were getting into a twist over Greece—like an octopuss playing Twister, as a matter of fact—because of what Greece represented:

A firewall.

Greece needs a couple of hundred billion euros—but Italy has the third largest sovereign debt in the world, topped only by Japan’s and the United States’. Over $2 trillion of its debt comes due over the next five years. And Spain is not that far behind, if you add the regional debts of the autonomous regions, and the fact that the enormous Spanish banking sector is teetering, and will very likely need to be bailed by the Spanish government.

In short, Italy and Spain are simply Too Big To Bail-out.

Hence the troika—the IMF, the EC and the ECB—was trying its mightiest to bail out Greece and use it as a firewall to stop the sovereign debt crisis from spreading across the eurozone.

Too late: As of yesterday, Monday July 11, the tipping point was reached, insofar as market fears of Italy and Spain.

Monday was when Spanish 10-year bonds suddenly crossed the 6% yield mark, reaching highs not seen since 1997; the spread between Spanish and German debt is the widest in eurozone history. Meanwhile, Italy’s 10-year also hit records—5.67% yields—also records since donkey’s ears.

What happened Monday wasn’t a panic, precisely: It was more of a pre-panic. Think of it like a sharp tremor before The Big One: A taste of what a true sovereign debt panic would be like.

Now, why is this happening? That is, why is this happening now—what triggered it?

Nobody knows—and that’s precisely the problem. It could have been the ECB’s decision last week to raise interest rates 25 basis points to 1.5%—even as there is no inflationary smoke anywhere on the eurozone horizon. It could have been the IMF’s Christine Lagarde trying to sound tough over the weekend, saying essentially that all options were on the table with regards to Greece, including default. It could have been that some random bond salesman woke up gloomy because his football team lost on Sunday night, and spread his foul mood to his whole trading desk, and from thence to the entire eurobond market.

There are tons of explanations. But really, nobody knows why the eurobond markets swooned yesterday.

Ultimately, what triggered this swoon is a pointless question—like asking which of the last five straws broke the camel’s back. As it is, if it hadn’t been overloaded, this particular camel—or rather, this particular PIIG—would have been able to easily stand up to any one of those straws.

But on Monday, a tipping point was reached—the camel’s back was broken—the glass began to overflow: Pick your metaphor—the result is all the same:

The bond markets all now believe that Italy and Spain are in serious trouble—which is of course a self-fulfilling prophecy.

A lot of economists—Paul Krugman and his fluffer Brad DeLong are a case in point—swerve between dismissal of the so-called “Bond Vigilantes”, and berating them. But these none-too-clever fellows miss the point: The bond markets matter for the single, inescapable fact that they provide the money for the party.

The sovereign governments go out and offer their bonds to the market. And the markets go and buy their issuance—so long as the bond markets trust them.

But if the bond markets lose that trust—if they no longer believe that the money they lend is gonna get repaid—then they don’t buy the sovereign bonds. If they don’t buy ‘em, then the governments won’t have the cash to pay for the services they provide as well as pay for the maturing debt.

If the governments don’t have the cash to pay for their obligations, then they default—then they’re broke.

It really is that simple.

Monday was the unequivocal signal that the eurobond markets no longer trust Italy and Spain.

This Thursday, Italy is going to auction off 15-year and 25-year bonds. The chief economist of Citigroup and former Bank of England policy maven Willem Buiter thinks the ECB will simply have to step in and buy some of those bonds in order to prevent a failed auction—which could easily devolve into a full-scale panic at this point in time.

In other words, Buiter think that the ECB will have to begin to monetize the PIIGS’s sovereign debt, in order to avert a full-scale panic in the eurozone. This is major: Builter is plugged in, and he doesn’t hit the alarm button lightly.

This afternoon, however, Italy successfully auctioned off short-term paper, albeit it at yields of 3.67%, as opposed to the pre-swoon forecast of 3.1%.

So maybe Buiter is wrong: Maybe nothing happens on Thursday.

But actually, it doesn’t really matter—not after Monday’s swoon. It doesn’t matter if Thursday’s Italian bond auction goes smooth as glass or not: Monday was the signal that the markets have realized—in their bones—that the PIIGS are all broke, and that they will default, eventually.

