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22 Reasons Why We Could See An Economic Collapse In Europe In 2012

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Will 2012 be the year that we see an economic collapse in Europe?  Before you dismiss the title of this article as “alarmist”, read the facts listed in the rest of this article first.  Over the past several months, there has been an astonishing loss of confidence in the European financial system.  Right now, virtually nobody wants to loan money to financially troubled nations in the EU and virtually nobody wants to lend money to major European banks.  Remember, one of the primary reasons for the financial crisis of 2008 was a major credit crunch that happened here in the United States.  This burgeoning credit crunch in Europe is just one element of a “perfect storm” that is rapidly coming together as we get ready to go into 2012.  The signs of trouble are everywhere.  All over Europe, governments are implementing austerity measures and dramatically cutting back on spending.  European banks are substantially cutting back on lending as they seek to meet new capital requirements that are being imposed upon them.  Meanwhile, bond yields are going through the roof all over Europe as investors lose confidence and demand much higher returns for investing in European debt.  It has become clear that without a miracle happening, quite a few European nations and a significant number of European banks are not going to be able to get the funding that they need from the market in 2012.  The only thing that is going to avert a complete and total financial meltdown in Europe is dramatic action, but right now European leaders are so busy squabbling with each other that a bold plan seems out of the question.

The following are 22 reasons why we could see an economic collapse in Europe in 2012….

#1 Germany could rescue the rest of Europe, but that would take an unprecedented financial commitment, and the German people do not have the stomach for that.  It has been estimated that it would cost Germany 7 percent of GDP over several years in order to sufficiently bail out the other financially troubled EU nations.  Such an amount would far surpass the incredibly oppressive reparations that Germany was forced to pay out in the aftermath of World War I.

A host of recent surveys has shown that the German people are steadfastly against bailing out the rest of Europe.  For example, according to one recent poll 57 percent of the German people are against the creation of eurobonds.

At this point, German politicians are firmly opposed to any measure that would place an inordinate burden on German taxpayers, so unless this changes that means that Europe is not going to be saved from within.

#2 The United States could rescue Europe, but the Obama administration knows that it would be really tough to sell that to the American people during an election season.  The following is what White House Press Secretary Jay Carney said today about the potential for a bailout of Europe by the United States….

“This is something they need to solve and they have the capacity to solve, both financial capacity and political will”

Carney also said that the Obama administration does not plan to commit any “additional resources” to rescuing Europe….

“We do not in any way believe that additional resources are required from the United States and from American taxpayers.”

#3 Right now, banks all over Europe are in deleveraging mode as they attempt to meet new capital-adequacy requirements by next June.

According to renowned financial journalist Ambrose Evans-Pritchard, European banks need to reduce the amount of lending on their books by about 7 trillion dollars in order to get down to safe levels….

Europe’s banks face a $7 trillion lending contraction to bring their balance sheets in line with the US and Japan, threatening to trap the region in a credit crunch and chronic depression for a decade.

So what does that mean?

It means that European banks are going to be getting really, really stingy with loans.

That means that it is going to become really hard to buy a home or expand a business in Europe, and that means that the economy of Europe is going to slow down substantially.

#4 European banks are overloaded with “toxic assets” that they are desperate to get rid of.  Just like we saw with U.S. banks back in 2008, major European banks are busy trying to unload mountains of worthless assets that have a book value of trillions of euros, but virtually nobody wants to buy them.

#5 Government austerity programs are now being implemented all over Europe.  But government austerity programs can have very negative economic effects.  For example, we have already seen what government austerity has done to Greece. 100,000 businesses have closed and a third of the population is now living in poverty.

But now governments all over Europe have decided that austerity is the way to go.  The following comes from a recent article in the Economist….

France’s budget plans are close to being agreed on; further cuts are likely but will be delayed until after the elections in spring. Italy has yet to vote through a much-revised package of cuts. Spain’s incoming government has promised further spending cuts, especially in regional outlays, in order to meet deficit targets agreed with Brussels.

#6 The amount of debt owed by some of these European nations is so large that it is difficult to comprehend.  For example, Greece, Portugal, Ireland, Italy and Spain owe the rest of the world about 3 trillion euros combined.

So what will massive government austerity do to troubled nations such as Spain, Portugal, Ireland and Italy?  Ambrose Evans-Pritchard is very concerned about what even more joblessness will mean for many of those countries….

Even today, the jobless rate for youth is near 10pc in Japan. It is already 46pc in Spain, 43pc in Greece, 32pc in Ireland, and 27pc in Italy. We will discover over time what yet more debt deleveraging will do to these societies.

#7 Europe was able to bail out Greece and Ireland, but there is no way that Italy will be able to be rescued if they require a full-blown bailout.

Unfortunately, Italy is in the midst of a massive financial meltdown as you read this.  The yield on two year Italian bonds is now about double what it was for most of the summer.  There is no way that is sustainable.

It would be hard to overstate how much of a crisis Italy represents.  The following is how former hedge fund manager Bruce Krasting recently described the current situation….

At this point there is zero possibility that Italy can refinance any portion of its $300b of 2012 maturing debt. If there is anyone at the table who still thinks that Italy can pull off a miracle, they are wrong. I’m certain that the finance guys at the ECB and Italian CB understand this. I repeat, there is a zero chance for a market solution for Italy.

Krasting believes that either Italy gets a gigantic mountain of cash from somewhere or they will default within six months and that will mean the start of a global depression….

I think the Italian story is make or break. Either this gets fixed or Italy defaults in less than six months. The default option is not really an option that policy makers would consider. If Italy can’t make it, then there will be a very big crashing sound. It would end up taking out most of the global lenders, a fair number of countries would follow into Italy’s vortex. In my opinion a default by Italy is certain to bring a global depression; one that would take many years to crawl out of.

#8 An Italian default may be closer than most people think.  As the Telegraph recently reported, just to refinance existing debt, the Italian government must sell more than 30 billion euros worth of new bonds by the end of January….

Italy’s new government will have to sell more than EURO 30 billion of new bonds by the end of January to refinance its debts. Analysts say there is no guarantee that investors will buy all of those bonds, which could force Italy to default.

The Italian government yesterday said that in talks with German Chancellor Angela Merkel and French President Nicolas Sarkozy, Prime Minister Mario Monti had agreed that an Italian collapse “would inevitably be the end of the euro.”

