The Beginning Of The End
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Europe Tries To Kick The Can Down The Road But It Will Only Lead To Financial Disaster

Have you heard the good news?  Financial armageddon has been averted.  The economic collapse in Europe has been cancelled.  Everything is going to be okay.  Well, actually none of those statements is true, but news of the "debt deal" in Europe has set off a frenzy of irrational exuberance throughout the financial world anyway.  Newspapers all over the globe are declaring that the financial crisis in Europe is over.  Stock markets all over the world are soaring.  The Dow was up nearly 3 percent today, and this recent surge is helping the S&P 500 to have its best month since 1974.  Global financial markets are experiencing an explosion of optimism right now.  Yes, European leaders have been able to kick the can down the road for a few months and a total Greek default is not going to happen right now.  However, as you will see below, the core elements of this "debt deal" actually make a financial disaster in Europe even more likely in the future.

The two most important parts of the plan are a 50% "haircut" on Greek debt held by private investors and highly leveraging the European Financial Stability Facility (EFSF) to give it much more "firepower".

Both of these elements are likely to cause significant problems down the road.  But most investors do not seem to have figured this out yet.  In fact, most investors seem to be buying into the hype that Europe's problems have been solved.

There is a tremendous lack of critical thinking in the financial community today.  Just because politicians in Europe say that the crisis has been solved does not mean that the crisis has been solved.  But all over the world there are bold declarations that a great "breakthrough" has been achieved.  An article posted on USA Today is an example of this irrational exuberance....

Investors — at least for now — don't have to worry about a financial collapse like the one in 2008, after Wall Street investment bank Lehman Bros. filed for bankruptcy, sparking a global financial crisis.

"Financial Armageddon seems to have been taken off the table," says Mark Luschini, chief investment strategist at Janney Montgomery Scott.

Wow, doesn't that sound great?

But now let's look at the facts.

You can't solve a debt problem with even more debt.  But that is what this debt deal is trying to do.

The politicians in Europe did not want to raise more money for the EFSF the "hard way".  Voters in Germany (and other European nations) are overwhelmingly against contributing even more cash to a fund that many see as a financial black hole.

So what do you do when more money is needed but nobody wants to contribute?

You borrow it.

Essentially, this debt deal calls for the EFSF to become four or five times larger by "leveraging" the existing funds in the EFSF.

But isn't that risky?

Of course it is.

There are some leaders in Europe that recognize this.  For example, an article in The Telegraph notes the reservations that the president of the Bundesbank has about this plan....

Jens Weidmann, the president of the Bundesbank and a member of the European Central Bank, sounded the alarm over the plan to “leverage” the fund by a factor of four to five times without putting any new money into the pot.

He warned that the scheme could be hit by market turbulence with taxpayers left holding the bill for risky investments in Italian and Spanish bonds.

So who is going to fund all of this new debt?

Well, it turns out that the Europeans are counting on the same folks that the U.S. government is constantly borrowing money from.

The Chinese.

French President Nicolas Sarkozy has already spoken directly with Chinese President Hu Jintao about funding this new bailout effort.

So is borrowing money from the Chinese to fund bailouts for Greece and other weak sisters in Europe sound policy?

Of course not.

And the sad thing is that this expanded EFSF is still not going to be enough to solve the financial problems in Europe.

According to an article in The Telegraph, a recent survey of economists found that most of them do not believe that this new plan is going to raise enough money....

The plan to increase the European Financial and Stability Facility to €1  trillion on paper was attacked by economists as not enough to “stave off” worsening debt problems in Italy and Spain.

In a survey of economists, 26 of 48 thought the firepower was not enough.

But the worst part of this new plan is the 50 percent "haircut" that private investors are being forced to take.

This is essentially a partial default by the Greek government.  A lot of folks are going to get hit really hard by losses from this.  Instead of making financial institutions in Europe stronger, these losses are going to make a lot of them even weaker.