The lack of a trigger for Monday’s swoon (or a “trigger” so trivial that it really is as slim as a single stick of straw) proves that the sovereign bond markets have no faith not just in Greece and Portugal and Ireland, but in Spain and Italy—the whales among the PIIGS.

For my Members at the Strategic Planning Group, I’ve already mapped out a detailed plan of what to do, once there is a sovereign default and the eurozone begins to break apart.

But the moment of when the eurozone would start to break apart? That was—I thought—in the indeterminate future: “Close, but not yet,” was my thinking.

Not anymore. Not after yesterday.

When a bond market swoons for no real reason at all, it’s a sign that the market participants realize they’re playing a game of musical chairs.

Therefore, the beginning of the end of the eurozone has arrived. It will happen imminently. And it could be triggered by anything—or like on Monday, by nothing at all.

Prepare accordingly.
FYI: Last May 30, I advised my SPG Members to get out of the euro and into the Swiss franc. At the time, it was trading at CHFr. 1.217 per €1. Today it is at CHFr. 1.167—a fall of over 4%. More seems in the offing.

Do check out the the preview page of the Strategic Planning Group. Thank you.

61 comments:

  1. you do know what lies ahead is going to be dreadful america is in trouble the euro is in trouble the western world is heading for hell on earth famine disease starvation all within 2 years max

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  2. A 2 page article in the FINANCIAL POST 2 days ago stated over 50 million Americans will starve to death..soon. VERY SOON.

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  3. The difference between the US and the PIIGS is that the US has a sovereign currency.

    Bondbuyers would rather pay for our party by buying bonds instead of getting hit with devaluation of the dollar or, god forbid, taxes/tariffs.

    http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt

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  4. The conclusuion you should be drawing is that there is serious "blood in the water" and the financial sharks are getting ready to rip the prey to pieces. That prey is the euro, of course. There will be a lot of money made as that currency goes down.

    The question is ... when do Germany and the UK jump the ship from the European Union? And how long before those announcements happen?

    PeteCA

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  5. Gonzalo,

    I have read your derivative dribble above and I'm supremely confident that there is not a single Seminole or innovative idea in any of it...!

    Here is why, you fail to mention GERMANY....
    1.
    Germany is very stable and, well, eventually be forced to agree to save the Euro zone along with the IMF, ECB, etc...

    2. This Euro zone collapse would lead to a spectacular rally in the dollar, and thus, the globalist elite's plan would be null and void in collapsing the dollar to reign in The Amero ;
    Set-up by the private, secret organization of The North American Union in 2007.

    3. Obomba is bought and paid for by British royalty. The U.S. will step-in to ensure collapse doesn't happen in The Euro Zone. This already been decided by the powers that be.

    4. This event with a tremendous dollar rally would destroy precious metal values.
    So I would hope you would not want this collapse to happen as you are a reputed gold and silver bug.

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  6. Anonymous needs to get off the crack pipe. There will be NO dollar rally that destroys the precious metals market. We are way too far gone for that to happen. Germany is anything but stable and the dollar and euro will fall together. Gold has outperformed every asset class since 1969
    1. Gold's average annual return = 11% (What interest rate is your bank paying you on that CD?)
    2. Gold - 12 month return = 20% 24 month return =37% 5 year return = 250% 10 year return = 700%

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  7. Obama was put into power by Evelyn Rothschild, the Queen is his subject. Prophecies Org. extraordinary reading about Obama there.

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  8. One more thing about Germany being "stable", Germany creates 474 euros of debt per second, that's over 28,000 euros per minute, over 1.7 million euros of debt per hour, and over 41 million euros of debt DAILY. Now what was that about Germany being "stable"?

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  9. I agree that the dollar will rally and gold will have a major set back. DOW $3,200? IMO, it's just a matter of time.

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  10. LOL @ The Candid Blogger:

    BWAAAA HAAAA HAAA. You are an absolute idiot
    look at your precious metal charts from The Great Depression... THEY CRASHED, just like they will AGAIN. Didn't you learn that when Silver went to it's all-time high and crashed down to $33 -$ 34 ? Gold has been on a 10 year bull run (with the returns your stating) that's ALMOST OVER ! Nothing is going to collapse except Gold and Silver. Germany is very stable.