#9 European nations other than just the “PIIGS” are getting into an increasing amount of trouble.  For example, S&P recently slashed the credit rating of Belgium to AA.

#10 Credit downgrades are coming fast and furious all over Europe now.  At this point it seems like we see a new downgrade almost every single week.  Some nations have been downgraded several times.  For instance, Fitch has downgraded the credit rating of Portugal again.  At this point it is being projected that Portuguese GDP will shrink by about 3 percent in 2012.

#11 The financial collapse of Hungary didn’t make many headlines in the United States, but it should have.  Moody’s has cut the credit rating of Hungarian debt to junk status, and Hungary has now submitted a formal request to the EU and the IMF for a bailout.

#12 Even faith in German debt seems to be wavering. Last week, Germany had “one of its worst bond auctions ever“.

#13 German banks are also starting to show signs of weakness.  The other day, Moody’s downgraded the ratings of 10 major German banks.

#14 As the Telegraph recently reported, the British government is now making plans based on the assumption that a collapse of the euro is only “just a matter of time”….

As the Italian government struggled to borrow and Spain considered seeking an international bail-out, British ministers privately warned that the break-up of the euro, once almost unthinkable, is now increasingly plausible.

Diplomats are preparing to help Britons abroad through a banking collapse and even riots arising from the debt crisis.

The Treasury confirmed earlier this month that contingency planning for a collapse is now under way.

A senior minister has now revealed the extent of the Government’s concern, saying that Britain is now planning on the basis that a euro collapse is now just a matter of time.

#15 The EFSF was supposed to help bring some stability to the situation, but the truth is that the EFSF is already a bad joke.  It has been reported that the EFSF has already been forced to buy up huge numbers of its own bonds.

#16 Unfortunately, it looks like a run on the banks has already begun in Europe.  The following comes from a recent article in The Economist….

“We are starting to witness signs that corporates are withdrawing deposits from banks in Spain, Italy, France and Belgium,” an analyst at Citi Group wrote in a recent report. “This is a worrying development.”

#17 Confidence in European banks has been absolutely shattered and virtually nobody wants to lend them money right now.

The following is a short excerpt from a recent CNBC article….

Money-market funds in the United States have quite dramatically slammed shut their lending windows to European banks. According to the Economist, Fitch estimates U.S. money market funds have withdrawn 42 percent of their money from European banks in general.

And for France that number is even higher — 69 percent. European money-market funds are also getting in on the act.

#18 There are dozens of major European banks that are in danger of failing.  The reality is that most major European banks are leveraged to the hilt and are massively exposed to sovereign debt.  Before it fell in 2008, Lehman Brothers was leveraged 31 to 1.  Today, major German banks are leveraged 32 to 1, and those banks are currently holding a massive amount of European sovereign debt.

#19 According to the New York Times, the economy of the EU is already projected to shrink slightly next year, and this doesn’t even take into account what is going to happen in the event of a total financial collapse.

#20 There are already signs that the European economy is seriously slowing down.  Industrial orders in the eurozone declined by 6.4 percent during September.  That was the largest decline that we have seen since the midst of the financial crisis in 2008.

#21 Panic and fear are everywhere in Europe right now.  The European Commission’s index of consumer confidence has declined for five months in a row.

#22 European leaders are really busy fighting with each other and a true consensus on how to solve the current problems seems way off at the moment.  The following is how the Express recently described rising tensions between German and British leaders….

The German Chancellor rejected outright Mr Cameron’s opposition to a new EU-wide financial tax that would have a devastating impact on the City of London.

And she refused to be persuaded by his call for the European Central Bank to support the euro. Money markets took a dip after their failure to agree.

Are you starting to get the picture?

The European financial system is in a massive amount of trouble, and when it melts down the entire globe is going to be shaken.

But it isn’t just me that is saying this.  As I mentioned in a previous article, there are huge numbers of respected economists all over the globe that are now saying that Europe is on the verge of collapse.

For example, just check out what Credit Suisse is saying about the situation in Europe….

“We seem to have entered the last days of the euro as we currently know it. That doesn’t make a break-up very likely, but it does mean some extraordinary things will almost certainly need to happen – probably by mid-January – to prevent the progressive closure of all the euro zone sovereign bond markets, potentially accompanied by escalating runs on even the strongest banks.”

Many European leaders are promoting much deeper integration and a “European superstate” as the answer to these problems, but it would take years to implement changes that drastic, and Europe does not have that kind of time.

If Europe experiences a massive economic collapse and a prolonged depression, it may seem like “the end of the world” to some people, but things will eventually stabilize.

A lot of people out there seem to think that the global economy is going to go from its present state to “Mad Max” in a matter of weeks.  Well, that is just not going to happen.  The coming troubles in Europe will just be another “wave” in the ongoing economic collapse of the western world.  There will be other “waves” after that.

Of course this current sovereign debt crisis could be entirely averted if the countries of the western world would just shut down their central banks and start issuing debt-free money.

The truth is that there is no reason why any sovereign nation on earth ever has to go a penny into debt to anyone.  If a nation is truly sovereign, then the government has the right to issue all of the debt-free money that it wants.  Yes, inflation would always be a potential danger in such a system (just as it is under central banking), but debt-free money would mean that government debt problems would be a thing of the past.

Unfortunately, most of the countries of the world operate under a system where more government debt is created when more currency is created.  The inevitable result of such a system is what we are witnessing now.  At this point, nearly the entire western world is drowning in debt.

There are alternatives to our current system.  But nobody in the mainstream media ever talks about them.

So instead of focusing on truly creative ways to deal with our current problems, we are all going to experience the bitter pain of the coming economic collapse instead.

Things did not have to turn out this way.

  • Antonio Gonzalez

    The main trouble for Euroland is America.

    • Dr. Chicago


      Only if you mean that America is still the land of the free and regardless of what the political looters do to surpress the free rights of man and bring them to a level of intolerable ignorance, there are still a handful of capable productive individualist who believe in the Constitution and Bill of Rights.

      God Bless America. Let the Euroland sink.

  • Pitchfork Ready

    Looks like Owebamma found a way to get American taxpayers on the hook for bailing out Europe–the IMF! Considering we contribute 20 percent that add up to 160 billion if the IMF steps in to bail out Europe out.

