The Beginning Of The End
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Look Out Below – The Nightmarish Decline Of The Euro Has Begun

The euro is a dying currency.  On Thursday, the EUR/USD fell below 1.28 for the first time since September 2010.  In fact, as I write this the EUR/USD is sitting at 1.2791.  Back in July, the EUR/USD was over 1.45.  But this is just the beginning.  The euro is going to go a lot lower.  At this point, there are several major European nations that are on the verge of default, the European financial system is overflowing with debt and toxic assets, and most major European banks are leveraged about as badly as Lehman Brothers was when it collapsed.  Most Americans simply do not grasp the gravity of what is happening.  Just because the Dow is sitting above 12000 and a few U.S. economic numbers have improved slightly does not mean that everything is going to be okay.  As I wrote about recently, the EU has a bigger economy than we do and they have a bigger banking system than we do.  U.S. banks are massively exposed to European sovereign debt and European banking debt.  When the financial system of Europe collapses and the euro falls apart it is going to rock the entire planet.  So you better look out below - the euro is coming down and it is coming down hard.  After the euro implodes, nothing is every going to be the same again.

So how far are we going to see the euro decline?

Julian Jessop of Capital Economics expects the euro to fall much further....

The relative strength of the recent economic data from the US is supporting the dollar more generally, and we expect this divergence to persist as the euro-zone slides into a deep and prolonged recession. Above all, doubts about the very survival of the euro itself are likely to remain a drag on the currency. We therefore continue to expect the euro to fall to around $1.10 by the end of the year.

Others are even more pessimistic.

As I have written about previously, the head of global bond portfolio management at PIMCO believes that the euro is going to go even lower than that....

"Parity with the dollar next year is not out of the question"

Can you imagine that?

1 dollar = 1 euro?

Don't think that it can't happen.

But the decline of the euro is just part of the story.  The truth is that Europe is on the verge of a financial collapse that could end up dwarfing the financial crisis of 2008.

Sadly, most Americans have no idea what has been going on in Europe the past few days....

-The stock of the biggest bank in Italy, UniCredit, is absolutely collapsing.  Shares of UniCredit fell 14 percent on Wednesday and 17 percent on Thursday.

-Shares of another major Italian bank, Intesa Sanpaolo, fell 7.3 percent on Thursday.

-Shares of three major French banks all fell by at least 5 percent on Thursday.

-Even shares of German banks are falling like a rock.  Shares of Commerzbank fell 4.5 percent on Thursday and shares of Deutsche Bank fell 5.6 percent on Thursday.

-The yield on 5 years Italian bonds is back over 6 percent and the yield on 10 year Italian bonds is back over 7 percent.  Analysts all over Europe insist that that the Italian debt situation is not sustainable if rates stay this high.

-Italy's youth unemployment rate has hit the highest level ever.

This is mind blowing news.

But what is the top headline on USA Today right now?

"Employers Impose Bans On Smokers"

These are some of the other top headlines on USA Today right now....

"Automakers Rush To Offer Apps In Your Car"

"Bargain Season At Taco Bell, Pizza Hut, Wendy's"

"Does Your Dog Understand You? Study Says Maybe"

Is that what passes as news in this country?

A financial meltdown of historic proportions is happening in Europe and you cannot even find anything about it on the front page of USA Today.

Amazing.

All of us need to snap out of our television-induced comas and start waking up.

Things are about to get really bad for the global financial system.

At this point so much confidence has been lost in the euro that even the Council on Foreign Relations is admitting that the euro is a failure....

The euro should now be recognized as an experiment that failed. This failure, which has come after just over a dozen years since the euro was introduced, in 1999, was not an accident or the result of bureaucratic mismanagement but rather the inevitable consequence of imposing a single currency on a very heterogeneous group of countries. The adverse economic consequences of the euro include the sovereign debt crises in several European countries, the fragile condition of major European banks, high levels of unemployment across the eurozone, and the large trade deficits that now plague most eurozone countries.

If even the CFR is throwing in the towel, that should tell you something about what is about to happen to the euro.

There is a very real possibility that we could see the euro break up at some point during the next couple of years.

It now seems that a report produced a while back by Credit Suisse's Fixed Income Research unit was right on target....

"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."

The European debt crisis just continues to get worse and worse.  None of the solutions that European leaders have tried have worked.  We are rapidly approaching the meltdown phase of this crisis.

As I have written about previously, it doesn't take a genius to figure out what is happening in Europe.  The equation is simple....