    YOU ARE A FOOL TO THINK THAT THE EURO AND DOLLAR WOULD COLLAPSE AT THE SAME TIME YOU FOOL.

    YOU ARE BEST OFF BY OWNING U.S. STOCKS THAT PAY DIVIDENDS THEN TO OWN A PAPER WEIGHTS LIKE GOLD AND SILVER !!!!!!!!!

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  11. that pastor lindsay guy on the oil insider tip line predicts that the euro crashes into oblivion first and then after a few days, the rest of the financial notional paper wealth world implodes into a supermassive black hole. events so far seem to support lindsay, even though he's kind of daft...

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  12. Lira, I don't know anything about Monday's bond market, but I did see an amusing headline (NYT?) "Italy Moves to Rein in Short Sellers". LOL! If Italy is squeaking about "unfair" short sellers you know they are very much afraid.

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  13. GL,
    Is the chain link fence intended to keep people in or out?

    KS

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  14. Anonymous said...

    "Gonzalo,

    I have read your derivative dribble above and I'm supremely confident that there is not a single Seminole or innovative idea in any of it...! "

    Sorry old chap, but you come accross as a tad backward - last I heard a Seminole is a North American indian - perhaps you meant seminal? Whatever - a giant gaffe like that is tough on the old credibility though.

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  15. All of this talk of sovereign money and debt, and how one economy is stable enough to survive while another may fail. It aint just a river in Egypt, my friends.
    Everyone reading this had better get their nuggets wrapped around the fact that the entire western world economies are going to go belly up and the nation states that have defrauded billions of people for centuries are going to be worthless history. Most notably will be the empire of what we think of as Anglo-Saxon England, but is in actuality just another scam artists regime of dictatorship and fraud.
    The fiat currencies of everything that the bankers of England have manipulated for centuries are played out. There will be no more bail outs, there will be no more job creation, there will be a complete and equivocal no confidence of any western banker, politician, statesman or bureaucrat. And rightly so.
    Those who believe that there will be some that profit greatly from all of this are right, but only for the shortest period of time. The richest of the rich are the targets of the poor in the coming months, and they will be stripped down and sold like the slaves they have advertised all of us to be (for them) for centuries.
    This article tells only the truth: that all fiat currencies are on the brink, that the self righteous manipulators and paper pushers are in a panic about it, and the whole chaotic mess will crash and burn with no Phoenix from the ashes.
    The New World Order of these rich men (disguised as human beings) is a pathetic and catastrophic failure. They have now switched to lifeboat mode. That too will fail. It is written. It is written in so many places and in so many forms that there is no escape from it no matter how much paper, land or gold you have or think you can use to save your sorry a**. Those who have passed their liabilities on to strangers and those that have put middle men between themselves and God, themselves and their security and themselves and freedom will find that their middle men saviors are backpedaling towards the cliff, driven by the horrors of inevitable truth.
    If you fear it, and you live in fear because of it, then the true purpose of it all has been fulfilled. If you can rise above that fear, and face the world absent of evil and hate then you will triumph. Swim that river of economic recovery all you want, in the end you are just swimming in a flow of worthless paper owned by empty souls. As one of their puppets has stated clearly, you are either with them, or against them...

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  16. And then I saw this gem on Mish Shedlock's blog: "EU Commissioner Seeks to Prohibit Agencies from Rating Debt of Countries in Rescue Programs" ROTFL!

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  17. This is what happens when you turn from God and let the 'chosen ones' rule your nations. Wake the up people! Stop being programmed by the controllers and embrace Christ once again!

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  18. Bababouey! Bababouey! Bababouey! Bababouey! Bababouey! Bababouey! Bababouey! Bababouey! Bababouey! Bababouey! Bababouey! Bababouey! Bababouey! Bababouey! Bababouey! Bababouey! Bababouey! Bababouey! Bababouey! Bababouey! Bababouey! Bababouey! Bababouey! Bababouey!

