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Is The 505 Trillion Dollar Interest Rate Derivatives Bubble In Imminent Jeopardy?

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Bubble In Hands - Public DomainAll over the planet, large banks are massively overexposed to derivatives contracts.  Interest rate derivatives account for the biggest chunk of these derivatives contracts.  According to the Bank for International Settlements, the notional value of all interest rate derivatives contracts outstanding around the globe is a staggering 505 trillion dollars.  Considering the fact that the U.S. national debt is only 18 trillion dollars, that is an amount of money that is almost incomprehensible.  When this derivatives bubble finally bursts, there won’t be enough money in the entire world to bail everyone out.  The key to making sure that all of these interest rate bets do not start going bad is for interest rates to remain stable.  That is why what is going on in Greece right now is so important.  The Greek government has announced that it will default on a loan payment that it owes to the IMF on June 5th.  If that default does indeed happen, Greek bond yields will soar into the stratosphere as panicked investors flee for the exits.  But it won’t just be Greece.  If Greece defaults despite years of intervention by the EU and the IMF, that will be a clear signal to the financial world that no nation in Europe is truly safe.  Bond yields will start spiking in Italy, Spain, Portugal, Ireland and all over the rest of the continent.  By the end of it, we could be faced with the greatest interest rate derivatives crisis that any of us have ever seen.

The number one thing that bond investors want is to get their money back.  If a nation like Greece is actually allowed to default after so much time and so much effort has been expended to prop them up, that is really going to spook those that invest in bonds.

At this point, Greece has not gotten any new cash from the EU or the IMF since last August.  The Greek government is essentially flat broke at this point, and once again over the weekend a Greek government official warned that the loan payment that is scheduled to be made to the IMF on June 5th simply will not happen

Greece cannot make debt repayments to the International Monetary Fund next month unless it achieves a deal with creditors, its Interior Minister said on Sunday, the most explicit remarks yet from Athens about the likelihood of default if talks fail.

Shut out of bond markets and with bailout aid locked, cash-strapped Athens has been scraping state coffers to meet debt obligations and to pay wages and pensions. With its future as a member of the 19-nation euro zone potentially at stake, a second government minister accused its international lenders of subjecting it to slow and calculated torture.

After four months of talks with its eurozone partners and the IMF, the leftist-led government is still scrambling for a deal that could release up to 7.2 billion euros ($7.9 billion) in aid to avert bankruptcy.

And it isn’t just the payment on June 5th that won’t happen.  There are three other huge payments due later in June, and without a deal the Greek government will not be making any of those payments either.

It isn’t that Greece is holding back any money.  As the Greek interior minister recently explained during a television interview, the money for the payments just isn’t there

The money won’t be given . . . It isn’t there to be given,” Nikos Voutsis, the interior minister, told the Greek television station Mega.

This crisis can still be avoided if a deal is reached.  But after months of wrangling, things are not looking promising at the moment.  The following comes from CNBC

People who have spoken to Mr Tsipras say he is in dour mood and willing to acknowledge the serious risk of an accident in coming weeks.

“The negotiations are going badly,” said one official in contact with the prime minister. “Germany is playing hard. Even Merkel isn’t as open to helping as before.”

And even if a deal is reached, various national parliaments around Europe are going to have to give it their approval.  According to Business Insider, that may also be difficult…

The finance ministers that make up the Eurogroup will have to get approval from their own national parliaments for any deal, and politicians in the rest of Europe seem less inclined than ever to be lenient.

So what happens if there is no deal by June 5th?

Well, Greece will default and the fun will begin.

In the end, Greece may be forced out of the eurozone entirely and would have to go back to using the drachma.  At this point, even Greek government officials are warning that such a development would be “catastrophic” for Greece…

One possible alternative if talks do not progress is that Greece would leave the common currency and return to the drachma. This would be “catastrophic”, Mr Varoufakis warned, and not just for Greece itself.

“It would be a disaster for everyone involved, it would be a disaster primarily for the Greek social economy, but it would also be the beginning of the end for the common currency project in Europe,” he said.

“Whatever some analysts are saying about firewalls, these firewalls won’t last long once you put and infuse into people’s minds, into investors’ minds, that the eurozone is not indivisible,” he added.

But the bigger story is what it would mean for the rest of Europe.

If Greece is allowed to fail, it would tell bond investors that their money is not truly safe anywhere in Europe and bond yields would start spiking like crazy.  The 505 trillion dollar interest rate derivatives scam is based on the assumption that interest rates will remain fairly stable, and so if interest rates begin flying around all over the place that could rapidly create some gigantic problems in the financial world.