    My question is–who’s going to bail the United States out when the contagion lands on our shores? The rest of the world better fire up the printing presses.

    • WarriorClass III

      When in the Course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, … when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their DUTY, to throw off such Government, and to provide new Guards for their future security.

      • Pitchfork Ready

        You know I agree 100 percent but who’s going to make that stand that people can rally around? Who’s going to say no more? I wonder if there are any Americans left who heed the words and wisdom of Thomas Jefferson and are willing to lay down their lives to restore The Constitution.

  • DaytoDay

    You know, I started to “wake up” when I had a gut feeling that something was awry with society. This lead me to search for answers, which lead to thousands of hours of research, observation and social interaction.

    I thought about my whole past, e.g, how people use to be, how life used to be, how much my life has changed from then to now, etc…

    And so, my point is that, I think for myself. I always have and I always will. Having said that, the information that Michael’s puts out, and others like him, (Gerald Celente, Alex Jones, etc…) Really clarifies (for me) what I’ve been thinking all along.

    The country is broken, the people are broken, the jobs are broken, the houses are broken, I mean, everything seems to be broken!

    It doesn’t take a rocket scientist, to see that there is something wrong, or something amiss in the air. It almost doesn’t seem real, because it’s so crazy, and so I can understand why people don’t want to believe how bad things have gotten.

    I’ve seen the things that Michael describes in his articles, first hand. That’s why I can believe in what he says.

    It’s because of how AK Steel, layed off 500 people in 07, then 1500 people in 2010 and then they just shut down the plant in 2011, laying off 5,000 people…
    It’s because my dad lost his house of 30yrs, which my grandmother had built…
    It’s because so many jobs have been lost, so many people are homeless on the streets, and so many businesses are closing, leaving vacant property for over 3 years, that has just been sitting there.

    It’s because of all of the things mentioned above and much more, have happened to people whom I know directly, literally hundreds of people who I personally know, have had their lives change and for the wrong direction.

    Since I started investigating and doing research on my own, the economy, society, and politics, have all gotten worse over the years. This is why I believe, because I see it everyday, and I am truly amazed at how, each year is worse than the last, and I mean by strides…

    So, thanks Michael for posting these articles, my only hope is that you keep an unbiased perspective. However, I’m sure that if the economy starts to improve, you’ll be the first to let us know!

    Good Luck and Keep Up the Good Work!

    • Michael


      Thanks for the kind words, and I appreciated that very thoughtful comment.


    • Self-employed

      So Daytoday, I applaud your research and careful observations and certainly the concern that prompted them.

      Your conclusions seems to be that our society is broken but you do not say broken in what way. Or broken how? or even broken when?

      What are the changes that are causing this
      ‘something amiss in the air’?



        Do you really have to ask these questions? Is there a sign slapped on your forehead that says
        “Permanently Asleep, Do Not Awaken”?

  • Kevin2

    In the end the six weeks of vacation, retiring young, a year of maternity leave and the rest will cease to exist and instead of competing with the US they now have China as the standard. It’s no vacation, no benefits, 24 hours maternity leave and a 75% cut in pay. There is no sense stealing off your neighbor state because they don’t have anything either and the US protected you for 65 years so even if you wanted to take what’s not yours you don’t have the military to carry out the task.

  • McKinley Morganfield

    “European banks are overloaded with “toxic assets” that they are desperate to get rid of. Just like we saw with U.S. banks back in 2008, major European banks are busy trying to unload mountains of worthless assets that have a book value of trillions of euros, but virtually nobody wants to buy them.”

    The really bad news is that U.S. banks still hold much of those ‘toxic assets’ on their balance sheets and indeed, they that are utterly worthless. It came out earlier today ( that Uncle Ben has flushed $13 trillion into the U.S. banks, which along with TARP, comes to nearly $14 trillion. That is basically the nation’s current GDP!

    Its nearly impossible to believe the EU crisis can be brought back to a stable financial status; too much debt, too much leverage to put Humpty Dumpty back together again. I believe the same is true of the USA. We’ll be the last to crumble, but we will fall the furthest. It will all begin in the EU zone sometime within 1 week to 12 months.

  • r.bitting

    Michael, I have mentioned this before but theres a very interesting article in circulation by a Russian Engineer named Dimitry Orlov, who lives here in the U.S, but was a citizen of the USSR during it’s collapse and has since made it his lifes work to study economic collapses. The article is entitled ” Closing the collapse gap, why the USSR was better prepared for a collapse than the U.S.” It’s an excellent comparision of the two societies and breaks down the different components of a functioning society such as food distribution, healthcare, transportation, education, etc. While I don’t agree with all his views ( such as big oil or religion ) he makes a compelling case for why it will be much more difficult here than it was for the Soviets. You have quite a few preppers on your site and I know for a fact that they would benefit from reading it. It’s sister article is entitled ” The five stages of economic collapse ” It’s excellent as well.

    • Michael

      That sounds interesting. Do you have a link?


    • D

      I’ve seen that – pretty interesting.

    • Ben Dover

      Orlov is nationalistic in that he seems to believe that USSR was better prepared than USA in every way.

    • Self-employed

      I have read many interesting articles about Black swan events, of which the collapse of Russia in 1998 was a compelling example. Black Swan eventa are marked by a low probability of their occuring and a extremly high impact once they do occur.

      They are almost impossible to predict and in normal human fashion it is only afterwards that we can impose order and evaluate what happened.

    • JustanOguy

      I read a couple of his articles a year or two ago…. Great Stuff and highly suggested for everybody to read.

  • md

    see #6 all these nations owe 3 Trillion together!
    the US owes $15 trillion alone!!! talk about the elephant in the room

    • Michael

      Actually 3 trillion euros is well over 4 trillion dollars, and the combined GDP of those nations is only a small fraction of the GDP of the United States.


  • kyky

    Just today, I’ve read about 2 articles on 2 different finance publications (Economist & Financial Times) that it could be a matter of days while the other said it could be a matter of weeks (which could still be 2012). Can’t wait till this rollercoaster is over.