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  19. @NeonTetra - Just like the U.S. wants now to have an I.D. card to own, buy, sell or trade GOLD & SILVER. Think of what that will do to "Precious Metals" ... SELL SELL SELL SELL

    I would rather own U.S. OIL STOCKS / TRUSTS that pay huge dividends!

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  20. ChewyBees is pretty close on to what might actually happen. Both dollar and euro will fail, but we don't know which one will go first.
    Without a medium of exchange, people can't buy food or fuel; they will have to barter. You folk in the USA who are forbidden to grow your own food and collect rainwater, maybe now you can see why. You aren't meant to survive (at least, according to the NWO).

    We in the UK are a nation of gardeners, so there's going to be a lot of digging and planting going on. Many will remember "Dig For Victory" in World War 2, when gardens and lawns were dug up to plant vegetables. We've already bought a pile of seeds ready for next season; we're determined to have something, even if it means going vegetarian for some long while, maybe permanently. We use the old Boy Scout motto, "Be Prepared". Nothing could be more true than the times we are in right now.

    As for gold and silver, I believe they will retain a value of some kind, that will be usable...the old financial ways are dying and you can't stop it. It has already been decreed by the Highest Authority.

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  21. Chris
    As chilling as your words are I believe you are right. Food and water are the means of control when the whole system crashes, One suggestion I have is stockpile mung beans and as many pulses as you can get. Despite all the rubbish in the press regarding the e-coli scare these foods when sprouted not boiled to death are a highly nutritious and not bad tasting super food. Grown indoors as needed with the minimum of water will be life saving for a good while. Hence all the fear and scaremonger around this gift. Good for the entire body. Good luck. Lin

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  22. Order out of chaos, they will create chaos and nobody will see it coming. Every body is busy with keeping their heads up.

    Only thing that you can do is leave the system. Get self sufficient, grow your own food and live close to nature.

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  23. "Yesterday, the European contagion spread to Italy and Spain."

    Ranks this article as stupid.

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  24. Please! Are you really so naive as to not know that bond speculators can turn against any particular market when it pleases their fancy. Your columns are generally very insightful but you missed the boat on this one. There doesn't have to be a particular moment or reason that causes a market crash. Traders produce the crash then find reasons to justify it.

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  25. YOU "DOOMSDAY" PEOPLE CRACK ME UP!
    NOTHING WILL FAIL EXCEPT YOUR DOOM AND GLOOM PREDICTIONS. WE ARE NOT GOING BACK TO THE "CAVEMAN DAYS" WHERE YOU TRADE A PIECE OF GOLD FOR FOOD LOL. GIVE ME A BREAK WITH THIS CRAP ALREADY! THIS IS ---SO PLAYED OUT AND TIRED---

    YOU PEOPLE REALLY NEED TO GET A LIFE.

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  26. Greetings from a visitor from Smoking Mirrors blog sires.

    1. You have hasbara trolls here - probably more than one.

    2. Rothschild and his zionist oligarch associates instigating this global economic meltdown to force everyone on earth to cry out for the implementation of a one world currency and a one world government.

    3. To succumb will result in you and your family becoming literal slaves infinitum.

    4. The US dollar will crash as will all fiat currencies in the world soon (days, weeks?)

    5. It is by fractional fiat and usury the criminal syndicate named above has control of the people and the governments of the whole world.

    6. The criminal syndicate controls the private central banks in 193 of 197 countries in the world.

    7. The criminal syndicate did 9/11, Spainish train bombing and 7/7 for geopolitical gain through Mossad and the domestic secret service in the country attacked.

    8. The criminal syndicate created/bought Rothschildlandia in 1917 via the Balfor declaration and has supported the genocide of the Palestinians off their own land ever since.

    9. Iceland is my hero. F**k the zionist banksters.

    10. Jesus Christ in the book of Revelations states: You who call yourselves Jews but who are not, you are the synagogue of Satan. I believe refers to ashkenazi/khazarians who are not semites - thereby the term anti-semitism is a complete misnomer. The Palestinians are semites.