Normally, in the event of a default, credit default swap contracts would be triggered.  But apparently because this was considered to be a "voluntary" haircut, that is not going to happen in this instance.

A Bloomberg article explained this in greater detail.  The following is a brief excerpt....

The EU agreement with investors for a voluntary 50 percent writedown on their Greek bond holdings means $3.7 billion of debt-insurance contracts won’t be triggered, according to the International Swaps & Derivatives Association’s rules.

That means that investors and financial institutions all over the world are just going to have to eat these losses.

Greek Prime Minister George Papandreou is already acknowledging that a number of Greek banks will have to be nationalized because of the severity of this "haircut".  A recent CNBC article detailed this....

The haircut is expected to impose big losses on the country's banks and state-run pension funds, which are up their necks in toxic Greek government bonds of about 100 billion euros.

The government will replenish pension funds' capital, but banks may face temporary nationalisation, Papandreou said.

"It is very likely that a large part of the banks' shares will pass into state ownership," Papandreou said. He pledged, however, that these stakes will be sold back to private investors after the banks' restructuring.

So where will the Greek government get the funds to "replenish" the capital of those banks?

That is a very good question.

But we haven't even discussed the worst part of this "debt deal" yet.

If you don't remember any other part of this article, please remember this.

The debt deal in Europe sends a very frightening message to the market.

The truth is that Europe could have totally bailed out Greece without any sort of a "haircut" taking place.

But they didn't.

So now investors all over the globe have got to be thinking that if they are holding Portuguese bonds, Italian bonds or Spanish bonds there is a really good chance that they will be forced to take a massive "haircut" at some point as well.

At this time last year, the yield on two year Italian bonds was about 2.5 percent.  Now it is about 4.5 percent.  As investors begin to price in the probability of having to take a future "haircut" on Italian debt, those bond yields are going to go much, much higher.

That means that it is going to become much more expensive for the Italian government to borrow money and that also means that it is going to become much more difficult for the Italians to get their financial house in order.

In essence, the haircut on Greek debt is a signal to investors that they should require a much higher rate of return on the debt of all of the PIIGS.  This is going to make the financial collapse of all of the PIIGS much more likely.

Remember, about this time last year the yield on two year Greek bonds was about 10 percent.  Today, it is over 70 percent.

As I wrote about in a previous article, the western world is in debt up to its eyeballs right now and trying to kick the can down the road is not going to solve anything.

Our leaders may succeed in delaying the pain for a while, but it most definitely is coming.

Greece, Portugal, Ireland and Italy all have debt to GDP ratios that are well over 100% right now.  Spain is in a huge amount of trouble as well.

When you add up all the debt, Greece, Portugal, Ireland, Italy and Spain owe the rest of the world about 3 trillion euros combined.

If Italy or Spain goes down, the rest of Europe is going to be helpless to stop it.  There simply is not going to be enough money to bail either one of them out.

That is why this "debt deal" is so alarming.  All investors in Italian or Spanish debt will now have to factor in the probability that they will be required to accept a 50 percent haircut at some point in the future.

If the markets behave rationally (and if the ECB does not manipulate them too much), it appears inevitable that bond yields over in Europe are going to rise substantially, and that will put tremendous additional financial strain on governments all over Europe.

Basically, we have got a huge mess on our hands, and this debt deal just made it a lot worse.

Yes, a financial collapse has been averted in Greece for the moment, but the truth is that there is no real reason to be celebrating this deal.

A massive financial storm is coming to Europe, and this "debt deal" has made that all the more certain.

Once again, politicians in Europe have tried to kick the can down the road, but in the end their efforts are only going to lead to complete and total financial disaster.

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  • Pauly

    Inflation.

    • James C Vaughan

      Hyperinflation.

  • Grasshopper

    I was actually surprised by this news today. So many blogs are saying the same thing as this one. So the can will be kicked down the road again and yet people still say a disaster is coming, is it?