  • JD

    Theyre holding Germany hostage. (the banksters) They want to force Germany to agree to print money by holding an economic gun against their head. (example the failed bond auction). Germany is terrified of another Weimar republic inflation situation so theyre stuck between a rock and a hard place. The EU has two simple choices print money like the FED, or let the euro fall apart. The banksters will not allow Germany to refuse their demands. They have Goldman Sachs stooges in Italy and Greece running the show and they are scared of having to take nightmarish haircuts like they did with Greece. So it looks like 2012 really might be our worlds trial by fire after all.

    • Melissa

      You got that right JD. Thanks

      Here is a link to what Paul Craig Roberts thinks to this topic:
      “Bankers have seized Europe, Goldmann-Sachs is taking over.

    • 007

      Nobody is holding Germany hostage. They know the score and the inning. They also know they are holding all the cards. They can force whatever concessions they want from anyone they want. All they have to do is allow the ECB to print money. The price they charge for this will change the world and Germany will land on top big time.

    • D

      Whatever it is, Germany will rule Europe and have all the power.

  • mark

    You can’t fix a debt problem with more debt. Any fix that they try is just playing musical chairs with the debt that governments owe to someone. In the US we put wall steet’s and the bankster’s debts on the backs of the taxpayers. This will not end well. We should be using the time left to prepare.

    • McKinley Morganfield

      “This will not end well. We should be using the time left to prepare.”

      Couldn’t agree more. Bought another 192 meals of freeze dried food a couple of hours ago. Prepare to survive. Tighten family connections. Try to find common cause with your neighbors and encourage them to prepare for 30 days (a minimum, I know) on their own. Gather the supplies to grow your own food and preserve it. And gather the supplies to secure your home against the rabble like OWS.

  • tappedops

    Enough already…no more musical chairs and deck chair polo… DIE euro DIE… drag down the green tp… bring on the strangle hold austerity to the states…spark WW3…7 dollar gas.. 45%UI… 40% inf…inturnal bank runs… take the guns and let the sheep march themselves to the camps… lets get it overwith…

    • D

      Lol. Some days that’s the way I feel too. I don’t want chaos to ensue, but SWHTF eventually. I guess it gives more time to prepare, but like you said, this musical chairs fiasco is getting sickening. No need to fear though – I think we are very close.

  • mondobeyondo

    Um… er…

    (A disclaimer: Due to the effects of the combination of vodka and pomegranate juice, I am unable to give a coherent response. Until tomorrow, at least. But I will at least try. Sorry. It’s the holiday season, and well, you know…)
    Needless to say…

    Please, feel free to correct me if I’m wrong. The cranberry juice (or maybe the vodka?!) is kicking in.)

    The whole European debt thingy. Germamy’s got a lot of stake here. First, the European Central Bank’s central headquarters is located in Frankfurt. Frankfurt is in Germany. Germany is the most powerful country, economically, in the Eurozone.

    The Eurozone was created on a similar basis more or less as NATO. I mean, built or modeled after NATO. Or more as less as the Three Musketeers. All for one, and one for all.

    i.e. “An attack on any NATO country is an attack on ALL NATO countries….”

    SAME WITH THE EURO! Economically speaking of course.
    What affects one Euro country affects all countries that use the Euro as their currency!

    The Euro is a common currency.
    But not European nations are equally strong.
    (Repeat above statement until you finally get it)

    Greece’s econony does not compare to Germany’s.
    Italy’s economy does not compare to Germany’s.
    France’s economy does not compare to Gnrmany’s
    Ireland vs. Switzerland? How many Swiss chocolate bars vs. Irish beers are traded?

    But the people bought into the idea of a “single currency”. without realizing there are “different peoples” and “different economic realities” associated with those independent nations and peoples.

    Germany is not Greece.
    Greece is not Spain.
    Spain is not Portugal.
    BUT — they are all part of the Eurozone.
    A very tightly integrated financial system.
    And that is part of the problem.
    Remember what I said in the beginning.
    All for one, and one for all.

    What affects Greece, affects Italy.

    And Paris. London. Berlin. Buenos Aires, Sao Paulo, Cape Town, Bangkok, Mumbai, Nairobi. London. New York. Los Angeles. And eventually, YOU.

    This whole house of cards is built on quicksand and it will be coming down FAST.

    Give me another pomegranate juice and vodka cocktail, bartender!


    • highspeedloafer

      Occifer! Occiferrr!!!!!
      Somebody get this floor off the drunk.

      • John


  • Ken

    The economy will crash, the only question is when.

  • Dargos

    The Europeans are trying hard by means of austerity measures and by means of adjusting their financial system to the new reality to fix their problems and ultimately they will while the US is exacerbating its financial problems. The US has taken a path of no return towards a definite economic collapse.

  • Bob-bob-bob

    Remember the “Golden Rule” , He who has the gold makes the rules !! Right now thats India , Arabia ( UAE ) and China . I wonder how much gold is in the vaults of Germany ? Depending on what they have , they could end up doing what World wars I and II could not and thats controlling the entire Continent of Europe with out firing a shot !! The only fly in the ointment will be Russia (Read: Putin, who will certainly be elected to another term as President) Russia has lots of Gold if they want to go and mine it. Then they could loan it out and “Own” Europe .

  • gardener1

    Here’s the link to Dimitri Orlov’s website, ClubOrlov.

  • shypuffadder

    Our politicians don’t seem to be aware of any problems anywhere. They are too busy practicing their “winning smiles with authority.” When any problem is brought to their attention, they throw up their hands and say “Geez, somebody ought to do something.” Right now, this country should be preparing for what is coming, educating the people and working together. The only plan we have is to refuse to see what is happening, therefore, nothing is happening. The Executive and Legislative Branches of this (not our) government might do something after the November elections. After they finish celebrating their victories. After they make sure they are taking advantage of all the perks. After they get their orders from Wall Street. After they pass more laws that are unfairly to their advantage.

    We, as a country, need to start looking for capable candidates to elect. After, of course, we stop beating each other over $2 waffle irons.

  • obamaville 2008

    having just read a summery of closing the collapse gap, one can say it is best summed up with the phrase, the higher they rise, the further they fall…which fits the u.s scenareio to a t, since it has much further to go than the soviet union before it hits the ground, and so the dislocation will be much greater, along with the hardship poverty rioting and other blights that come as a result of americas efficency gone wrong.. which incidentaly brings to mind the less efficient half of the american story, thomas jefferson and is ideal of the self dependent yokal, whose existance was more stable because they were closer to the bottom then the capitalist class up north, somewhat similar to the thousands of organic farms that dot the u.s and europe today

  • Paul

    German companies have cash, they do not rely solely on credits and loans. They increased their equity within the last year by 30%.
    The company I work for hardly ever takes out a loan. All running costs are covered by cashflow. Investments are financed by savings. Andno, we don’t have shareholders. The majority of German medium sized companies has no shareholders who only suck money from a company.