    11. Usury. See 'The Eleventh Marble' article at WRH

    12. Good luck. Good post and comments. Sincerely

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  27. I'm not even saying that you are wrong as I agree with much of what you say but when I was working as a junior broker in the 1980's emerging debt was priced routinely in the high teens. 5.67% and 6% is only high relative to the stupidly low interest rates now....artificially low. 6 month LIBOR averaged 6% for a decade or more prior to this stupid period. In fact a normal 10 year yield should be 6% if you factor in 3% Inflation and 3% real rate of return.

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  28. Gonzalo,

    Does China's alleged interest in the euro affect your assessment? Following is a quote from Bloomberg.

    "Europe and the euro will remain among the most important areas of investment for China’s world-record $2.65 trillion of foreign-exchange reserves, a central bank official said in the nation’s latest show of support." (http://www.bloomberg.com/news/2011-01-07/china-will-put-currency-reserves-into-europe-euro-central-bank-s-yi-says.html)

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  29. To the anonymous shouting idiot:
    If nothing is going to fail, then you should load up on Greek bonds, LOL! At 30% yield or so they are the deal of the decade!!!

    Germany has barely kept their general pension system from imploding with the export surplus during the last years, but unfortunately they will soon realize they have sold good cars and machinery for bad debts which the German banks lent out...

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  30. Anonymous above, your confidence doesn't become you. Please admit that you're just as much of a clueless schmuck as the rest of us (I can say that with certainty), and approach your future internet conversations with more humility.

    I do agree that the gold and silver bugs are also a bit too confident about their positions. My big issue is that there's something like 1000x or more debt as there is cash in the system now, so why not bank runs and massive debt deflation? Such would be brutal for metals in the short term, right? Long term it wouldn't make much of a difference, but many of you seem to be counting on PMs to make you rich. There's like $220 trillion or more in derivatives debt out there, tread carefully and keep some cash in the same.

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  31. if you paid attention over the weekend gonzo, there was plenty of warning, shit the consub point blank said on sunday all shorts are off the table, not that its the bond market but everybody and their momma knew something was up at the close on friday, maybe you wern't paying attention

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  32. AWW DOOM AND GLOOMERS LOL. YES THE SUN WILL STILL RISE TOMORROW. SO HEY, TAKE OFF THAT UGLY TIN FOIL CAP AND GET SOME SUN! :)ALL THIS NEWS IS PRICED IN THE MARKET, EVERYONE IS AWARE OF IT.
    NOTHING IS GONNA FAIL....REMEMBER THAT. KAY :)

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  33. To say "all this news is priced into the market" implies that all investors, in the aggregate, understand completely the consequences of the news and have invested accordingly. This was a stupid assertions for you to make, because life has fractal complexity and nobody understands anything completely. The fact that you made such a stupid assertion in capital letters was merely redundant.

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  34. Anyone who promotes gold and silver over legitimate state sponsored currencies is an economic terrorist!

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  35. • By March of 2011, once higher commodity prices reach the marketplace, monthly CPI will be at an annualized rate of not less than 5%.
    • By July of 2011, annualized CPI will be no less than 8% annualized.
    • By October of 2011, annualized CPI will have crossed 10%.
    • By March of 2012, annualized CPI will cross the hyperinflationary tipping point of 15%.

    Two swings and two misses. Wages dropping, unemployment rising, housing continuing to decline. Even oil prices moderating. I am confident in predicting that unless wages begin rising there will be no overall inflation. The proof will come in a few months when the Bernanke unleashes QE3 in an attempt to ward off deflation, even though his QE2 was a massive failure with the economy obviously slowing down early in the second quarter directly into the teeth of his QE.

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  36. You miss the point Gonzalo.

    The BIG PICTURE indicates that Europe's economic woes (and indeed those of the entire planet) are the direct result of AMERICAN FINANCIAL INSTITUTIONS -such as GOLDMAN SACHS- openly embezzling and defrauding foreign financial markets with WFMD's (WEAPONS of FINANCIAL MASS DESTRUCTION) known as 'derivatives' and 'credit default swaps'.

    Granted, they may have had the help & cooperation of local politicians who knowingly or not played right into their hands, but ultimately this is 100% an AMERICAN FRAUD.

