The Beginning Of The End
The Beginning Of The End By Michael T. Snyder - Kindle Version

The Prepper's Blueprint

The Mystery Of The Shemitah
Don't Buy Survival Food Until You Read This - If you stockpile the wrong foods, you could be setting your family up to starve. It sounds harsh, but the truth is too many people with good intentions are making critical mistakes with their food stockpiles. Watch this video now >>
Gold Buying Guide: Golden Eagle Coins

Recent Posts

Archives

Will Italy Be The Spark That Sets Off Financial Armageddon In Europe?

Will Italy Be The Spark That Sets Off Financial Armageddon In EuropeIs the financial collapse of Italy going to be the final blow that breaks the back of Europe financially?  Most people don’t realize this, but Italy is actually the third largest debtor in the entire world after the United States and Japan.  Italy currently has a debt to GDP ratio of more than 120 percent, and Italy has a bigger national debt than anyone else in Europe does.  That is why it is such a big deal that Italian voters have just overwhelmingly rejected austerity.  The political parties led by anti-austerity candidates Silvio Berlusconi and Beppe Grillo did far better than anticipated.  When you combine their totals, they got more than 50 percent of the vote.  Italian voters have seen what austerity has done to Greece and Spain and they want no part of it.  Unfortunately for Italian voters, it has been the promise of austerity that has kept the Italian financial system stable in recent months.  Now that Italian voters have clearly rejected austerity, investors are fearing that austerity programs all over Europe may start falling apart.  This is creating quite a bit of panic in European financial markets right now.  On Tuesday, Italian stocks had their worst day in 10 months, Italian bond yields rose by the most that we have seen in 19 months, and the stocks of the two largest banks in Italy both fell by more than 8 percent.  Italy is already experiencing its fourth recession since 2001, and unemployment has been steadily rising.  If Italy is now “ungovernable”, as many are saying, then what does that mean for the future of Italy?  Will Italy be the spark that sets off financial armageddon in Europe?

All of Europe was totally shocked by the election results in Italy.  As you can see from the following excerpt from a Bloomberg article, the vote was very divided and the anti-austerity parties did much better than had been projected…

The results showed pre-election favorite Pier Luigi Bersani won the lower house with 29.5 percent, less than a half a percentage point ahead of Silvio Berlusconi, the ex-premier fighting a tax-fraud conviction. Beppe Grillo, a former comedian, got 25.6 percent, while Monti scored 10.6 percent. Bersani and his allies got 31.6 percent of votes in the Senate, compared with 30.7 percent for Berlusconi and 23.79 percent for Grillo, according to final figures from the Interior Ministry.

So what do those election results mean for Italy and for the rest of Europe?

Right now, there is a lot of panic about those results.  There is fear that what just happened in Italy could result in a rejection of austerity all over Europe

“I think the election results (or lack thereof) are a negative for the euro, which will likely keep the currency pressured for some time,” Omer Esiner, chief market analyst for Commonwealth Foreign Exchange, told me. But it’s not just the political uncertainty in Italy, he adds. “The shocking gains made by anti-establishment parties in Italy signal a broad-based frustration with austerity among voters and a decisive rejection of the policies pushed by Germany in nations across the euro zone’s periphery. That theme revives unresolved debt crisis issues and could threaten the continuity of reforms across other countries in the euro zone.”

And the financial markets have clearly interpreted the election results in Europe as a very bad sign.  Zero Hedge summarized some of the bad news out of Europe that we saw on Tuesday…

Swiss 2Y rates turned negative once again for the first time in a month; EURUSD relatively flatlined around 1.3050 (250 pips lower than pre-Italy); Europe’s VIX exploded to almost 26% (from under 19% yesterday); and 3-month EUR-USD basis swaps plunged to their most liquidity-demanding level since 12/28. Spain and Italy (and Portugal) were the most hurt in bonds today as 2Y Italian spreads broke back above 200bps (surging over 50bps casting doubt on OMT support) and 3Y Spain yields broke above 3% once again. The Italian equity market suffered its equal biggest drop in 6 months falling back to 10 week lows (and down 14% from its end-Jan highs). Italian bond yields (and spreads) smashed higher – the biggest jump in 19 months as BTP futures volume exploded in the last two days.

Not that things in Europe were going well before all this.

In fact, the UK was just stripped of its prized AAA credit rating.  That was huge news.

And check out some of the other things that have been going on in the rest of Europe

In Spain, a major real estate company, Reyal Urbis, collapsed last week, leaving already battered banks on the hook for millions of euros in losses. Meanwhile, the government faces a corruption scandal and a steady stream of anti-austerity demonstrations. Thousands of people took to the streets again on Saturday, protesting deep cuts to health and other services, as well as hefty bank bailouts.

Life is no better in a large swath of the broader EU. In Britain, Moody’s cited the continuing economic weakness and the resulting risks to the government’s tight fiscal policy for its rating cut. In Bulgaria, where the government fell last week and the economy is in a shambles, rightists who joined mass demonstrations across the country burned a European Union flag and waved anti-EU banners. Other austerity-minded governments in the EU face similar murky political futures.