In addition, a Greek default would send the value of the euro absolutely plummeting.  As I have warned so many times before, the euro is headed for parity with the U.S. dollar, and then it is going to go below parity.  And since there are 75 trillion dollars of derivatives that are directly tied to the value of the U.S. dollar, the euro and other major global currencies, that could also create a crisis of unprecedented proportions.

Over the past six years I have written more than 2,000 articles, I have authored two books and I have produced two DVDs.  One of the things that I have really tried to get across to people is that our financial system has been transformed into the largest casino in the history of the world.  Big banks all over the planet have become exceedingly reckless, and it is only a matter of time until all of this gambling backfires on them in a massive way.

It isn’t going to take much to topple the current financial order.  It could be a Greek debt default in June or it may be something else.  But when it does collapse, it is going to usher in the greatest economic crisis that any of us have ever seen.

So keep watching Europe.

Things are about to get extremely interesting, and if I am right, this is the start of something big.

  • Bill

    JH 15 is not a training exercise. We were doomed years ago and we are still doomed.

    • df NJ

      The JH 15 is just disturbing. What the heck. It makes no sense to do training exercises on the American people.

      • rmc9

        …take over time for pres. (dictator) obeyme…

        • df NJ

          As much as you hate the unitary executive when a Democrat is in charge, since 9/11, I am not 100% convinced our US military is any longer under civilian control. The homeland has been reclassified as a theater of war.

    • T.

      Right. It’s a Martial Law exercise after the Financial Collapse (Which will be precipitated by a False Flag event – to BLAME the Collapse on).

  • May

    Every time you put a date or deadline in your articles,,,,,,it never happens. In other words,,,Greece will be worked out one way or another. You write to bring people back to yior blood. Drama drama drama. Of course,any blogger wants people to come back and read more,,,,,,but every every every issue/problem u write about….never ever becomes an issue. You are smart,but TPTB are simply smarter!!!!

    D

    • May

      Back to your blog. Whoops sorry, lol

    • Mike Smithy

      What are you talking about? I’ve been following Michaels blog for a long time and I have never witnessed him place a definitive date on his predictions. He merely reports facts and the harsh realities that most journalists will not report on? I find his approach pure and refreshing as the vast majority of the media shills are owned by special interest to spew their poisonous propaganda and push the agenda of the puppet masters. You should stick with the Huffington Post or Media Matters where unicorns fart rainbow skittles.

      • Avner

        Yeah seriously.. if he wants to hear a particular view point to fit a bias.. all he gotta do is go to either HuffPo, Media Matters, Brietbart, TGP.. Left vs Right is a fun football game after all. Thankfully Michael talks about real things, like economics and culture that matter long term.

      • MichaelfromTheEconomicCollapse

        Thank you Mike. I try to be very careful with my words. I am not saying that June 5th is the end of the world. But what I did say is that the Greeks say that they will default on June 5th if there is no agreement.

    • Nemnor

      May, Michael has not done anything “wrong” and I have not seen a definite “date” stated with any of his ‘predictions”.

      The only “fault” I personally see with Michael, is the “fault” I see with many who are aware (like Michael) of the serious issues facing the World. That “fault” is them SEEMING to not understand the main root cause of the major issues facing the USA and the World.

      Many (like Michael) see the main root of the issue as (more or less) our “sinfulness” and “turning away from God”, etc. And, in a sense, this is “correct”. However, because “sinfulness” and the idea of “God” are all based on religious influence and are sources of confusion and division, I personally prefer to look at what history shows as the more direct/immediate and OBJECTIVE cause of the issues facing the Human Race, which is… the world-wide economic system itself – which is now decadent (due to reaching a stage of general over-production), and is now NOT able to generate long-term recovery by economic means alone.

  • chuck

    This is all hogwash. Greece is not going down the tubes. I hope though the powers that be have not pre-ordained that Greece fail. Why would they do that? I’ve heard it said that there is money to be made in wars.

    • Scott

      Greece is a nanny state that no one wants to keep subsidizing. It’s already down the tubes and about to get worse.

  • El mico

    So the Greeks are trying to negotiate to borrow more money to make payments on previously borrowed money.

    What sort of idiots would let their country get to that state of affairs.

    Oh…..

    So if most countries are in this situation, who has money to lend.
    Thats right, our grandchildren.

    China owns the most US debt but China’s debt is said to be far greater than the US.

    Im going to lie down, my head hurts.

    • Barry Goldwater

      The Greek Government has for years spent money they did not have for things they should not be doing and paying for it with borrowed money. Does this sound familiar? It should, after all we’re doing the same thing. The only major difference is that we’re the worlds reserve currency ( for now ) but that’s going to end and when it does we’ll look a lot more like Greece. New realities are coming and most citizens are unprepared for the shock of not being able to print our way out.