    And I hope that as nations slowly wake-up to the realization of the massive THEFT they've been subjected to, they will eventually band together and start INDICTING, EXTRADITING & PROSECUTING AMERICAN WAR/FINANCIAL CRIMINALS.

    Even if it means WAR between the U.S. and EVERYONE ELSE ON THE F@CKING PLANET!!!!

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  37. YOU KNOW, I'M SICK OF READING THE ASSUMPTIONS OF LESSOR MORTALS. DOOM AND GLOOMERS ARE JUST RETARDED FEAR MONGERS. THIS ISN'T CHILE WE ARE TALKING ABOUT HERE. HYPERINFLATION IS NOT POSSIBLE IN THE U.S. YOU GOT U.S. AND CHINA BACKING THE EUROZONE. IF ANY OF THESE THREE WERE TO FAIL, THE ENTIRE WORLD ECONOMY WOULD FAIL. THIS WOULD DESTROY THE VERY MARKETS THAT PRICE THE VALUE OF YOUR "PRECIOUS METALS". SUCH AN EVENT WOULD MAKE THE VALUE OF THESE METALS SET AT WHAT EVER SOMEONE ON THE STREET WILL TRADE YOU FOR IT (IF ANYTHING). SINCE YOU CAN'T EAT GOLD OR SILVER AND IN A WORLD ECONOMIC COLLAPSE, IT'S WORTHLESS... BEN BERNANKE, THE MAN THAT CONTROLS THE WORLD ECONOMY AS HAVING THE POWER OVER THE WORLD'S RESERVE CURRENCY EVEN SAID TO RON PAUL, GOLD IS ---NOT--- MONEY. WHEN THIS MAN SAYS THIS, YOU BETTER SELL... DON'T BE A STUPID FOLLOWER, SELL THIS CRAP WHILE YOU CAN, BECAUSE THE NEW WORLD ORDER ISN'T GONNA LET IT HAPPEN. PERIOD. THE AMERO IS THE NEXT CURRENCY IF ANYTHING, NOT GOLD OR SILVER.

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  38. If 50 million Americans die of starvation in the next few years I hope LOL @ The Candid Blogger: is one of them

    As a patriotic America I know that the only Constitutional money is gold and silver.

    During the US Constitutional Convention the members STRIPPED the power to issue paper money from the Federal government due to fear of inflationary excesses. This power was included in the Articles of Confederation and was misused resulting in the "not worth a Continental" destruction of the Continental fiat currency of the Revolution.

    In that era paper money was called "Bills of Credit" and was also banned to the states in Section 10 of the US Constitution.

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  39. Thanks for all the laughs anonymous WANKERS

    Get your hand off it dudes before you wear the damn thing out !

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  40. I think many people will be surprised how fast panic will spread in the financial community very soon. I think this idea of the world running to the US dollar as a flight to quality, is a joke. there isn't any quality anywhere. If it's quality, why is the FED the main one buying our own debt now? Precious metals have been a store of wealth for thousands of years. that isn't going to stop anytime soon, just becasue some government official says it's a bubble. give me a break.
    You take your dividend paying stocks, and I'll hold physical silver. We'll see what each is worth after the dust settles.
    Once the panic starts, all efforts to stop it will fail. You're seeing the start now.

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  41. THE ONLY REASON GOLD HAS BEEN IN A BULL MARKET SINCE 2000 IS BECAUSE THE GLASS-STEAGALL ACT WAS REPEALED NOVEMBER 12, 1999. THAT ALLOWED THESE MEGA BANKS, WALL STREET, ETC TO CREATE ALL THIS FAKE DEBT OUT OF THIN AIR AND GAMBLE WITH DEPOSITOR'S MONEY. AFTER A DECADE+, IT'S COMING TO A HEAD, SO YOU DON'T WANT TO BE IN PRECIOUS METALS. THEY WILL GET CREAMED ALONG WITH EVERYTHING ELSE AS INVESTORS

    THIS IS REVERSIBLE BY ELECTING RON PAUL AS PRESIDENT, RE-INSTATING THE GLASS-STEAGALL ACT AND HAVING CONGRESS DECLARE ALL THE PHONY DEBT TO BE FRAUDULENT. THIS SAVES THE DOLLAR.