    I am really starting to wonder about all this. The more and more I look, I see many people who are still kicking the can down the road and have down the same thing as many countries, racked up debt. They still are still living the same way, same house, double mortgages, more than one house and make less money. Are they headed for a disaster? From how I have been raised, I would say yes. However, there seems to be bailout for everything now or someway to protect you from disaster.

    I will continue to keep prepping for my family and continue to watch to see what happens. It is crazy to see how long things can be dragged out like this. However, this gives me more time to continue to get ready for something that might or might not happen. So I should be grateful nothing has happened if I look at is this way.

  • PatriotOne

    Michael you have the pen of reason. I’m always taking a lot of crap over my opinions on th economy and they always point to the markets. It seems traders are only trading on head lines and emotion, not fundamentals.

    I see no reason for the DJIA to be over 7000, do you? Oh well, I guess I’ll just go invest in another Glock or Kel-Tec Sub2000, maybe some more gold colored bullets.

  • http://www.planorperish.com/ Gutter Economist

    “But the worst part of this new plan is the 50 percent “haircut” that private investors are being forced to take.”

    About 50 percent of the debt in Europe is owned by US banks.

    No problem – The Federal Reserve will take care of this if they have not done so already.

  • Christian for Israel

    How is it when the average joe, like you and I can see that adding more debt to an already massive debt load will not solve anything but will make things much worse and yet the Officials in our Government and on Wall Street think that we have just dodged Financial Armageddon. I truely believe that this is a set up, to purposely cause an Economic Collapse in the near future in order to bring about a NWO. Maybe the only good news out of all of this is that the Economic Collapse has been delayed for now and that gives us more time to prepare for the inevitable. There is no doubt about it, America will Fall and so will the rest of the world and I believe that China will end up going to war with us because at some point we will not be able to pay our bills. Europe is stupid to borrow money from the Chinese because the same will happen to them. May God be with us all when the s**t hits the fan.

  • r.bitting

    ” God made him who knew no sin to become sin for us so that we might become the Righteousness of God in him. ” 2nd Corinthians 5:21…. ( No, it does’nt have anything to do with the article, but you people already knew we were toast so I figured I would give you some good news for a change ).

  • Tripseven

    How long before the buzz is gone and the full on hangover is splitting our economic heads? We’ll toss our production cookies, and lay there twitching for months or years til the pain subsides. Then we will be too weak to get up for many more years.

    If you have debt, dump it now while you can, you’ll feel better faster and live longer too.

    777

  • uncurable wound

    According to the US Department of Commerce, GDP in the quarter ended Sept 30, 2011 grew at a 2.5% annual rate or by $185.8 billion in the quarter. A few weeks earlier, the US Department of Treasury reported that for the fiscal year ended Sept 30, 2011, the budget deficit grew by $1.3 trillion, or roughly $325 billion for the quarter. So the government spent a total of $325 billion more than it received in tax revenue in the third quarter so the economy as a whole, government, corporate and private sectors could generate a total of $185.8 billion in incremental sales of goods and services. Why didn’t somebody think of this before?
    LOL!
    The rest at
    http://chumbucketlive.blogspot.com/2011/10/us-gdp-growth-and-budget-deficit.html
    At this point a science fiction movie is more believable…
    Remember this too,the fed IS doing stealth QE3 they have pumped 79 billion to date into the markets for the month of october,and SHHAAZAM-the dow has its best month since 2002.Oil flew up earlier this week.Not on supply and demand but on rumors of a deal.The reports come out on wednesdays and RARELY do they follow S & D…
    Welcome to the Surreal.
    Michael,I heard not only high leveraging,but multiple leveraging as well=BEYOND INSANE…
    Great article as usual,you and the family are in prayers.Have a Blessed day…

    • uncurable wound

      Dont believe the hype
      As of yesterday the FED has pumped about $82 Billion into equities during this month to date vs. only $11 Billion in all of September.

      This is a Stealth QE3 that is in progress this month.