      • df NJ

        “America first”. I just wish our cartels and monopolies paid our workers higher wages so issues of debt would not be a problem. I think it may be time to close some of our 700+ foreign military bases. Maybe it would be better to open some bases on our southern and northern borders. Spur economic growth through military strength. I would like to see tariffs placed on imports proportional to the level of trade imbalance of the imports country of origin. I miss Barry Goldwater. It would be nice to put America first again. But given money to Israel will always be our highest priority.

        • Nemnor

          df NJ, you stated – “…It would be nice to put America first again. But giving money to Israel will always be our highest priority…”.

          Now, IF what you stated in relation to Israel is true, WHY is that so? What do you think is “compelling” the USA to give money to Israel as (one of) “our highest priority” (as you put it)?

    • Pic889

      It’s your deposits, man. Banks are loaning their national governments and other national governments using their customer’s deposits, and only keep an 1% stash of cash or so.

      Oh, and money printing which basically devalues your deposits and cash.

  • MIchael in Chicago

    Why does most of Europe have a history of defaulting on loans? But let’s not make the mistake of painting Greeks as deadbeats. National
    defaults, while rare, aren’t unheard of. Other European nations that
    have defaulted include: Austria (three times), Bulgaria (twice), Germany
    (in 1932), Hungary (1931), Italy (1940), Poland (twice), Portugal
    (twice), Romania (three times), Russia (twice), Serbia/Yugoslavia (three
    times), Spain (three times) and Turkey (four times).

    • Nemnor

      And history will “repeat” – but this time with even more countries “defaulting” (and probably even with several countries “defaulting” around the same time), as the world-wide economic system continue to sink towards total collapse/chaos.

  • K

    Well most of us, knew this was coming. The speed with which the naysayers showed up, seems to indicate Greece is another forbidden topic. Michael you need to write an article that includes, Greece Fukushima, and Walmart you would have so many posts, it might crash the site.

  • MIchael in Chicago

    Anyway. Even if the BRICS bail out Greece they will never be able to repay the loans. America is in a similar situation. GDP that is on the decline, increasing actual unemployment, an increase in low paying jobs, increase in national debt, growing trade debt…and so on and so on. All I do know is that the bond market is an excellent way to gage the health of a nation. Always has been, always will be.

    • Avner

      “growing trade debt”

      We haven’t seen NOTHING yet. TPP chief…. TPP. You know.. that “trade” agreement that’s so awesome we can’t know what’s in it, we just need to trust it’s awesome!

  • Antonio Ossa

    GREECE NEEDS TO CUT IT’S DEFAULT AND CUT IT’S LOSSES!

  • DJohn1

    Money represents commodities.
    If money isn’t connected to a tangible commodity it is no good.

    It really is that simple.
    P.I.G.S. have obviously forgot all about that.

  • df NJ

    Greenspan allowed the sub-prime mortgage market to destroy the banks. I just think the powers are not going to risk the whole monarchy over allowing derivatives to crash the economy. It makes no sense. The board is already as powerful as you can get. Crashing the economy will only jeopardize their existing power structure.

  • Mike H

    Michael, thank you for the consistent analysis and warnings about possible outcomes.

    I have a question regarding US Bonds and the dollar in the event of a Greek default.

    What is the short and long term expectation of bonds after a default? I would think that the dollar would be a short term haven for those who do not see the impending worldwide collapse and that commodities such as precious metals or other valuables for those who have an eye for cascading crisis.

    I am a novice and these are mere guesses.

    I was told something by a wise person, “We don’t need money. We only need the things money buys.”

    Give us this day our daily bread and forgive us our trespasses.

    • MichaelfromTheEconomicCollapse

      Mike:

      Initially I do believe that there will be a move into the U.S. dollar. But not too long after that I expect big trouble for the U.S. dollar. So I would look for big swings.

      Michael

    • Nemnor

      Mike, there might be a “move into the U.S. dollar”, mainly because almost everywhere else would seem “unsafe”.

      However, it is only a matter of time, and the USA will also sink into economic collapse/chaos. However, there is the increasing prospect that the USA generate (trigger) WW-III before the US sink/regress into being a “third world” state.

      You can KNOW that WW-III is, eventually, a real possibility, when you realize that the “rise” of China or Russia, etc. directly translates to the demise of the USA.

      However, the main root cause of the major socioeconomic issues facing the USA and the World, is the world-wide economic system itself, and the real/permanent solution begins with a fundamental change (shift) away from the current world-wide economic system – as no amount of reforms (“interventions”) can fix the system – which is now decadent and at a “dead end”.