    YES, WE WILL SEE WHEN THE DUST SETTLES ON YOUR METALS "BUBBLE" AND WHERE I WILL BE WITH MY COMMODITY DIVIDEND PAYING STOCKS AND TRUSTS BASED ON OIL AND FOOD.

    OHHH OHHH, I KNOW... LET'S BUY GOLD AT IT'S ALL-TIME HIGH! YA YA LET'S BUY SILVER NEAR IT'S ALL-TIME HIGH TOO :) ----NOT----

    LOOK AT WHAT COPPER IS DOING RIGHT NOW. IT'S GOING UP DUE TO PRODUCTION DEMAND. THIS IS A JOBLESS RECOVERY... ALCOA JUST REPORTED TRIPLE TO QUADRUPLE IN PROFIT INCREASES ON MONDAY.

    PEOPLE *MUST* HAVE FOOD AND OIL.
    PEOPLE DON'T NEED PRECIOUS METALS UNLESS
    THEY LIKE SHINNY PAPER WEIGHTS!

    AS FAR AS THE PANIC, UMMM, WASN'T THERE A PANIC JUST 3 YEARS AGO ?? IT WAS STOPPED. WHAT ABOUT THE FLASH CRASH LAST MAY? IT WAS STOPPED TOO?

    ONLY ROOKIE INVESTORS "PANIC".

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  42. It is a well known fact that when you type with CAPS ON it turns absolute utter rubbish into irrefutable fact.

    WANKERS !

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  43. I DO IT TO PISS OFF IDIOTS LIKE YOU THAT HAVE NOTHING REMOTELY INTELLIGENT TO STATE EXCEPT "WANKERS"...



    OHH AND WHAT DO YOU KNOW? CHINA JUST REPORTED BETTER THEN EXPECTED GDP NUMBERS!

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  44. You know, one of the best things about the Strategic Planning Group is having to pay for access eliminates the worst of the secret cabal conspiracy nutters, illiterates and caps lock typists.

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  45. The funniest thing is that all you people talking about the greatness of "paper money" and that silver and gold will be useless, you don´t think about the fact that the value of money isn´t real... it´s only valid if it has something to be valued against... in the case of oure currency (im swedish, so i hope you don´t complain to much about all spelling errors) its valued against the dollar... so pretty much everything will collapse if the dollar collapses... as it will...
    as an old chinese curse says: "May you live in interesting times"

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  46. It will be great to see the flush of the west because the world is sick of you and your arrogance. Remember, when your system caves in, you go back to your dark ages. Welcome back!

    ReplyDelete
  47. Dear Gonzalo, Yes, I've been expecting the PIIG meltdown, though perhaps not simultaneously. Though I'm no economist, I believe those countries will ultimately benefit from a fresh start.

    Iceland has managed, as did Argentina, and others. I'd love to see Goldman Sachs take it in the shorts. Pox on the banks, anyway!

    Economic matters are become untenable here in Sedona, AZ, with 17% food inflation this year. Those of us low on the totem pole have already we run out of money sooner each month. We have fired school teacher and policemen in our bread lines.

    Yesterday I read somewhere that QEII funds never went to the people, but to the banks, where most of it ended up in off-shore accounts. That money should go directly to the people where it could do some real good!

    Right now, in Sedona, we are more interested in filling our larders and growing our own foods. When you get right down to it, I'd rather have food than gold or silver. If word got out that you had precious metals, thugs might come and take it, maybe doing you in in the process. Close friends are also invaluable. Living on a small pension, I couldn't make it even now with the mutual support of friends!

    ReplyDelete
  48. Anonymous - July 14, 2011 1:25 AM

    If you believe all the lies that come out of China then you have obviously been shortchanged when it comes to intelligence.

    Go on CAPS ON man - keep up the bullshit as it is nothing more than pure comedy.

    ReplyDelete
  49. To quote: "And then I saw this gem on Mish Shedlock's blog: "EU Commissioner Seeks to Prohibit Agencies from Rating Debt of Countries in Rescue Programs" ROTFL! "

    Are we talking about the same agencies that rated AIG and Lehman triple A? and then in congress they invoked the 4th and thats just their opinion?