At this point, Europe is a complete and total economic mess and things are rapidly getting worse.

And that is really bad news because Europe is already in the midst of a recession.  In fact, according to the BBC, the recession in the eurozone got even deeper during the fourth quarter of 2012…

The eurozone recession deepened in the final three months of 2012, official figures show.

The economy of the 17 nations in the euro shrank by 0.6% in the fourth quarter, which was worse than forecast.

It is the sharpest contraction since the beginning of 2009 and marks the first time the region failed to grow in any quarter during a calendar year.

But this is just the beginning.

The truth is that government debt is not even the greatest danger that Europe is facing.  In reality, a collapse of the European banking system is of much greater concern.

Why is that?

Well, how would you feel if you woke up someday and every penny that you had in the bank was gone?

In the U.S. we don’t have to worry about that so much because all deposits are insured by the FDIC, but in many European countries things work much differently.

For example, just check out what Graham Summers recently had to say about the banking system in Spain…

It’s a little known fact about the Spanish crisis is that when the Spanish Government merges troubled banks, it typically swaps out depositors’ savings for shares in the new bank.

So… when the newly formed bank goes bust, “poof” your savings are GONE. Not gone as in some Spanish version of the FDIC will eventually get you your money, but gone as in gone forever (see the above article for proof).

This is why Bankia’s collapse is so significant: in one move, former depositors at seven banks just lost virtually everything.

And this in a nutshell is Europe’s financial system today: a totally insolvent sewer of garbage debt, run by corrupt career politicians who have no clue how to fix it or their economies… and which results in a big fat ZERO for those who are nuts enough to invest in it.

Be warned. There are many many more Bankias coming to light in the coming months. So if you have not already taken steps to prepare for systemic failure, you NEED to do so NOW. We’re literally at most a few months, and very likely just a few weeks from Europe’s banks imploding, potentially taking down the financial system with them. Think I’m joking? The Fed is pumping hundreds of BILLIONS of dollars into EU banks right now trying to stop this from happening.

Like Graham Summers, I am extremely concerned about the European banking system.  Europe actually has a much larger banking system than the U.S. does, and if the European banking system implodes that is going to send huge shockwaves to the farthest corners of the globe.

But if you want to believe that the “experts” in Europe and in the United States have “everything under control”, then you might as well stop reading now.

After all, they are very highly educated and they know what they are doing, right?

But if you want to listen to some common sense, you might want to check out this very ominous warning from Karl Denninger

I hope you’re ready.

Congress has wasted the time it was given by the Europeans getting things “temporarily” under control.  But they didn’t actually get anything under control, as the Italian elections just showed.

Now, with the budget over there at risk of being abandoned, and fiscal restraint being abandoned (note: exactly what the US has been doing) the markets are recognizing exactly the risk that never in fact went away over the last couple of years.

It was hidden by lies, just as it has been hidden by lies here.

Bernanke’s machinations and other games “gave” the Congress four years to do the right thing.  They didn’t, because that same “gift” also destroyed all market signals of urgency.

As such you have people like Krugman and others claiming that it’s all ok and that we can spend with wild abandon, taking our fiscal medicine never.

They were wrong.  Congress was wrong.  The Republicans were wrong, the Democrats were wrong, and the Administration was wrong.

Congress is out of time; as I noted the deficit spending must stop now, irrespective of the fact that it will cause significant economic damage.

For the past couple of years, authorities in the U.S. and in Europe have been trying to delay the coming crisis by kicking the can down the road.

By doing so, they have been making the eventual collapse even worse.

And now time is running out.

I hope that you are ready.

Armageddon

Are The Government And The Big Banks Quietly Preparing For An Imminent Financial Collapse?

Something really strange appears to be happening.  All over the globe, governments and big banks are acting as if they are anticipating an imminent financial collapse.  Unfortunately, we are not privy to the quiet conversations that are taking place in corporate boardrooms and in the halls of power in places such as Washington D.C. and London, so all we can do is try to make sense of all the clues that are all around us.  Of course it is completely possible to misinterpret these clues, but sticking our heads in the sand is not going to do any good either.  Last week, it was revealed that the U.S. government has been secretly directing five of the biggest banks in America “to develop plans for staving off collapse” for the last two years.  By itself, that wouldn’t be that big of a deal.  But when you add that piece to the dozens of other clues of imminent financial collapse, a very troubling picture begins to emerge.  Over the past 12 months, hundreds of banking executives have been resigning, corporate insiders have been selling off enormous amounts of stock, and I have been personally told that a significant number of Wall Street bankers have been shopping for “prepper properties” in rural communities this summer.  Meanwhile, there have been reports that the U.S. government has been stockpiling food and ammunition, and Barack Obama has been signing a whole bunch of executive orders that would potentially be implemented in the event of a major meltdown of society.  So what does all of this mean?  It could mean something or it could mean nothing.  What we do know is that a financial collapse is coming at some point.  Over the past 40 years, the total amount of all debt in the United States has grown from about 2 trillion dollars to nearly 55 trillion dollars.  That is a recipe for financial armageddon, and it is inevitable that this gigantic bubble of debt is going to burst at some point.