      10/03/11 Mon $2.5B
      10/04/11 Tues $4.59B
      10/05/11 Wed $1.37B
      10/06/11 Thur $8.87B
      10/07/11 Fri $1.72B
      10/10/11 Mon
      10/11/11 Tues $2.5B
      10/12/11 Wed $8.87B
      10/13/11 Thur $4.882B
      10/14/11 Fri $4.6B
      10/17/11 Mon $1.37B
      10/18/11 Tues $2.5B
      10/19/11 Wed $4.88B
      10/20/11 Thur $8.87B
      10/21/11 Fri $4.6B
      10/24/11 Mon $2.5
      10/25/11 Tues $4.6B
      10/26/11 Wed $8.87B
      10/27/11 Thur $2.5B

      Total Est. = $82 Billion
      Trust your gut,the Holy Spirit is trying to tell us -GET READY NOW!!!
      At this point America and europe are both standing on mountain tops kicking the can up in the air,because there is no more road.Once and a while they kick it over the ocean,then they have to do two cans in the air at once.
      I believe that the euro was never created to compete against the dollar….
      I believe it was created so the elites could bail eachother out…Want proof?
      Look around!

  • mondobeyondo

    Whew! It’s over! The financial crisis is over! Yaaay!! The Dow gained something like 350 points today. Break out the Budweiser! (can’t afford champagne).

    It ain’t over till it’s over. (Thank you, Yogi Berra.) All that’s happened is a bunch of deck chairs being rearranged, and some fancy new seat cushions placed in the chairs. The fundamental problems are still there. In Europe, and in the U.S. as well. Unless European and U.S. leaders have the courage to address these debt issues head on (which they don’t. Austerity might as well be a four letter word), we will still be in a world of hurt.

    That can is going to get a lot harder to kick.

    • mondobeyondo

      Besides, it would be unpopular! Politicians couldn’t possibly confront the real issues head on. That would cost them VOTES in the next ELECTION!!! Politicians love to get elected over and over – it’s their job (literally, it is!)

  • 007

    It is amazing they did not print all the money for this bail out through the ECB. Still, the debt problem continues. All of these countries are still way in debt over 100% of GDP. The economies are built around governments they can not afford. These socialist governments have so destroyed the private markets they can not grow. We will see this same problem again in a few weeks with another one of the PIIGS. Then the problem will be that they are all out of money. Then the ECB will have to print money to bail them out.

  • Steve

    So far it’s all been foreshocks…According to the scholarly book “The Fourth Turning”, expect the “big one” around 2020, give or take a couplee of years (this is a pattern that has held since the War of the Roses). By “big one” it means a society shattering cataclysm… it may or may not be triggered by an economic unraveling. It’s a very scholarly book describing the prior historical patterns of growth and collapse…check out chapter ten for the authors’ take on our present decline (written in the 1990′s) and some possible outcomes.

    • http://YAHOO RICHARD

      I DON’T THINK WE WILL HAVE TO WAIT THAT LONG STEVE !

  • McKinley Morganfield

    This is the best article I’ve read here. You succinctly cover all the salient points and you’re in the center of the bullseye.

    “But the worst part of this new plan is the 50 percent “haircut” that private investors are being forced to take.”

    The greatest irony of all is that the governments of the EU want banks to raise capital from the private sector! First comes Greece; then comes Italy; Spain, Portugal, and Ireland soon to follow as the PIIGS cry “wee-wee-wee” all the way home. Global economic collapse is imminent.

  • Highspeed

    So, how long before hyper-inflation here?

    • uncurable wound

      Hey Highspeed,I have a newer study on emp’s.Its about 430 pages long,put out by the U.S. govt in 1990-VERY DETAILED…Let me know if you are interested.
      I dont think it has anything on growing beans though…LOL
      Have a Blessed day!

      • Highspeed

        Uncurable wound, Yes, I would like to do some more research on emp’s.You can post a link here or send an e-mail to me @gmail.com.
        Thanks of thinking of me, I am a ways behind but I’m catching up.

  • David M

    In my minds eye, I see some guy waving a paper saying war is averted.

