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

18 Indications That Europe Has Become An Economic Black Hole Which Is Going To Suck The Life Out Of The Global Economy

Summer vacation is over and things are about to get very interesting in Europe.  Most Americans don’t realize this, but much of Europe shuts down for the entire month of August.  I wish we had something similar in the United States.  But now millions of Europeans are returning from their extended family vacations and the fun is about to begin.  During August economic conditions continued to degenerate in Europe, but I figured that it wouldn’t be until after August that the European debt crisis would take center stage once again.  And as I wrote about last week, if there is going to be a financial panic, it typically happens in the fall.  The stock market has seen quite a nice rally over the summer, and many investors are nervous that we could see a significant “correction” very soon.  The month of September has been the absolute worst month for stock performance over the past 50 years, and it has also been the absolute worst month for stock performance over the past 100 years as well.  Of course that does not guarantee that anything is going to happen this year.  But things in Europe continue to get worse.  Unemployment rates are spiking, manufacturing activity is slowing down, housing prices are crashing and major financial institutions are failing.  What is happening in Europe right now appears to be an even worse version of what happened to the United States back in 2008.

But most Americans aren’t too concerned about what is happening in Europe.

In fact, most Americans don’t believe that a European financial collapse would be much of a problem for us.

Well, just remember what happened back in 2008. When the U.S. financial system started coming apart at the seams it sparked a devastating worldwide recession which was felt in every corner of the globe.

If the European financial system implodes, the consequences could be even worse.

Why?

Europe has a larger population than the United States does.

Europe has a larger economy than the United States does.

Europe has a much, much larger banking system than the United States does.

If Europe experiences a financial collapse, the entire globe will feel the pain.

And considering how weak the U.S. economy already is, it would not take much to push us over the edge.

What is going on in Europe right now is a very, very big deal and people need to pay attention.

The following are 18 indications that Europe has become an economic black hole which is going to suck the life out of the global economy….

#1 The unemployment rate in France is up to 10 percent, and the French media is buzzing about the fact that the number of unemployed French workers has now hit the 3 million mark.

#2 The French government has just announced the nationalization of its second largest mortgage lender.  Additional bailouts are likely on the way.

#3 French automaker PSA Peugeot Citroen has announced that it will be cutting more than 10,000 jobs.  But of course major layoff announcements like this are coming out of Europe almost every day now.

#4 Home prices in France are falling rapidly and the recent election of a socialist president has created a bit of a panic in the French housing market….

British people with homes in France were today warned that the property market is in ‘free fall’.

A combination of factors including the election of a tax-and-spend Socialist government means that prices are tumbling.

It means an end to the boom years, when thousands of Britons poured money into rental or retirement investments across the Channel.

#5 A slow-motion bank run is happening in Spain.  The amount of money being pulled out of the Spanish banking system is absolutely unprecedented.  The following is from a recent Zero Hedge article….

The central bank of Spain just released the net capital outflow numbers and they are disastrous. During the month of June alone $70.90 billion left the Spanish banks and in July it was worse at $92.88 billion which is 4.7% of total bank deposits in Spain. For the first seven months of the year the outflow adds up to $368.80 billion or 17.7% of the total bank deposits of Spain and the trajectory of the outflow is increasing dramatically. Reality is reality and Spain is experiencing a full-fledged run on its banks whether anyone in Europe wants to admit it or not.

If this pace keeps up, more than 600 billion dollars will be pulled out of Spanish banks by the end of the year.

Keep in mind that the GDP of Spain for all of 2011 was just 1.49 trillion dollars.

So by the end of this year we could see the equivalent of more than 40 percent of Spanish GDP pulled out of Spanish banks and sent out of the country.

In case you were wondering, yes, that is a nightmare scenario.

#6 The unemployment rate in Spain is over 25 percent.  The youth unemployment rate in Spain is well over 50 percent.  Spain is a tinderbox that could be set ablaze at any moment.

#7 The yield on 10 year Spanish bonds is up to 6.85 percent.  This is an unsustainable level, and if rates don’t come down on Spanish debt soon it is inevitable that Spain will end up just like Greece.