Brutal austerity + toxic levels of government debt + rising bond yields + a lack of confidence in the financial system + banks that are massively overleveraged + a massive credit crunch = A financial implosion of historic proportions

Unfortunately, what is happening right now in Europe is eventually going to happen in the United States as well.

As I wrote about yesterday, U.S. debt is a ticking time bomb that is going to devastate the entire global economy at some point.  Nobody knows when the implosion will happen, but everyone knows that it is inevitable.

When Europe falls apart financially, that is going to make our own financial system much less stable.  What is happening in Europe could turn our "limited recovery" into a "major recession" almost overnight.

So keep your eye on the euro.

If the euro keeps going down, that is going to be really bad news for the global economy.

Unfortunately, the truth is that the decline of the euro is just getting started.

Hold on to your hats.

***UPDATE***

The euro continues to drop like a rock.  Right now it is at 1.2721.

Michael

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  • mondobeyondo

    Meanwhile, as we all sail along on the Good Ship Lollipoop….

    (yes, that’s misspelled intentionally)

    • mondobeyondo

      A little nod to Shirley Temple, in case you’re wondering.

      • r.bitting

        You just dated yourself by claiming to know who Shirley Temple is.

  • wilson

    See who is really funding Romney (and all of the other candidates) at:

    http://www.opensecrets.org/pres12/contrib.php?id=N00000286&cycle=2012

    8 of the top 10, and 13 of the top 20 Romney supporters are the banksters.

    • DB200

      So now you probably can guess who will win?

  • Proftel

    Kick In History:

    “No one knows for sure what will prevail in 2012: to slow U.S. recovery, reflected by a fall of 9.6% to 8.5% unemployment in 2011, and diving endless economic system is right europeu.O that the search for solid ground in international trade will have a space of struggle increasingly ruthless. The Brazil that survived well in the first stage of the crisis must be prepared to not die on the beach. The Brazilian industry accumulated a trade deficit of around U.S. $ 80 billion over the past two years. Hailed by the orthodoxy as encouraging competitiveness, unbridled importation of manufactured goods helps to control inflation. But it has a high cost less visible: the national production loses momentum and space in its own market and it carries a burden of concern in employment and income. In November 2011 – latest data – the performance of the manufacturing sector was 2.5% below the same month in 2010. Industrial chains are being eroded by foreign competition, especially the Chinese. The exchange is the main villain. The flood of dollars attracted by high interest cheapens imports to the point of stifling local manufacturing. There are also technological gap. But it does not explain, for example, the choking of the textile sector, which has technical standard equivalent to the international bridge. Or, as recalled by Luiz Gonzaga Belluzzo Palmeiras, does not justify a Chinese football club is offered to Brazil for R $ 1.39 against the local average cost of $ 35. Brazil may have missed the tone on the pitch but can you make balls. Orthodoxy and their media device criticize transient protective tariffs and incentives to promote industrial. It is believed that the righteous society will spring flood of imports and sanitizing free flow of capital. Brazil was so pre-Vargas would be a paradise. Willful ignorance abstracts the path of their own references. He claims the Chinese standard of competitiveness, but without the framework of Chinese industrial protection and exchange, with interest set by the central committee of the PC. I would, perhaps, then pinch the inhuman conditions of work. Promotion of technology, protectionism, subsidies, exchange and interest rates administered were used in England for 300 years to build its power in the nineteenth century, weapons of economic warfare are largely driven by the U.S., Japan, China and South Korea, whose governments protested the WTO when the emerging shoot the same arsenal. Or, to remember the economist Ha-Joon Chang, ‘kick the ladder’ going up. It’s part. The worst are internal allies do not hesitate to kick the story to defend a laissez-faire never had the leading role assigned to it in the wealth of nations.”

    Fonte:

    http://www.cartamaior.com.br/templates/index.cfm?alterarHomeAtual=1

    :-)

  • Proftel

    An interesting link, check out:

    http://globalresearch.ca/

    :-)

  • Rancher

    No one in leadership will do anything to turn us around. It is against their very nature to fix the problems. Why? Because fixing the problems will require them to give up their control and power.

    They are in a powerful isolated position in DC and the longer they stay there the more they get mired in it. Term limits for all is my only hope.

    I do not believe they will vote away their long terms so there is no hope…

    Therefore we continue to prep for the tough years ahead. We prep with others and do our best to withstand the dark days ahead.