  • Save the Republic

    You wouldn’t catch me buying bonds from any of these countries, nor America either. Buying bonds from these countries right now is like loaning another $20 to a guy who has been borrowing money from you for years and hasn’t had a job the whole time. You might as well just flush it down the toilet.

  • Game Over

    Revolution

  • Marco

    Kick the can down the road – to 2012. Great timing!

    What happened to accountability?

  • Lisa

    This is the best explanation I’ve seen yet on today’s “debt deal”. Well done. I find everything here perfectly believable. As I tell a friend of mine, “Hold onto your backside. We are about to go on a wild ride.” Thanks for writing this article.

  • http://lnx-bsp.net/ Tel

    The bailout of Greece will cause some inflation, but the 50% haircut destroying private debt will cause some deflation. Might come out close to evens.

    Then there’s still Cantillon effects… oh well, nobody’s perfect.

  • michelle

    according to lindsey williams we have 3 weeks after the euro fails till the dollar follows suit…

  • Bob-bob-bob

    I wouldn’t risk my worst enemys money on Europen bonds ,heck for that matter any bonds .IN this day and age if you want to double your money , FOLD IT and put it back in your pocket !

  • RSteiner

    Exactly. Europe has gained some time, but the road clearly leads to disaster.

  • jd

    Inflation indeed – they’re going to resort to money-printing and devaluing the euro. So will the US. That’s why gold and other precious metals are bouncing back big time. Investors are going to abandon the West’s paper monopoly money.

  • Bone Idle

    As I see it

    The Germans can see that eventually the financial system will collapse. I suspect they are trying to bring it on. Better now than later.
    Post financial collapse I suspect that Germany will be holding a very strong hand over Europe.

    Many third world countries are saddled with foreign debt. Now that Greece has been “Excused” from paying their debt out completely will the Third World countries be lining up and holding their hands up to get their debts excused?

    China will screw it up! Count on it.

  • joe doe

    Get ready for DA BOMB!!!

  • Christian for Israel

    You were right Michael, The 10 year yield on the Italian Bond has topped 6%, setting a record high.
    Source: cnbc.com

    • Michael

      Here we go…..

      Actually I expect the ECB to try to intervene by buying up bonds, but will they be able to keep the lid on the can for long?

      Michael

  • http://TheEconomicCollapse BobK

    Ah yes, another layer or two of sandbags.

  • irun131

    It seems to me that another downside will be if China infuses capital into Europe, that would mean less purchasing of US Treasuries? Meaning more QE’s on the Fed’s part?

  • John Warner

    Use this time to prepare even more!!

  • Had Enough

    When oh when will world leaders learn that you can’t eradicate debt with more debt? Clearly, Europe is in such a state of panic to bail out it’s wayward child (Greece) that they will make a deal with China that will come back and bite them in the butt later on. At that time, without China there to cover any more of there debt, China wins and Europe loses. This will impact the entire world. Here in the US we’ve been in this conundrum for years now. Obviously they all skipped Economics 101.

  • PatriotRider

    Hyper-inflation, Weimar II

  • Barn Cat

    The European Central Bank will just print the money. Or, worse yet, the Federal Reserve will create the money and “lend” it to them.

  • knightowl77

    We (the world) have been kicking the proverbial can down the road for some time. I think that if we had taken our lumps and our medicine in 2008/2009 we would have been coming out of the darkness by now…
    This continued borrowing to postpone the inevitable day of reckoning is only making the hole deeper and deeper. I fear that each QE, bailout or other type of leveraging is only making the problem worse and worse….
    The so-called leaders must know this, so what is their rational for postponing what is inevitable?

    • Barn Cat

      I believe it’s being done deliberately to create a disaster big enough to create a one-world government. The one prophesied in the book of Revelation.

      • Tripseven

        This thought has crossed my mind too.

        As I’ve posted before, I’m not sure Bush or Obama has had much choice in thhe matter.