#8 On Monday it was announced that Spanish banking giant Bankia will be getting an emergency “cash injection” of between 4 and 5 billion euros.  Apparently “cash injection” sounds better to the politicians than “a bailout” does.

#9 The housing crash in Spain just continues to get worse.  It is being reported that some homes in Spain are being sold at a 70% discount from where they were at the peak of the market back in 2006.  At this point there are approximately 2 million unsold homes in Spain.

#10 There are persistent rumors that the government of Spain will soon be forced to officially ask for a bailout from the rest of Europe.  But who is going to bail them out?  Most of the other governments of the eurozone are on the verge of bankruptcy themselves.

#11 Manufacturing activity in Europe has contracted for 13 months in a row.  The following is from a recent Reuters report….

The downturn that began in the smaller periphery members of the 17-nation bloc is now sweeping through Germany and France and the situation remained dire in the region’s third and fourth biggest economies of Italy and Spain.

“Larger nations like France and Germany remain in reverse gear… the (manufacturing) sector is on course to act as a drag on gross domestic product in the third quarter,” said Rob Dobson, senior economist at data collator Markit.

Markit’s final Purchasing Managers’ Index (PMI) for the manufacturing sector fell from an earlier flash reading of 45.3 to 45.1, above July’s three-year low of 44.0, but notching its 13th month below the 50 mark separating growth from contraction.

#12 Chinese exports to the EU declined by 16.2 percent in July.  U.S. exports to Europe have been steadily falling as well.

#13 Slovenia and Cyprus are two other eurozone members that are in desperate need of bailout money.  The dominoes just keep falling and nobody seems to be able to come up with a plan to “fix” Europe.

#14 Even the “strong” economies in Europe are being dragged down now.  For example, unemployment in Germany has risen for five months in a row.

#15 According to one recent poll, only about one-fourth of all Germans want Greece to remain a part of the eurozone.  The odds of a breakup of the euro seem to rise with each passing day.

#16 It is now estimated that bad loans make up approximately 20 percent of all domestic loans in the Greek banking system at this point.

#17 The suicide rate in Greece is more than 30 percent higher than it was last year.  People are becoming very desperate in Greece and there is no end in sight to the economic depression that they are going through.

#18 Large U.S. companies have been rapidly getting prepared for a Greek exit from the eurozone.  The following is from a recent New York Times article….

Even as Greece desperately tries to avoid defaulting on its debt, American companies are preparing for what was once unthinkable: that Greece could soon be forced to leave the euro zone.

Bank of America Merrill Lynch has looked into filling trucks with cash and sending them over the Greek border so clients can continue to pay local employees and suppliers in the event money is unavailable. Ford has configured its computer systems so they will be able to immediately handle a new Greek currency.

Every time European leaders get together they declare that they have “a plan” that will solve the problems that Europe is experiencing, but as we have seen things in Europe just continue to get worse with no end in sight.

A key date is coming up in the middle of this month.  On September 12th, Germany’s Constitutional Court will determine the fate of the recent fiscal pact and the ESM.  According to UniCredit global chief economist Erik Nielsen, if the court rules against the fiscal pact and the ESM the fallout will be catastrophic….

“If they were to surprise us by striking down Germany’s participation, I would think it’d be an utter bloodbath in markets”

But that is not the only thing that could set off a full-blown panic in the financial markets.

The truth is that Europe is teetering on the edge.

One wrong move and it is going to be 1929 all over again.

As I have maintained all along, the next wave of the economic collapse is rapidly approaching, and this time the epicenter for the crisis is going to be in Europe.

But that does not mean that things are going to be easier for the United States than last time.  We have never even come close to recovering from the last recession.  Most Americans families are just barely getting by.  In fact, 77 percent of them are living paycheck to paycheck at least part of the time.

Right now there are millions of Americans that have lost their jobs and their homes in recent years and that feel forsaken by society.

After this next wave hits us there will be tens of millions of Americans feeling the pain of economic desperation.

The last wave of the economic collapse hurt us.

This next wave is going to absolutely devastate us.

Watch what is happening in Europe very carefully.  What Greece, Spain, Italy and France are experiencing right now is going to hit us soon enough.

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...