    I dunno why they still have something to say.

    ReplyDelete
  50. Japan has provided the model to get out of this mess - Zero interest rates. The US has followed their lead. The ECB has to do the same - it must buy the government bonds at zero interest.

    What in effect has happened is that usury has been eliminated out of the system. It is true that growth has slowed - but it has not died - in Japan the economy is still functioning - the same is happening in the US. This also needs to happen in our private economies.

    Usury is bad - usury is inherently unstable - all interest base banking systems eventually fail. It is observationally true that as usury economies mature, most the money ends up in the hands of a very few. It is observationally true that in the boom and bust economic cycles that the rich end up with more wealth and power and that the middle class's wealth is devalued.

    Fiat money is not a store of value. Value is stored in what we own and what we are able to create and sell. Money has only one true function - that is, it is a means to exchange goods and services. There is no reason that new money cannot be issued without interest for the private economy to us and grow. Money would only be issued if there is something that is available to buy. In this way there is always an incentive to create and sell goods and services.

    When all is said and done, sometime in the future - there is no rational reason that we cannot purchase what we need without a cumbersome, destined to fail usury system of money.

    ReplyDelete
  51. I don’t believe you are offering much to the conversation, Anonymous. Fiat currencies always die. They are either inflated away, devalued, defaulted upon or debauched over time. They can also deflate. These are ways of adjusting to reality. Neither the US nor Europe are prepared to get real, yet.

    You have such faith in Germany’s willingness to be screwed for the PIIGS benefit. And the willingness of the PIIGS to sacrifice their sovereign powers to the Central Bankers.

    Neither of us know, for certain, what the future will bring, but, there is no way we can stand on the sidelines. We have placed different bets on the future. We cannot both be correct.

    It may be a bias of mine that I expect to see the EURO disintegrate. I would bet against the EURO, but most other currencies are just as bad. I have a long term perspective, your’s seems focused rather short.

    Long term, the EURO will be abandoned when sovereign nations return to their prior currencies. The Dollar could go either way, but I am mostly drawn toward the hyperinflation camp. I suspect that Ben Bernanke will go down fighting, not collapse. He will go down printing money to the end, until when no one will take a dollar in exchange.

    It’s a personal bet. You can bet differently.

    ReplyDelete
  52. I have a Question to ALL government?????
    Where is your TRUE LOYALTY If you only trusted
    your respective peoples and not the bankers
    you could say fine Were Broke and move on.
    DEBT MORITORIUM and nationalize your currency
    and do away with Derivations.
    But NO you'd rather Kill yourselves with MOBS.

    ReplyDelete
  53. GL, I always like reading your articles. Although, there was one respondent above who was taking your timetable for hyperinflation and throwing down the gauntlet to you. I, too, am interested in where we stand with your benchmarks.

    Too all those who think gold and silver are wastes of time: look at what China has been, and is continuing to do. They are the world's number one producer AND importer of gold bullion. They set domestic production and import records last year and will top their 2010 levels this year. They are following through on their statements to increase gold deposits. So if gold is not money, why would they do this?

    Initially, I thought they were setting themselves up to offset their soon-to-be losses in US Treasuries. But it hit me lately, they are most likely positioning themselves to back the Yuan (or Renminbi) in gold. I think they get the fact fiat currencies always ultimately fail. The gold-backed Yuan will be the world's reserve currency.

    Thoughts, GL...anyone?

    ReplyDelete
  54. FOFOA describes a nuclear option for Europe to save itself. Google FOFOA 'Greece is the word'

    What are your thoughts on that GL?
    Seems quite plausible to me.

    ReplyDelete
  55. sorry, i should have elaborated a bit more.
    Essentially Europe can save itself by super inflating the price of *physical* gold to say $50k/oz.

    It would recapitalise their banking system if the PIIGS send them insolvent.

    It may also trigger the hyperinflation of the US Dollar once the paper gold market is anililated by everyone scrabbling for physical.

    ReplyDelete
  56. i live in italy but nothing has happened yet.
    The italian government is cutting expenses and raising taxes as imposed by the EU governement.

    Do you still think italy and spaing will exit the euro?

    ReplyDelete
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