  • justadad

    The borrower becomes a slave to the lender.
    How foolish to indebt/enslave yourself to communist dictators.
    Run from debt or your childrens’ future will be owned by the Chinese.

  • Lennie Pike

    Isn’t fiat money a wonderful thing? It provides wonderful carefree lives for those that benefit from it’s fraud at the expense of the ignorant little worker people.

    Gold and silver is money and nothing else is.

    The tyrannical and evil actions of the owners and agents of the Federal Reserve is the only problem.

    Even if these scumbags are eliminated from their positions of abuse, if gold and silver are not used as money after they’re gone, other scumbags will take their place.

    Gold and silver is money and nothing else is.

  • Scott

    With respect, I disagree.

    I think deflation is what we shall get, complete with falling wages and contracting credit. Expect housing prices to take a huge swan dive, further south.

  • http://georgesblogforum.wordpress.com George Forfa

    Real money defines integrity. Is there any integrity in fiat currency? The world is not ready for what is coming. To borrow a line from “Man Max: Beyond Thunderdome”, “I know you won’t break the rules. There aren’t any.”

    http://georgesblogforum.wordpress.com/2011/10/06/crash-course/

  • mark

    The can is always being kicked down the road. To think that we place so much value in a piece of printed paper that is backed by governments with huge debts is insane. As long as most are willing to play this game, it can go on for a long time. The problem is in a game of musical chairs it will be very hard if you are one of the folks left standing up. If you are prepared, you might be lucky enough to have a chair for your family, friends and neighbors when the music stops.

  • http://theelevationgroup.net/presentation/register.php?a_aid=a6affed9&a_bid=290b868b John Jackson

    This article confirms that what’s going to take place in the economy in 2012 can bankrupt 95% of the population… (Fact: This has already happened in 30 distinctive countries during the last 100 years, and TWICE in the US!) Fewer than one in a hundred people understand what’s happening and even fewer know what to do about it. You owe it to yourself to be one of those who do. Get a clear and comprehensive picture for making informed decisions about your financial future in a format anyone can understand and gain access to it immediately. To learn how to not only survive the economic collapse but thrive from it and how to become a part of our movement to restore personal wealth and freedom please visit:

    http://theelevationgroup.net/presentation/register.php?a_aid=a6affed9&a_bid=290b868b

  • Maria

    Watching these idiots and their theater is disgusting. A bunch of smarmy, gladhanding, backscratching sychophants. They accomplish nothing but destruction, and the markets rejoice.

    The inmates have taken over the asylum. Rome is burning, and the “Ceasars” are throwing gas on the fire. This situation has gone from absurd to insane….a 21st century, demented Shakespearean trajedy.

    Modern feudalism is where we are headed at best….after they reduce the peasants from 7 to about 1 billion.

    • Maria

      I do not believe the NWO will succeed. They are failing. Their fiat economy is failing, and their plans for world domination are failing. People all over the world are waking up. People are refusing to be controlled by materialism and greed. We are going through a tough time right now, but it will end. God’s will prevails. The axis of evil will soon be dead. Then it will be time for us to build the world God intended for us to build. Pray and prepare.

  • DeathSpiral

    The problem is they are not kicking the can down the road anymore but instead kicking it into the air. How many times can they kick it into the air before it hits the ground is the question.

    It seems the kicks must now happen every 3 to 5 months instead of every 5 years.

    • Tripseven

      International debt Hacki-sac? Interesting. If the players are good, you can keep the sac in the air forever-

      777

      • DeathSpiral

        They could but seems every time the Hacki-Sac is kicked it gets a little bit heavier. Hence, the need to kick it a lot more often. At some point could do the Mother Of All Kicks and it won’t stay aloft any longer.

  • Robert

    So, when the collapse is coming? A year from now? Or maybe december 2012?

    Great article by the way, the media is a really powerful tool of mind control.