      • Nemnor

        Also, Canada is another country that would seem “safe” (for now). And many investors might remember that the 5 major banks in Canada appeared to have “weathered” the deepened economic crisis of 2007-2008, better than banks in the USA and the rest of the World in general. (One of the exceptions was China, that seemed to have survived better than most from the 2007-2008 deepened crisis)

        So even though the Canadian dollar is “weaker” than that of the US, many would perceive that (as the last 2 decades or so seem to indicate) Canada has a better “managed” economy than that of the USA. Hence, Canada is now a “secret” (unspoken) haven for the (super) wealthy investor looking for a “safe” Country to LEGALLY store their money.

  • Genada

    This is all theater of the absurd. The whole point of all of this is to strip the Greeks of all assets and put them into debt slavery.

    The Greek government will feign resistance then fold and on this sad game goes. The entire time the people of Greece will keep on losing, becoming poorer and poorer.

    We have indeed reached the Goldilocks scenario. A state where the power elite are able to run roughshod over the masses and they accept it without resistance.

    • Avner

      Genada,

      here is a question for you.. IF the Greek government folds after feigning resistance yet again, do the people of Greece at that point have the right to stand up, and say no and take matters in their own hands like Iceland did? I would say yes.

      • Genada

        This was Greece trying to stand up but they are finding that elections do not matter. That you can vote whoever you want in but they are going to sell you down the river.

        They should of done like Iceland to begin with. They had some money in the country and could of used it to attempt to cushion the blow they would suffer from defaulting and leaving but that’s all gone now.

        They either accept the demands of the creditors or they default and the country goes into complete chaos.

        The thing about this is that they still should default, take the pain but everyone is too fearful to do that because the pain will be too extreme at this point. So they will come to terms which will leave them trapped. They are in a debt trap, no cuts, no taxes, nothing they can do will lead them to being able to pay off the debt. The best they can hope for is to be able to service the debt and be left in a state of debt slavery.

        • Avner

          In Iceland though, didn’t they have to have two elections to throw out the first set who doublecrossed the people?

          What is the pain in Greece if they say screw it, default, and say in no uncertain terms that their banker masters no longer have any say? Are the Greek people united in this? Or are they still trying to maintain something that they can’t do?

          • Genada

            The Greek people want to stay in the Euro and to end austerity. They can not do both but that is what they want.

            The pain is that they would need to fire state workers, cut pensions and do other actions to balance the budget. They spend too much and take in too little.

            Greece is flat broke and should default but it can not do so and remain in the EU. The party in power has a mandate it can not make. So they will pick the lesser of two bad options. Accept terms and surrender.

    • John Byde

      The Greeks will go the way of Ireland. Lots of talk about pride and independence, but in reality just an EU vassal state who lets itself be bullied into re-voting on the Lisbon Treaty, lets the EU see its budget before its own politicians and votes for abominations like homosexual “marriage”.

  • Richard

    Well done, Michael. A horror story exquisitely described.

  • Robert

    Nowhere to run to. If I had a few million I would head to NZ myself. Buy your way in.

    • Nemnor

      Robert, eventually, NZ (too) will ALSO decay towards economic collapse/chaos.

      It is the ENTIRE world-wide system that is now DECADENT and decaying, and eventually, NO country will be spared, EXCEPT if we have a fundamental change away from the current world-wide economic system, to a SUSTAINABLE alternative system that addresses the ABUNDANT needs of the “rational” individual (and not just of “the 1%”).

  • alan

    So if it got this big pretty much without anyone noticing, I imagine it could become 5 Quadrillion and no one will say a thing. Remember everyone in the US has a 401k being held hostage! If this is all debt base fiat paper electronic ones and zeros then why can this not go on another 50 years? Kind of being sarcastic. If you can just slap on another piece of paper to cover the hole and everyone at the table agrees then its good. I want to say this will blow apart and thought this about 7 years ago, now I’m not so sure.

    • Avner

      IRAs, 401ks, bank accounts… all waiting to be EFT’d to the bankers from you. With the click of the mouse. Don’t like it? Go talk to the MRAP on the corner of the bank, the police will greatly “help” you.

  • XSANDIEGOCA

    This won’t happen. This time. If the Dems have learned anything, you do not want a crisis leading into election day. ( Let the other fellow create the crisis. ) Yellen will crank up the printing presses, keep rates low, low, low to prevent a massive currency flight into America and deflate Europe like a balloon. She will very quietly pass the fresh batch of cash onto Greece via the ECB. In short, we will bail out Greece. The alternative, as Michael has pointed out, is a complete meltdown. Now once Hillary is firmly ensconced in the White House a currency crisis would be an excellent excuse to assume “special” powers but that is another story for another time.