    You have a very high savings rate in Germany, and still increasing investment in renewable energy.
    Major development right now in electro-mobility, to become independent from fuel imports.
    Government incentives for insulating your house and installing solar heat panels, reducing further the use of fossil fuels. And thereby reducing operating costs of households and businesses alike.
    A collapse in germany is very unlikely.

  • Chris

    Reason #23 – There’s a lot more money missing than most of us realize. This is just one example of what we now know 3 years into this mess.

    • Chris

      How many more “secrets” are there in the US and European banking sectors?

  • Kevin2


    They said it was “An investment in the future” not debt. That mades a difference.

    I think they learned that from Bill Clinton when he redefined sex.

  • ATW

    Fed will print quietly to save the EU banks like they did previously. Why? Cos the real danger is not China dumping their US Treasuries, its the European public and private sectors doing so.
    Why don’t you find out how much they hold?

  • Pat

    Before 911 happened I was studying the movements of the NWO for about 10 years. I have lived and worked in Europe since 2000. I now live in Spain. I happen to be an investment banker with an extensive background working with sovereign debt and other financial instruments.

    It is no surprise to us that Europe has failed. That was by design. It was not an economic failure. But it was the failure of their socialistic model and the theft of Billions. The Will of the people was broken when the people accepted socialism in response to Facism.

    If you research the evolution of the Soviet Union, Nazi Germany or any other autocracy you will see that the people’s Will was broken long before the first shot was fired.

    Two years ago I went to my bank to withdraw a few thousand Euros. They claimed that the money was not there. But I had already seen the transfer on a terminal screen so I knew it had been received. They just did not want to give it to me. From that day on I was suspicious that these banks were going to steal the money.

    I opened a new account at Deutsche Bank. They offered to put my account into an investment. Upon reading the type of investment they were offering it was clear that those investments were all losing money. When I said that I wanted to invest in strategic metals I was informed that I could not because my balance was too small. You mean only the rich were allowed to make money and I had to waste my money with the rest of the customers? It was clear that something was wrong.

    Now we know what was wrong.

    Five years ago I wrote a confidential report for a well known Danish bank and they did not appreciate the report’s conclusion that there were problems in the banking area of Europe.

    It was obvious to me that there would be a collapse in Europe when I first arrived and researched the markets. That was in 2000.

    I am no whizkid. If this is what I could learn in my research certainly people who were better informed than me would have known what was coming, I tried to tell a few people what I had seen but they thought I was a silly American and that it was the “toxic” mortgages behind it.

    Now let me caution you from snap judgments and repeating TV doctrine. I say that the economic collapse is calculated and has an ulterior motive. I can not say what that motive is but if it is true then we are not dealing with a bunch of fumbling fools but rather a cabal of thieves and social engineers who think they know what is best for us.

    If I am right, no Occupy Movement is going to help. It will only exhaust our resolve. What we need is honest dialog and a properly legal well placed precise response. We do not need mass hysteria based on false information.

    I know they have all the guns. But if guns were enough they would not waste time brainwashing you. They can not hurt you without your consent.

    May I suggest that you turn off your TV sets and stop allowing the enemy to infiltrate your minds? Write letters to your legislators or anyone in public office to assert our beliefs and setting the boundaries past which no man or organization may go. But if you give them one inch they will take a mile.

    Failure to protect yourself adequately both financially and mentally will result in a collapse of the Will as has happened in Europe which will be more devastating than any economic collapse.

    In the words of Sun Tsu “The battle is won before it begins”. And “First win then fight”.

    • Marco

      Great post Pat. Unfortunately, most people willingly choose to ignore your advice and continue to watch crappy reality TV shows or are more concerned about professional sports strikes…

    • A.S.

      Write to your legislators or anyonein public office? Are you serious? They are all in on it except for Ron Paul. Haven’t you read how they make money on insider trading? Take bribes? Involved in shady business deals? They are in on it for themselves to make more money. They are part of the NWO system. The only way to fight them is to store food, water and guns, educate yourself and eventually get the heck out of the U.S., Europe, any Western country.

  • MountainHome

    Probably the best investment right now, for average Americans, is canned food, one year supply. If you can, you might want to store 20 gals. of gasoline in the shed if Iran is attacked because gasoline will rise to $7-9 a gal.

    IT is a great article. Thanks.

  • mondobeyondo

    Did anyone watch the “60 Minutes” segment on the “Hard Times Generation?”;cbsCarousel

    This is truly heartbreaking.
    If there was any doubt that we are going through another Great Depression, this should remove all doubt.

    • TX4Life

      Yes! Very heartbreaking. But wow, those kids living in the truck with their dad have been made wise beyond their years and have an understanding of what is important unlike most kids their age. Mine included. An ironic bright side to the New Depression.

    • r.bitting

      I watched it, and you are right, it’s very heartbreaking. But now let me give you some good news. Today, as i’m going to work this morning ( I live in central Florida, which is where the kids are from ) they had the father and his two children, who were living in the truck, on the radio talk show I listen to, and they have had multiple offers on housing and the father has had multiple job offers as well since the show aired. Also, theres a fund for all the kids that has been successful in raising a ton of money for these families.

  • The idea that a single-tiered fiat monetary system is any better than the current dual-tiered fiat monetary system defies the historical record. So-called “debt-free” money or single-tiered fiat money issued without the organization of debt into currencies has been attemped numerous times and each time it ended in disaster. The is only one debt-free type of money and is gold/silver, it is a double asset on both sides of the ledger, it requires no promise to pay as does both the single-tiered and dual-tiered fiat monies require.

    The so-called debt-free fiat monetary system is still a double liability system, the only difference is that the holders of the debt are internal instead of external; there would still be the requirement of a promise to pay with such a system…it is still an system of IOUs based upon credit. There is no free-ride with any type of fiat monetary system despite the loud proclamations that the solution to our debt problems are that this government simply issue fiat money without organization of debt into currency, it simply does not work that way. To trust this government with the printing press is like handing over the keys to the wealth of this country to thugs. There must be the chains of restraint and responsibility placed upon this government and that cannot nor will it occur until the power to print fiat money, no matter which type, is removed from the hands of government.