  • Zedge Hero

    Speaking of the Chinese being the big bailout boy in play here. Well lets not forget who they are at the core. Thats why this whole thing scares me because the “Occupy Wall Streeters” are talking anti capitalism and yet they don’t know what they are wishing for. Ask the Chinese people who are the 99% and the Communist ruling party who are the 1%, sound familiar? There will be no “Occcupy Shangai” because it won’t be allowed. That what this weeks video is about.

    http://www.youtube.com/user/zedgehero

  • A Citizen

    When will the collapse actually occur in 2012?

    • James

      When? That’s the question. If we knew when then we would know why (exactly) and might actually be able to do something about it.

      As it stands, all we have is every single indicator saying “imminent collapse” but pointing to no specific date. I see a *maximum* ceiling of this being the autumn of 2013. If nothing happens by then, either someone is smarter than us and fixed it or we seriously missed something in our analysis (both are unlikely).

      Look for windows of opportunity. Economic collapse could happen at anytime naturally. Politically motivated collapses tend to happen in the October/November timeframe because no one wants to fight back when they’re cold and hungry.

      The debt ceiling debate was a possible window. The thing with Greece debt was another. Anytime before an election can also be a window.

      So, keep your eyes open is about all I can tell you.

    • Pitchfork Ready

      Does it matter when in 2012? If you haven’t prepared it’s not really going to matter when. Just do what you can to prepare as much as you can. I started last year and while I’m not confident that I have everything I need I sleep better these days.

      Nobody knows when exactly. It’s a shell game. Everybody is believing what they want to believe because the truth is more terrifying than a Stephen King novel. I think next year is a possibility because it’s hard for me to believe the markets will continue to give The US a free ride as we approach 17 trillion in debt.

  • http://georgesblogforum.wordpress.com George Forfa

    Appeals for a stay of execution requires a higher authority to appeal to. Eventually, the commercial world will answer to final authority.

    http://georgesblogforum.wordpress.com/2011/10/28/the-never-never-land-of-socialism-update-10282011/

  • REED RICHARDS

    Michael,

    Alan DebtSpan made it clear that Amerika can pay any debt it incurs because it can always print the necessary greenbacks to pay it. Should there be a credit event triggered, you can best believe that more stringent and back-breaking austerity measures will be implemented. No biggie to the BIGS. Barack Obama is following the script given to him by Lloyd Blankfein of Goldman Sachs and Jamie Dimon of JP Morgan. Make no mistake about it. The greenback is the world’s reserve currency and if Amerika has to invade every country on earth, trigger WW III, and destroy the entire planet, it will do so.

  • http://portlavacalots.com CTD

    I really appreciated all the comments because I have the same concerns and comments. Kick the can down the road is buying time and time is money so it will pay more later. However, it give us more time to prepare for our family. Even if our predict is wrong, there is nothing wrong with prepare for the worst and hope for the best. We are in the same boat on Titanic and hopefully we are the one that can be told the stories to our great grand children.

  • REED RICHARDS

    As for Bumkozy and Jerkel the Blunder Twins, It should be obvious to even the biggest moron that they are doing nothing but pumping up the stock markets. Well, good luck with that with the blunder twins in charge…………

  • jerry O

    The Europeans think that
    they have solved the problem
    but they have only held off
    what has to happen.

    The European economy will
    collapse and along with it
    we will see massive chaos
    around the world.

    Banks from all over the world
    have been dumping money into
    the European economy to keep
    the markets higher.

    This can not continue and sooner
    or later the bubble will burst.

    When it does you will see massive
    wealth transfer.

    Here is a short video put together
    by a millionaire that explains
    in detail what is going to happen
    based on past events in history.

    http://theelevationgroup.net/presentation/register.php?a_aid=160667&a_bid=290b868b&chan=y

    The video will enlighten you and
    will help you prepare for what is
    about to come our way.

    No one knows the date but it will
    happen.

  • dave

    In October

    • Highspeed

      It will have to be monday then.

  • Kevin2

    They been kicking the can down the road for quite some time with the live now pay later strategy.

    How long is the damn road?