In normal times, the U.S. government does not tell major banks to “develop plans for staving off collapse”.

But according to a recent Reuters article, that is apparently exactly what has been happening….

U.S. regulators directed five of the country’s biggest banks, including Bank of America Corp and Goldman Sachs Group Inc, to develop plans for staving off collapse if they faced serious problems, emphasizing that the banks could not count on government help.

The two-year-old program, which has been largely secret until now, is in addition to the “living wills” the banks crafted to help regulators dismantle them if they actually do fail. It shows how hard regulators are working to ensure that banks have plans for worst-case scenarios and can act rationally in times of distress.

Does it seem odd to anyone else that only five really big banks got such a warning?

And why keep it secret from the American public?

Does the federal government actually expect such a collapse to happen?

If federal officials do expect a financial collapse to occur, they would not be the only ones.  An increasing number of very respected economists are speaking about the coming financial collapse as if there is a certain inevitability about it.

For example, check out the following quote from a recent Money Morning article….

Richard Duncan, formerly of the World Bank and chief economist at Blackhorse Asset Mgmt., says America’s $16 trillion federal debt has escalated into a “death spiral,” as he told CNBC.

And it could result in a depression so severe that he doesn’t “think our civilization could survive it.”

A former World Bank executive is warning that our civilization might not survive what is coming?

That is pretty chilling.

Economist Nouriel Roubini says that he believes that the coming crisis will be even worse than 2008….

“Worse because like 2008 you will have an economic and financial crisis but unlike 2008, you are running out of policy bullets. In 2008, you could cut rates; do QE1, QE2; you could do fiscal stimulus; you could backstop/ringfence/guarantee banks and everybody else. Today, more QEs are becoming less and less effective because the problems are of solvency not liquidity. Fiscal deficits are already so large and you cannot bail out the banks because 1) there is a political opposition to it; and 2) governments are near-insolvent – they cannot bailout themselves let alone their banks. The problem is that we are running out of policy rabbits to pull out of the hat!”

Across the pond, many European officials are echoing similar sentiments.

What Nigel Farage told King World News the other day is very ominous….

Today MEP (Member European Parliament) Nigel Farage spoke with King World News about what he described as the possibility of, “a really dramatic banking collapse.”  Farage also warned that central planners want to enslave and imprison people inside of a ‘New Order,’ and he described the situation as “horrifying.”

The situation in Europe continues to get worse and worse.  The authorities in Europe have come out with “solution” after “solution”, and yet unemployment continues to skyrocket and economic conditions in the EU have deteriorated very steadily over the past 12 months.

If all of that was not bad enough, there are an increasing number of indications that Germany is actually considering leaving the euro.

Needless to say, that would be a complete and total disaster for the rest of the eurozone.

Of course there are any number of ways that the financial crisis in Europe could potentially play out.

But all of the realistic scenarios would be very bad for the global economy.

Meanwhile, our resources are dwindling, war in the Middle East could erupt at any moment and our planet is becoming increasingly unstable.  The following is from a recent article by Paul B. Farrell on Marketwatch.com….

Fasten your seat belts, soon we’ll all be shocked out of denial. Some unpredictable black swan. A global wake-up call will trigger the Pentagon’s prediction in Fortune a decade ago at the launch of the Iraq War: “By 2020 … an ancient pattern of desperate, all-out wars over food, water, and energy supplies is emerging … warfare defining human life.”

It is almost as if a “perfect storm” is brewing.

Of course the historic drought that is ravaging food production in the United States this summer is not helping matters either.  Another summer or two like this one and we could be looking at a return of Dust Bowl conditions.

Anyone that is watching what is going on in the world and is not concerned at all about what is happening is simply being delusional.

Recently, a “team of scientists, economists, and geopolitical analysts” examined the current state of the global economic system and the conclusions they reached were absolutely staggering….

One member of this team, Chris Martenson, a pathologist and former VP of a Fortune 300 company, explains their findings:

“We found an identical pattern in our debt, total credit market, and money supply that guarantees they’re going to fail. This pattern is nearly the same as in any pyramid scheme, one that escalates exponentially fast before it collapses. Governments around the globe are chiefly responsible.

“And what’s really disturbing about these findings is that the pattern isn’t limited to our economy. We found the same catastrophic pattern in our energy, food, and water systems as well.”

According to Martenson: “These systems could all implode at the same time. Food, water, energy, money. Everything.”

Hmmmm – it sounds like they have been reading The Economic Collapse Blog.

The truth is that a massive worldwide financial collapse is coming.

It is inevitable, and it is going to be extremely painful.

So what do you think about all of this?  Please feel free to post a comment with your thoughts below….

Shocking Forecast
Thrive Life
FEMA Hates This

Austin Coins
High Blood Pressure?
FINCA BAYANO
Survive After Collapse

Silver.com

Camping Survival
GunMagWarehouse.com
SFC_The-Video-They-Tried-To-Ban_125
Print Friendly and PDF
Facebook Twitter More...