    • Avner

      The real question is when QE 5678 is in place and printing money like no tomorrow… is what our world reserve currency status will be. You see, I don’t believe that the other countries want our dollar anymore. So, Yellen will print but I don’t see anyone buying it. So.. I think we’re looking at a meltdown no matter what, unless they have some skullduggery that kicks that can down the road..

      Should be interesting for sure. You know when the Acess cards no longer get anything, or when there is massive unemployment (more than currently there is!) the entire USA is going to look like Baltimore, Ferguson, LA, etc… and the police state WILL crack down on those defending themselves and not the rioters.

      Hey.. don’t let a crisis go to waste, right?

      • XSANDIEGOCA

        Agreed. At some point, you have Weimar. I read a description of what happened back then. The Weimar government was QEing like Mad but over a 4-5 week period, the collective consciousness of the Germans came to the conclusion their Marks were worthless. Then the Fat was in the Fire as everyone dumped their Marks for anything of perceived value. The Marks came into the Banks so fast there was no room for them in the Vault so they just stacked them on the floor. At one point, the devaluation was so great they could not print bills fast enough so they added “stickies” of “000”s onto the bills. The lesson: When it goes down, it will go down very fast.

        • Avner

          I think we’re a lot closer to it going down than a lot want to admit. There is a newfound sense of urgency not only domestically, but internationally with military drills, banking shenanagians, etc. JH15 coincides with a few things here domestically as well. Also, how about the fact that they are going to calculate GDP in a new way… yes you heard it right. The negative numbers in Q1 are going to be “re-recalculated” to fit the agenda. Ready for an U3 rate of 4% while 150 million are “jobless”

          • XSANDIEGOCA

            Does not surprise me in the slightest. There is a definite air of unease across the land.

          • Genada

            The thing about Weimar is that the money velocity was very fast. That’s not the case today, the money velocity is very low.

            In Weimar the money flowed to the bottom, to the middle, to the top. Everything went up and went up daily. Workers were payed twice, daily.

            We see inflation now that’s quite high but it’s going towards the things the wealthy buy due to qe not reaching the masses. At some point it could of course but till then we will see the economy keep splitting apart.

      • Maneb

        Transforming America!

        • Avner

          Oh, it’s already transformed in a lot of ways for sure. The real question is that there are two directions this goes in at the end. Which direction will it go in? At the end of it, we’re either free or we’re not.

          I’m not even referring to “liberal” vs “conservative” either. Those two are well on the path to tyranny.

    • AzDi

      I actually think a republican (conservative) will get in instead of Hilliary. If so, then the crisis will start and again the republicans will have to clean up the mess (if it can be cleaned up) and will take the blame for what the liberals have done to this country for years….. Or, you are right and we are doomed either way!

      • gleam

        Your wonderful Republicans in the Senate just passed the fast-track trade bill (which now goes to the house).

        My prediction: A Republican president will be elected in 2016 and they will further screw over the American people.

        This is not about the common people it is about the elites and giving their masters whatever they want.

        They believe they and their families will be spared the pain, but don’t realize once they have served their purpose they will also become like us and have to endure what we do.

        Until we STOP with the republican vs democrat nonsense this country will never be free.

        Although I suspect people are so easily fooled and manipulated that a new beast would rise up to take the place of these 2 parties and we would be no better off.

        Just a pathetic commentary on the state of man kind. Maybe we do deserve what we get, since we cannot see the forest through the trees and the truth.

      • XSANDIEGOCA

        I thought of that myself. You almost have to pity whoever succeeds Obozo. Cleaning out the Augean Stables with a toothbrush would be easier.

        • gleam

          Do you honestly not get it? It does not matter who gets in office. There will be NO cleaning up of anything. Only escalation according to the prescribed agenda.

          The president is a puppet. The president is a puppet. The president is a puppet. Congress members are puppets. Congress members are puppets. Congress members are puppets.

          Maybe if you say these things to yourself enough it will sink in.

          There has never been a president who has gotten into office and undid anything previous presidents have done. Same with congress.

          • XSANDIEGOCA

            Then, we are doomed.

          • Nemnor

            But the reason the USA (like Japan, etc.) is (eventually) “doomed” is not so much because we do not (and might not) have a President who will make a real difference, but rather it is because of a wider world-wide systemic issue.

            Governments (Presidents) come and go, and NO real change/improvements come about because the main root of the issue facing the USA and the World is the world-wide economic system itself – which is now DECADENT (due to reaching a stage of general over-production), and is NOT able to generate long-term recovery by economic means alone.