  • 007

    I really an starting to think this may be able to go on as long as they can print money and get away with it. They can try to limit inflation by keeping it out of the average citizens hands. Then they will lie about inflation and claim it doesn’t exist. In the end, people may have to riot before something changes. Then, be careful what the new change is.

    • Kevin2

      007

      One Kent State type incident can be spun into a Boston Massacre that fuels the protest movement and it becomes a de-facto revolution with who the hell knows who is in charge. Unemployed blue collar and former white collars become brown shirts that before too long become storm troopers and what remans of the rule of law goes out the window. It’s happened before under circumstances that appear similar at least in an incipient stage to what is going on presently.

      People are rightfully pissed off and that is understandable but this is getting a bit scary. I have a feeling that frightening feeling will increase because I just can’t see things getting better.

      Ugly and scary.

    • http://www.planorperish.com/ Gutter Economist

      If you have the freedom to print your own money, you can also control inflation by selling commodities short.

      • Kevin2

        They needed to increase M1 and debt to cover the overall general loss of employment from the industrial evisceration. If we were required to truly live off our productivity the standard of living would have been eroding significantly as manufacturing fled. That would have fueled political opposition to the increasing “Free Trade” agreements. Rather than a decline over a two decade span that was masked we’re now getting a big drop as the debt falsely propping up the economy reached a point that it could not be serviced.

        We been running on ***************** for two decades. The butcher, the baker and the candlestick maker could see that the service economy was doomed to failure but the powers to be kept up the falsehood.

  • http://EconomicCollapse Already Gone

    Just How Stupid Are These People, It Seems That They Are To The Point That They Are Convinced That Thay Are Telling The Truth, Chronic Liars Are Like That,It Does Not Take A Rocket Scholar
    To Figure Out That When They Wave there Magic Wand That All The Previous Peoblems Will Disappear,But In Wall Street’s Fantasy World It Works Since The Dow Gained Considerable Ground.
    So The Vicious Circle Continues To Revolve And Nobody Knows When It Is Going To Stop, But
    When It Does It Will Be Heard All Around And The Effects Of It Are Not Going To Be Pretty.
    So For Me The Time Has Come To Pick Up The Pace In Preparing For The Chaos That is Coming. God Bless And Good Luck To All.

  • tappedops

    And on its ashes… they will build… a New World Order…
    http://www.youtube.com/watch?v=x-CrNlilZho

  • yhung

    I am surprised ww economy hasn’t crashed by now with all the money printing. The illuminatis are out to wrack the economy of countries to achieve NWO. The more I observe the happenings the more I believe it is so.

  • ScoutMotto

    I see a whole lot of legal enslavement going on with all of this lending and propping up and can-kicking and postponement of economic Armageddon. I only wonder who is going to be the victor when all the enslavement is complete. China? Rothschild? Both?

  • Electrikoolaid

    Who would by bonds at 70% interest? Does the purchaser really feel these will ever be redeemed?

  • jerry O

    They think they can
    continue to print money
    and make things ok.

    Sooner or later, it will
    catch up with them.

    They are getting close to
    the end.

    When that happens nothing
    will be able to save them.

    We are about to see a massive
    wealth transfer that is going
    to make a lot of people very
    poor and others very rich.

    To see what one millionaire
    has predicted by looking at
    the past go to:

    http://theelevationgroup.net/presentation/register.php?a_aid=160667&a_bid=290b868b&chan=y

    This video will shock you as
    you find out why we are in
    the position we are in and
    where we are headed.

  • Denise

    Kevin2 – well certainly ordinary people become “Brown Shirts” and “stormtroopers”. There a REASON this happens. Why do ya think this is so, Kev?

  • Jeff

    Why is it perfectly acceptable for poor and middle class Europeans to make hard sacrifices to pay for the bad decisions of their “leaders”, but rich investors should not be required to do the same?

    The 50% “haircut” is reasonable. It’s the difference between a Lexus and a Mercedes for the rich.

    For the poor, it’s their next meal, or a roof over their heads.

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