    If you want to see what so-called debt-free money will do the pay attention to Quantitative Easing, that is pure, single-tiered, debt-free money…watch what happens as it filters through the economy.

    • 007

      Very well said. As much as I appreciate Michael and believe he is correct on so many issues, I disagree on this one. Simply, getting rid of central banks and allowing the government to print money at will, can only serve to accelerate the problem.

      Throughout history, allowing government unbridled authority to print money will only cause misallocations of labor and capital. Absolute power will corrupt absolutely. Money, at the end of the day, has to be a fair reward for people’s labor and resources. It is one of the most fundamental economic principles. As the bible puts it, as a man sows so shall he reap.

      No whether it is sea shells, tigers teeth or gold, there has to be a universal rare commodity which can not be mass produced to create spending disipline. Moreover, in recorded history, no government has ever been successful in beating the temptation to print money for its own purposes. The result is absolutely country destructive inflationary.

      Inflation and money printing is nothing but clever theft of people’s hard work. That is why money printing will always be wrong and the wrong answer.

      • Michael

        I didn’t say print more money than we are today.

        But what I did say is that if we take away the power to issue money from the Federal Reserve we could start solving the national debt problem tomorrow.


        • 007

          I think the federal reserve should be eliminated and we should move to a hard money gold/silver standard. How would you constrain the government from just printing debt free money into perpetuity and not creating terrible inflation.

        • The Unicorn

          Micheal The US gov. did have a central banks many years ago it was mainly used to promote agriculture cover cost for planting.It was good at 1st then greed turned it into a failure,you don’t want to repeat history.

          Here a short read about 2hrs

          Goes all the way back to Babylon same thing just different players.

    • D

      It all comes down to corruption. The Fed needs to go. It would definitely help the problem. But yes, government printed money would eventually break regulations and turn into corruption, power, and greed. Rock N Roll. We are screwed either way. Cheers!

  • Syrin

    I could give 20 reasons why it would happen before we even reach 2012, and 22 reasons why it will happen to the US in 2012.

  • jolt

    We are going to continue to see
    the economies of the world go

    It is predicted by looking
    at the past.

    All economies go through
    7 stages and the US is
    in between 6 & 7.

    To see the cycles go to:

    You will find that we are headed
    down the path of no return and
    what you can do to prepare yourself.

  • William

    Another unnecessary war of choice for Israel is in the works. That is the way it works. Wars are brought into being to divert the attention of the ignorant masses from the economic problems at hand. Most Americans were IGNORANT enough to support the unnecessary war in Iraq that has wasted a THOUSAND BILLION DOLLARS …all BORROWED. War. It is coming. Where first….Syria, or Iran, or Lebanon??? One thing is sure, the Republican war mongers will not fight in a war, neither will their urchins.

  • Barn Cat

    I can’t help but think that the collapse in Europe could be worse than expected and faster than expected. We don’t know the full impact of derivatives and credit default swaps on the world financial system. The collapse in Europe could cause America to collapse. We could see Europe and America creating vast amounts of money to deal with the crisis. That would cause a sudden decrease in the value of the currency. What if we wake up one morning to find out that everything costs three times what it did the day before?

  • GREAT article Michael!!! How can a family with a nest egg protect themselves and in this case actually prosper from such an event?

  • Americans For Stopping Treason

    You want to get rid of the global problems,… get rid of the PRIVATE central banks!

    **************** all the borrowed money,… its owed to the central banks who want your COUNTRY as collateral!

    Simply declare the Private Central Banks for what they are: Terrorist Organizations.

    Sieze all the assets of the World Bank, IMF, BIS, and Central Banks and return it all to their respective countries.

    Arrest, try and convict the International and Central Bankers for Terrorism and Treason,… then ********** the scumbags,.. the whole lot of them.

    Nationalize ALL central banks to their respective gov’ts and have a universal doctrine that no country is allowed to have Private Central Banks.

    This wipes out the debt, get rid of the Banksters, return assets and property to nations, punishes the most criminal elements of mankind, and puts the power to create/control money back where it belongs,… in the hands of the citizens and their govt.

    Failure to do anything less guarantees the Banksters win.

    JD – US Marines – Fighting to stop our domestic terrorists,.. the bankers.

    • A.S.

      Why would any court take such cases, when they too are all in on it? They are part of the corrupt system. What, haven’t you heard of the Senate bill 1867 being voted on? I am starting to think this is a bill to counter anyone who wants to go against the NWO. The only way to counter the evil banksters is to have a revolution against them, like the French Revolution or the American Revolution. They are a modern day King George.

  • @Americans Stopping Treason

    Actually, the Central Banks are not private, but are, by their very nature, at the height of Mercantilism. Their purpose, especially regarding the FED, is to provide this government with the ability to operate beyond the law, beyond the restraint of the Constitution. It is the government which benefits greater than any within this patronage system of Mercantilism. The FED operates as the behest and on behalf of this government, it is government mandated and functions at the pleasure of this government. It allows this government to siphon off the wealth of this country without the necessity of overt taxation, instead it utilizes the hidden taxation of fiat monetary inflation which allows this government to avoid the public outrage of direct taxation for a very indirect taxation.

    What is needed is to remove the ability of government to simply print money, and restrain it, once again, with the only type of money that chains it down…sound money.

    The entire system, built upon the ideals of Hamiltonianism, was created to provide this government with a highly centralized power to control and manipulate the population of this country.

  • @Americans Stopping Treason

    Actually, the Central Banks are not private, but are, by their very nature, at the height of Mercantilism. Their purpose, especially regarding the FED, is to provide this government with the ability to operate beyond the law, beyond the restraint of the Constitution. It is the government which benefits greater than any within this patronage system of Mercantilism. The FED operates as the behest and on behalf of this government, it is government mandated and functions at the pleasure of this government. It allows this government to siphon off the wealth of this country without the necessity of overt taxation, instead it utilizes the hidden taxation of fiat monetary inflation which allows this government to avoid the public outrage of direct taxation for a very indirect taxation.

    What is needed is to remove the ability of government to simply print money, and restrain it, once again, with the only type of money that chains it down…sound money.