          • gleam

            Not true. Not true at all. This go much deeper than most people even realize.

            This is happening because they want it to happen.

            As we all waste the precious time on earth we have analyzing it they are closer to their goal.

            Change what you can in your own backyard. Things in the federal arm of the government are out of our control.

          • Nemnor

            gleam, the first 2 lines in your reply (above) is a “non sequitur” (as it relates to my post) because, while you PRETEND that there is a “deeper reason/cause” (than the one I gave) for the main issues facing the USA (and the world), your very next statement then gave a VERY SHALLOW reason/cause for the main issues facing the USA.

            Additionally, you go on to PRETEND that the mass of the people of the USA (and the World) do not have any real power to change the USA (and the World). But this is so much nonsense from you!

            History shows that a people united on ANY particular matter can bring about (virtually) ANY change they want, NOT just in their “backyard” but at ANY level of society.

            Again, regardless to who is in the WH and regardless to the “interventions” of Central Banks, the USA (like Japan, etc.) is (eventually) “doomed”, because of the wider world-wide economic system – which is now decadent (due to reaching a stage of general over-production), and is now NOT able to generate long-term recovery by economic means alone.

          • gleam

            Bull. People changing things with government is an illusion. Always has been and always will be. If the American citizens had any sense or real power you would NOT have members of congress still in office for 60 plus years.

          • CactusPatch

            Kennedy tried to challenge the military-industrial-financial complex. It didn’t work out so well.

    • Mike Smithy

      It is yet to be determined if the bankster mafia puppet masters coronate “Queen Cankles” (Hillary), as their heir apparent to the White House. They may decide to throw their support behind a sellout rhino republican this time around. We know that GW Bush carried the water for the puppet masters throughout their presidency and yet they decided to destroy Senator McStain’s chances by imploding the market in September 2008. Modern history has taught us that the electorate in the USSA only have the illusion of choice when it comes to national elections.

      • XSANDIEGOCA

        Agreed. In America, the POTUS is “selected” not elected.

    • Horiboyable .

      There is one flaw in your theory and it is one that central bankers have made through out the world currently. Central Banks do NOT control the markets and can not alter the trend. They can bend it but that just creates stresses in other areas and makes the situation worse. When the markets move against your position there is nothing you can do. When an event happens, if its a Black Swan or real, large amounts of capital can move within a blink of an eye simply with a few mouse clicks. Mandarins are never behind the 8 ball and always end up on the wrong side of the trades like what happened with the Swissy peg.

  • Priszilla

    Anybody hoping “investing” in financial services will increase their wealth is part of the problem. The only way to increase wealth is by human work. And need to work more than consuming.

    Selling consumables won’t increase wealth. It only concentrates wealth in fewer hands.

    • Nemnor

      Priszilla, I agree with your above statements (more or less).

      When you stated – “…The only way to increase wealth is by human work…”, you are helping to expose the undeniable FACT that virtually ALL wealth is created by the WORKING CLASS – as the class actually doing virtually ALL the “human work”.

      However, we keep hanging on to an out-dated economic system in which – the BULK of the wealth created (BY the Working class in general) is concentrated more and more into the hands of a FEW (parasites/suckers) – i.e. “the 1%”.

      • Priszilla

        All people have the government they deserve.

  • Priszilla

    One of the biggest investment needs of a family is a home. If we could avoid homes being destroyed by wars and catastrophes we’d reduce the need for concentrating a large amount of money.

    (I’ll leave it at that for you to draw your own conclusions.)

  • Chris

    There will be a deal reached at the last second, just like before. All the “Sky is Falling,” has jumped the shark already.

    I am still waiting for the May 11th terrorist attack!! That was all over the internet back in the begging of May.

    • MichaelfromTheEconomicCollapse

      I never said one word about a terror attack on May 11th, so I am not sure why you are bringing that into the discussion.

  • Chris

    They will not let Greece default!

    This end of world talk has been going on for over 7 long years now!

  • Maneb

    Debt junkies….ah shucks! Chickens coming home finally?

  • pissedlizard كافر ‏

    They will get their bailout. Just watch. June 5 will roll around and a last minute deal will be cut and the can will be kicked down the road a little further

    • John Byde

      Probably

  • jakartaman

    Chump change – Who do I write the check?

  • Patriot Alice

    When the bubble burst they won’t need to bailout everyone, just the banks, insurance companies, etc… you know the too big to fail ones, like the last time. Haven’t we learned anything?