    Talk is cheap…how many years of food and supplies have you invested in? I bet a whole bunch less than the amount of time you spend reading and blogging about the current events and the future? Well if so you will at least know why it all fell apart around you as you starve and go under. Think about that instead of the euro ;-(

  • HIOB

    It is really cool to point at the European Financial System as a huge contender for failure.

    However, where is a BLOG here about the NDAA signed into law by Barak “YES WE CAN” Obama?

    Just for those, who are unaware: http://www.youtube.com/watch?feature=player_embedded&v=iu3nLLwmRvc#!

    Good luck, land of the “not so” free. What does a dollar matter if you sit in a concentration camp?
    Yeah really, wake up you nit wits.

    • DB200

      Was his motto “change” or “chains”?

  • DB200

    Michael,

    I have tried to contribute a certain text several times, on several occasions, but it is not showing up, instead of all the others I made. Could it that your website is filtered on contributions that contain certain key words or am I getting paranoia?

    • Michael

      DB200:

      All comments go through moderation before being posted, but nothing should be filtered out before I see it.

      What were you trying to send?

      Michael

      • DB200

        Information (public domain) about 3 recently appointed (unelected) higly placed politicians and their connection to Goldman Sachs.

        I just retried to copy-paste the text two times, and after pushing the “submit comment” button it didn’t show up after refreshing the webpage. All in all, I have tried to upload the info a dozen of times. All other contributions uploaded without any problem. Only this one failed consistently.

        • DB200

          Michael,

          have sent you an e-mail with the text separately. Am curious if you received it.

          • DB200

            Michael,

            Thanks for the reply, you received it.

            It gives me the idea that contributions are being watched and filtered. But don’t let that deter you, keep up the good work. More and more people are reading your blogs.

            For me, Europe and the USA are two sides of the same coin, like the Republicans and Democrats. There are far more ties between them than meets the eye.

            Take care.

  • Felix Unger

    Eventually the dollar will become worthless due to hyperinflation and we’ll have to issue a new currency . Maybe silver and gold coins or paper money backed by silver and gold, silverbacks or goldbacks instead of greenbacks. That is, if we have any gold left. Chinese officials recently demanded and got a personal inspection tour of our gold at Fort Knox. They may ask us for that or they won’t keep buying our treasuries .

    • uncurable wound

      Do you have any proof or a link to the chinese fort knox claim?I was unable to find anything on it.But if true it would be VERY disturbing!

      • Denise

        Yes. A Chinese inspection would be very disturbing, since the wholesale looting of America would be uncovered – and the creatures that have done the looting would be discovered, as well.

  • Lennie Pike

    Force me into a concentration camp?

    It would be like trying to get a very well armed Cheswick into the shock therapy room in the movie One Flew Over The Cuckoo’s nest.

    • Lennie Pike

      Found on YouTube @ Mr Cheswick No

    • Proftel

      Lennie Pike:

      You a smart and decent guy, not concentration camps us.

      Big difference there is between the U.S. and Brazil elections.

      Here people choose political (with compulsory voting Electoral Court itself).

      Here voting machines, there “coocuns” or something similar, non-binding vote, mandatory citizenship here (can vote blank, void, but HAS to vote), no tears to cry then.

      Two separate systems, a “third world” COMPUTER and other “first world” in the role of power alliances (where to send rich media in favor).

      Very strange you in the election ….

      Sorry, sincerity.

      :-)

  • Forrestcat

    @mark wandret

    Hey dun point finger at the muslims…did muslims burn half od europe on ww2..muslim natioans are literally debt free and have large sovereign wealth wealth…libya was a sovereign wealth nation and until now we know the bilderberg infidels stole that wealth in the UK banks..we muslims best topple our dictators and saudi prince than pilfer worthless christian cathedrals in europe which will freeze to death without muslim oil…

    To all of you…just head south where the south americans and muslims aremwith ur gold….its warm down here with plenty of trade surplus!!

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  • boeing engineer

    Best news possible. The Euro has been highly over-valued for years. I recall when $1 bought over €1.20, as it should. And since I travel to Europe frequently, it’s easy to realize that there’s a gross mismatch between the official exchange rate and real purchasing power.

  • Denise

    It’s NOT “Government debt”!!!!! It’s ROTHSCHILD’S FIAT DEBT!!!! Get rid of THEM – and their ilk – and you’ll ger rid of most of the problems the world is facing.

  • Paul
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