    The entire system, built upon the ideals of Hamiltonianism, was created to provide this government with a highly centralized power to control and manipulate the population of this country. It is,without doubt, a criminal enterprise between political and corporate powers, the corruption is beyond our imagination and until it is completely destroyed, we will continue to suffer the effects of Mercantilism.

  • Paul

    I read your column daily and I greatly your insights. Thank You. Question: If things are so bad and potentially getting a lot worse how do you explain the record setting black friday
    and cyber monday retail sales. It seems to me that most people must think that things are just great or some of has have been on the wrong path thinking things are bad and getting worse. I just cannot reconsile the record setting sales an the gloom and doom. Please comment. Thank you.

    • Michael


      The U.S. economy is experiencing the tail end of the “sugar high” brought on by TARP, all of the other bailouts, record federal spending and the massive amount of quantitative easing that the Federal Reserve has done.

      Trust me, in a few months all of this will be a lot clearer.


  • Toomanyfakeconservatives

    Beware foreign influence

  • A.S.

    I fail to see how the EFSF is different from EU and/or Eurozone issuing Eurobonds (which doesn’t exist yet, or does it?).

  • Help

    I wanted to check out the Your Home, Your Fortress book that was on the main page. Well, today it was no longer there. Does anyone know the link that was for the book.

  • tappedops

    Yo…All you fence sitting, milk-toasting, star dancing-football fant- fanny slapping, i-phone fiddling, suv driving, floride,gmo-Ctrail heads need to get with the program or get the heck out of the way…if your not willing to get educated then just turn yourself over to HLS as White Al-cia-duh. The party is deada** over and YOU are not going to help clean up. We on the other hand are going to give our lives, not just for our country, but for the millions of REAL patriots who gave you the right to be so grossly complacent… heres breaking news you dont have the courage to watch…

  • You know how, when you press the ‘fast-forward’
    button on your DVD, the movie characters seem
    to go at comically fast speed? That is the
    speed that the European (and US!) leaders NEED
    to be moving!

    Instead, they all smile, shake hands, kiss-kiss
    each other on the cheek, sit around, talk-talk-
    talk, take ‘vacations’, go out to fancy dinners,
    stay in hotels, go back to their families, all
    in seemingly SLOW MOTION! Nothing can be
    fixed, too much debt, but there appears to be
    no-one who is even TRYING!

    The Peter Principle, where everyone eventually
    ends up in a job that they are shamefully
    unqualified for, is definately at work here!

  • BenjiK

    Whatever happens in Europe will surely come to the shores of the U.S. shortly after. Unfortunately for us, the repercussions will be much worse here due to the fact Europeans traditionally survive on much less than Americans. After witnessing the madness of Black Friday, what will the masses do when we are fighting for survival, not just a $2 waffle iron or an X-Box? May God help us……….

  • You are spending so much time on Europe. Japan is not too far behind it. We may be spending so much time and attention on Europe that we get caught by surprise by a domino falling behind our backs.

    • Michael

      Good point.


  • Paranoid


  • ATW

    See the Fed will step in to save “itself”.

    Japan, EU debt? That’s not the REAL big deal, really its the Anglo-American(Israeli) MSM getting u all to think like that. So u can see how much pple here reading this blog are still MSM suckers/victims.

    Fitch; UK to be most indebted of any AAA rated sovereign, other than the US
    Tue, Nov 29 2011, 18:00 GMT | Forex Live
    By: Jamie Coleman

    UK fiscal projections signal significant deterioration since March forecasts Policy response shows continuing commitment to put UK on sustainable fiscal path Ability to absorb further economic shocks while keeping AAA largely exhausted unless government takes fresh steps Cable getting hit on the comments. 1.5600 and 1.5580 are next modest supports.

  • Warren

    This is a problem that started during the great depression when the U.S. and other governments completely abandoned the free market system and converted to keynesianism. Keynesianism and the fantasy land it blindly supports is the reason for all of this. Since our government converted to it, our dollar has lost 95% of it purchasing power since the end of world war two. The U.S. is already over the cliff and so is Europe. We just haven’t hit the bottom to let people who don’t care that we’ve fallen over a cliff. People have been so dependent on the government to “fix” the economy, they have forgotten or don’t know that an economy fixes itself if left alone under a true classical free market economy and prices and wages are allowed rise or fall. People are so focused on how much they make and forget that its not about nominal wages, its a about real wages and how much a dollar can purchase. The great depression was not caused by the failure of free markets, but the sudden heavy involvement of government in free market. The great depression was actually a combination of two recessions that were caused by government packages and stimulus that kept prices and wages from fluctuating.

    In 1920-1921, we had a recession that led into the roaring 20’s. prices fell by 38% and wages fell by 11%. Its ok to accept less pay if the price of goods falls as well, its all about the purchasing of the dollar against inflation.

    Classical economics needs to come back onto center stage or our standard of living which people have spilled sweat, tears, and blood for will vanish. A collapse CAN happen for our time is only but a time in history, and mankind’s history is full of extremes.

    • Economyst

      You’re kidding, right?

      I realize that the Austrians and investors are slamming Keynes, but their criticism doesn’t add up.

      In the 1920’s, Harding, Coolidge & Hoover lowered the top marginal income tax rates on wealthy individuals below 50%, and dropped government regulations to make a pro-business, laissez-faire environment. The resulting boom was the Roaring 20’s.

      Then came the bust, starting with the stock market crash in 1929. Hoover steadfastly refused to go into debt to slow down the deflationary spiral. People didn’t have money, so they spent less, so businesses had less revenue, laid off workers, and the spiral continued.

      Then, in 1932, FDR was elected, and in his first 100 days, started his New Deal agenda: massive gov’t spending on infrastructure projects, with most of the money going to hire workers. Millions who had been unemployed now had a paycheck, and consumer demand recovered, enabling businesses in the private sector to be profitable.

      From the 1930’s through the 1970’s, the U.S. economy was drastically different from the lasseiz-faire, hands-off policies of the 1920’s:
      – high taxes on corporations & wealthy individuals
      – high wages & salaries for workers
      – strong support for unions
      – strong regulation of banking (Glass-Steagall)

      During this period, the U.S. economy experienced consistent, steady growth, and paid off the debt from the New Deal stimulus, AND nearly paid off the debt from WW2 (which was over 120% of GDP).