  • DJohn1

    It isn’t just about Greece. Italy, Spain and Portugal are in a similar state of disrepair financially.
    The elite are riding a Tiger by the tail. In the story a man defends himself against a Tiger by grabbing it’s tail and swinging it around. When the man tires the tiger will get him.
    So he is doomed to eventually be victim to the very tiger he is swinging.
    Of course no tiger would allow this to happen! That man would be dead very quickly.
    The proverbial tiger is that they keep growing the bubble to keep it from overwhelming them.
    Eventually they run out of resources. Our Tiger is going to be a world war to hide the endless debt we are in right now.
    It was the eventual solution found by Hitler in Germany. Extreme nationalism and complete control over the population was Hitler’s solution.
    The question is more about when than anything else.
    I see it happening either with China going to war with us or the Middle East exploding into a war with us or both.

    • Nemnor

      DJohn1, your statements (above) show that you have a good understanding (more or less) of the reality in the current world-wide system and some of the history of the world-wide system.

      However, what “compelled” Hitler to trigger WW-II was not only to “cover” the “endless debt”, but that Hitler realize that (as Hitler actually said in essence) – “German Industry must expand (internationally) or DIE”. In other words, Hitler concluded that he must start an IMPERIALIST war in the hope of Germany gaining a larger/better share of the world’s (virtually) LIMITED “economic pie”.

      However, when you suggest a possible (potential) WW-III by stating “China going to war with us”. This tends to (subtly) imply that we are the “good guys”, when it could also be “we going to war with China” – i.e. it may very well be that WE (the USA) initiate/start a war with China or with Russia – as indicated by the fact that the USA now feels “compelled’ to provoke a (potential) war with Russia, with the situation the USA (and other western nations) instigated in the Ukraine (and while trying to lay the “blame” on Russia for what is happening in the Ukraine).

      • DJohn1

        The war is likely to start in Taiwan.
        I suggest that Chinese ships will sink an American Destroyer class ship.

  • Horiboyable .

    Wait for the 15 trillion US$ loans go off in the emerging markets, then watch pension funds explode and then government defaults. I am scared of what is about to happen but I am also excited to see such an economic spectacle. This will be an event that historians will be writing and studying about for years. The big down side though is if we end up in a World War. Looks like I might be needing that NZ Passport after all, better brush it off and get it ready.

  • df NJ

    JFK, Nixon, Reagan, JFK Junior, 9/11, Wars against Arabs, Bank Bailouts, Chinese pegging the Yuan 6 to 1 against the dollar, percentage of people employed, poverty, foreign aid, low wages, monopolies, cartels, military spending, national debt. Wow, there’s some serious bad juju in this country. I think the skull and bones pirates are winning or have already won. Satan is laughing. JH 15 is just the beginning. I guess we just sit back and enjoy the apocalypse. Where are Dorothy’s silver slippers now! Destroyed with JFK. Where are my green glasses?

  • John Byde

    Thanks for cheering us all up, Mike!! No, seriously, this is scary. OK, they may dig out a deal this time, but the whole thing is going to blow sometime or other. We here in Europe are just realising what a catastrophe the whole EU/Euro project has been.

  • SunnyFlaSnotress

    “Germany is playing hard. Even Merkel isn’t as open to helping as before.”

    It didn’t help Greece to pish in the wind w/the WW2 comments.

  • Joseph Lenahan

    Thi

    • gleam

      This is all true. Knowledge without the ability to change or really even predict events is just a waste of time and keeps us from living and understanding our true purpose on this earth.

    • GSOB

      It’s not going to go on forever. 1 an1 don’t make 3.
      Judgment is at the door.
      The government is to big and with its growing welfare state it will ensure coverage for everyone. Oh yeah and uh protection. .
      Drastic changes are howling in the wind with the gears of war. The world as we know it will experience more terror, corruption and murder. Its a very long slide and now and then we feel the speed bump seams that were welded together.
      I’ve been blogging here for years and can’t recall any ‘dates’ specific to accuse the owner of what you are insinuating. Economics is not hard to understand.
      If you can’t see the slide we’re on, perhaps your not at the right play ground. Everything is temporary. Anything can happen. Enjoy you life with your wife and kids.
      Don’t forget about Christ.

  • Nemnor

    sharonsj, while it is true that people should be more ‘vigilant’ and have more control on where their money is invested, please understand that, “derivatives” is now an all pervasive issue ALL over the World, that almost no one who invest money can escape from.

    Investing in “derivatives”, “financial bubbles” and other exotic “financial instruments” (and with many of these “investments” having little or no relations tot he real economy), is a NATURAL symptom of the decadent and decaying world-wide economic system – which is ESSENTIALLY Capitalism (but which has varying decadent forms usually labeled as – “corporatism”, or “socialism” or “crony capitalism” or “fascism” or “welfare(ism)” or “communism”, etc.)

    It is the world-wide Capitalist system itself (but with various labels applied to it) that is the main root of the major economic issues facing the USA and the World.

  • CharlesH

    Michael, thanks for the yeoman job you do for all of us here who desperately seek the truth. No one enjoys playing a game when they don’t know the rules and that seems to be the world the powers to be have constructed for us. There really be no real winners when this whole thing implodes.

  • Orac4Prez

    I like how Michael said the US debt “is ONLY $18 trillion dollars”! I guess it takes a trillion here and a trillion there, before you’re talking REAL money these days!

    I guess the next stockmarket crash will be a real one, unlike the infamous 1930 crash?

  • Wise Man

    The global economy is so intertwined and a single event can start a herd panic. Jim Rickards calls it the last “snowflake” that starts the avalanche.

    “And the kings of the earth, who committed acts of immorality and lived
    sensuously with her, will weep and lament over her when they see the
    smoke of her burning, standing
    at a distance because of the fear of her torment, saying, ‘Woe, woe,
    the great city, Babylon, the strong city! For in ONE HOUR your judgment
    has come.’ “And the merchants of the earth weep and mourn over her, because NO ONE buys their cargoes any more” Rev 9-11

  • Wise Man

    The global economy is so intertwined and a single event can start a herd panic. Jim Rickards calls it the last “snowflake” that starts the
    avalanche.

    “And the kings of the earth, who committed acts of immorality and lived sensuously with her, will weep and lament over her when they see the smoke of her burning, standing at a distance because of the fear of her torment, saying, ‘Woe, woe, the great city, Babylon, the strong city! For in ONE HOUR your judgment has come.’ “And the merchants of the earth weep and mourn over her, because NO ONE buys their cargoes any more” Rev 9-11

  • The Bird

    Hmm.Empoverish the world sounds like a sterling idea ol’ chaps.
    Now, how can we profit from this i wonder ?

  • gman

    “The number one thing that bond investors want is to get their money back.”

    heh. if this all goes down it won’t matter if they get their money back or not – there won’t be anything to buy. remember, this is all based on the hope of obtaining asportation of future production – but that future production is in decline and there won’t be enough to go around.

    “505 trillion dollars … is an amount of money that is almost incomprehensible.”

    oh it’s quite comprehensible. in 1980’s dollars that is enough to buy and operate for ten years over 5000 aircraft carrier battle groups – men, ships, aircraft, weapons, and support equipment. does anyone think that there is anywhere near that productive capability in the world? even if everything goes well and nothing falls apart does anyone think they are going to get anything for their money?

  • GetReal4U2

    Get ready…September approaches quickly…

  • Hank Hellman

    I thought that the Greek people voted themselves “no more austerity” at the last election. What gives?

  • bumblebee8

    Sounds like there should be no bailout for anyone foolish enough to put all their eggs into the stock market basket. If it does implode than that is everyone’s fault who contributed to this insanity. If people want a redistribution of wealth than look no further than a massive stock crash to be the catalyst. It would do the everyone a world of good to have this reset. Then I would severely curtail any future stock market, limit the amount of return/dividends so that they are the last ones fed on the corporate teat. The way this market works now it is already destroying most of what we have.

  • Stuart Duncan

    If the euro collapsed ( and it won’t) the U.S. Dollar would become a dominant currency the likes of which have not been seen since before the euro was created. It might be possible for the U.S. To reign in eu players in a U.S. Dominated currency consortium. China won’t buck the trend of using US dollars globally unless they stupidly choose to oppose the USA. Look for China to continue developing as a regional currency against the Yen. If China was smart it would try to cooperate with the U.S. And develop a euro like structure within Asia with the goal to dominating the region financially like Germans do in the eu, only this may prove difficult because of the yen. In time they would of course dominate. No. The world is not going to collapse although gold, silver and alternate currencies will be buoyed upwards. In short, Greece is so small it doesn’t matter. The Greeks should be ashamed of their finances.

  • Ken5745

    Actually the United States and Japan are in even dire straits than Greece.

    In Japan the debt to GDP is close to 265% and is rising with an aging population. In the next 50 years Japan’s population could fall by one third to 84 million from its current 126 million.

    The US has a US$18.2 trillion funded national debt PLUS another US$200 trillion in unfunded long term liabilities in Social Security, Medicare and Medicaid but the US tax receipts were only about US$3.6 trillion in 2014. Google Prof Lawrence Kotlikoff.

    With 47 million people on food stamps, 100 million out of the job markets and a rickety infrastructure that needs at least $5 trillion to mend, the US is insolvent and on the verge of a big collapse.

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