      Then in the 1980’s, Reagan lowered taxes, put corporate insiders in charge of regulating their own industries, went back to laissez-faire, busted unions, spent massive amounts on defense, and ran up more debt than all the previous U.S. Presidents, COMBINED. (That’s right — Reagan proved Keynes!)

      Today, we’re back where we were in the early 1930’s, except that all the manufacturing jobs are overseas. Taxes are the lowest in U.S. history, and the Middle Class has been wiped out, with most of their former income sitting on the balance sheets of the biggest multinational corporations.

      If you want the economy to recover, simply undo the tax, trade, and labor policy changes that have killed the economy. Pull out of the WTO. Cancel NAFTA and the so-called “free trade” agreements. Go back to labor-neutral tariffs. Stop subsidizing overseas manufacturing, and start promoting domestic manufacturing.

      It’s simple economics. If you have a business, you want your *customers* to be well-paid, with plenty of disposable income, and confidence about their long-term financial future. Even in 1956, Eisenhower boasted that U.S. wages & salaries were at all-time highs — and that was seen as a *good* thing. Because it *was*.

      In short, from the 1930’s through the 1970’s, U.S. policy was oriented to support high wages and salaries for the vast majority of workers.

      From the 1980’s to today, U.S. policy shifted in order to maximize the earnings of the largest multinational corporations and banks — at the expense of workers.

      We’re now at the stage where unregulated capitalism becomes unstable and unsustainable. Corporations and investors are close to fulfilling their dream of eliminating the ability of governments — both in the U.S. and in Europe — to regulate their behavior. And the banksters are still helping themselves to $trillions of the taxpayers’ money.

      There’s an economic collapse on the way, for sure, but it’s not because of Keynes. It’s because corporations and wealthy individuals have all the money, like in a game of Monopoly, and the rest of us aren’t paid enough to maintain the previous levels of demand. Wages & Salaries = Demand. You can’t keep paying workers less & less, and expect Demand to somehow stay the same.

      If you want to see the future (if we don’t change it very soon), check out a FoxConn factory in China, where workers are expected to be on call 24/7, living in ‘company towns’, working insane hours with no breaks, under extreme stress. That’s why they put up nets under the upper floors — to catch the jumpers. I’m not kidding.

      We can do the sweatshop & child labor thing, OR we can go back to the policies that WE KNOW result in a vibrant, robust economy. It’s a no-brainer, right??

  • Now, now, let´s talk about the REAL threat on Earth. The real threat is global warming… just kidding.

  • Glaucus
  • Why do the nations rage and the people’s plot in vain?

  • Wish I had the patience to read the whole thing but to admit the truth, I simply do not. God is in control of everything and what He allows, He, quite simply allows. Economically, prophetically, or in anything else. If there is anything I have learned, it is that God is in control. Man will mess up anything that he/she touches and our economy is only one example. In God, He speaks only truth and when we unquestioningly obey Him, we win, it is as simple as that. Why can’t we listen to Him, read His word and obey. We’ll be the winners. Ron Underwood

    • misterkel


      “God is in control of everything… Man will mess up anything that he/she touches and our economy is only one example.”

      Wait – if God controls EVERYTHING, then how can man mess things up? He is not controlling anything if God controls everything. These statements make no sense.

  • dumple

    Here we go

  • SS

    Europe is close to an economic depression. Some people predicted Europe will have currency devaluations and Europe would establish a new universal currency. The US would be unable to help Europe. Russia and China are the most likely to help Europe.

  • JR

    Ain’t socialism grand!

  • phil from stoke

    why not go bankrupt and start again, it’s nuch easier.

  • tony

    Pardon the mercenary question, but what investment vehicles would benefit from this collapse if it happens. Thought?

  • Aureanus

    All this makes to sense.
    Consider the following statement
    “Europe’s banks face a $7 trillion lending contraction to bring their balance sheets in line with the US and Japan, threatening to trap the region in a credit crunch and chronic depression for a decade.”
    And yet those same American banks needed almost 17 trillion dollars to keep afloat.
    Does that mean that the European banks are even worse off financially than the American banks?
    That makes even less sense since the savings money in Germany alone amounts to almost 4 trillion Euros.
    If it makes sense where did all this money disappear to. Someone saved, if it is gone, someone else must have it.

  • Shawn

    I have an idea, let’s go shopping at wal-mart; where everything is made overseas- in our toyota,honda,hyndai,nissan. some might say well they are assembled in U.S. and create jobs. but those few jobs costs millions of jobs and almost all of our money is sent over seas anyway from buying imported goods Who do you think owns majority of manufacturing.very few have American names. This should fix the world economy. let’s close our borders up. We can self sustain ourselves.

  • News Of The World

    With the bad economy, you will find more articles such as this about violent crime attacking victims in more serious ways. Read article below!

    PRINCE GEORGE’S COUNTY, Md. (NewsCore Updated Report) – Prince George’s County Police are investigating the murder of 32-year-old Raquel Israel in District Heights.

    On April 4, at approximately 9:00 a.m., patrol officers responded to the 2100 block of Brooks Drive for a check on the welfare call. Upon arrival, officers found Israel unresponsive in an apartment bedroom. Israel, of the 2100 block of Brooks Drive, was pronounced dead on the scene with the room trashed in which some family heirlooms such as glassware and chinaware being smashed and the murder is related to the heirlooms being smashed in the room. Detectives are currently working to identify a suspect(s) and motive in this case and police are telling NewsCore News and the public that criminals are now going into people’s homes to rob, murder and trash their homes by smashing their family heirlooms such as glassware, chinaware and other valuables and to terrorize the whole neighborhoods.

  • mansky….

    the basic key to all the problems in europe is still work.the people has to work so that the govt can derive taxes from the worker, from the manufacturer.a lot of european jobs have gone to china.they think that china is a huge market and its really true,but as china start to copy europes technology they can now make and compete with your product.this china rise has a big impact to europe and north american countries.

  • Yes, your article underlines some important points…
    I guess there will be a collapse, but only after at least one large country crashes (France, Germany or Italy). They are quiet now with Greece, but something will eventually happen and then the domino effect will be unstoppable. Investors and ordinary people will have to be careful when the first domino piece falls. After that, all of them will.

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