So says Graham Summers (www.gainspainscapital.com) in edited excerpts from his original article*.
Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has edited the article below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.
Summers goes on to say, in part:
The ECB is tapped out. Having provided over 1 trillion in funding via LTRO 1 and LTRO 2, taking on over 700 billion in PIIGS debt putting its own solvency at risk, it simply cannot launch another LTRO scheme for the following reasons:
- Those banks accepting LTRO funding are being punished by the market, thereby indicating that ECB funding is no financially toxic to a firm’s reputation in the market place.
- The positive effects of LTRO 2 lasted only one month compared to several months for LTRO 1. Thus, we find that with each additional intervention the benefits are shorter lasting.
- The last time the Fed printed (just $600 billion at that) food prices hit all time records and revolutions erupted around the world.
- Back home in the US the Fed came under massive political pressure forcing it to go on damage control mode…
- This is an election year. The Fed has done all it can to support Obama’s re-election… If the Fed launches some massive printing campaign, Obama will certainly lose.
- It’s ultimately a US-backed entity.
- The political environment in the US will not tolerate a bailout of the EU…
- This is an election year: how many times has the IMF asked for additional funding and been rejected?
- Merkel’s political party is getting destroyed in state elections due to her support of the EU – and Merkel is running for re-election in 2013.
- Merkel is committing political suicide by continuing to put Germany on the hook for Europe’s problems. Speaking of which,
- Germany is already on the hook for over 1 trillion in EU losses and the ECB has made it so that it can roll the losses from its PIIGS portfolio back onto National Central Banks (AKA the Bundesbank).
- Inflation is showing up in Germany and becoming a political issue….
- The German constitution does not permit the creation of Eurobonds.
- If Germany permits additional bailouts or funding it will lose its AAA rating, leaving Europe without an AAA rated large economy to fall back on.
- Having pumped its system full of liquidity it now faces inflation at the same time as its economy is slowing.
- This in turn means that China’s Government is starting to lose its already tenuous control of the populace.
- As a result China will be focusing on domestic issues rather than saving Europe (when was the last time the “China to back the EU” story appeared in the media?)
- It has re-instated its emergency bailout fund providing 480 billion in potential assistance to Germany banks in case of a Crisis.
- German banks will be permitted to dump their EU bonds into the emergency fund if need be.
- German corporations with operations in Greece have put clauses in their contracts to allow for the acceptance of the Drachma.
- Total Spanish banking loans are equal to 170% of Spanish GDP.
- Troubled loans at Spanish Banks just hit an 18-year high.
- Spanish banks need to rollover 20% of their debt this year.
- Spanish private sector debt is nearly 300% of Spanish GDP.
In plain terms, having spent two years and hundreds of billions (even TRILLIONS of Euros) dealing with the EU Crisis, the powers that be over there have backed themselves into a corner from which they cannot escape.
If you like what this site has to offer go here to receive Your Daily Intelligence Report with links to the latest articles posted on munKNEE.com. It’s FREE! An easy “unsubscribe” feature is provided should you decide to cancel at any time.
Let me be blunt: THERE IS NO ENTITY ON EARTH THAT CAN BAIL OUT EUROPE! It’s game over for that idea and the idea that one bankrupt nation (even Germany sports a REAL Debt to GDP of over 200% when you include unfunded liabilities) can prop up several others is ridiculous – and all of this is happening at the precise time that Spain is about to implode.
This is the REAL DEAL for Europe. Anyone who has some kind of counter-argument to these points either doesn’t understand the political environment we’ve entered (even Central Banks are fed up with bowing to political pressure from politicians) or is simply hoping that by ignoring these realities they (the realities) will go away – and they won’t.
Europe’s banking system as a whole is at risk a la 2008 and it’s nearly four times the seize of the U.S. banking system. As such, if you’re not already taking steps to prepare for the coming collapse, you need to do so now because the U.S. will not escape from this unscathed (some estimates put US exposure in the ballpark of several TRILLION Dollars). No one will – because the global banking system is just too interconnected.
To repeat: if you are not preparing for this, YOU NEED TO DO SO NOW.
*www.gainspainscapital.com (To access the above article please copy the URL and paste it into your browser.)
Editor’s Note: The above article may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.
We still don’t have many political voices [in the European Union] that have the courage to say, ‘We’re headed for the rocks, and before we hit the rocks, let’s take a different course. Let’s try to break this thing up peaceably, before it ends in disaster….The establishment always supports the status quo…but actually, I think the only way we can avoid a depression is to break this (the EU) up.
I continue to see articles in the media claiming that Europe’s problems are solved. Either the folks writing these articles can’t do simple math, or they don’t bother actually reading any of the political news coming out of Europe [so let me present 3 data points that guarantee Europe will collapse at some point in the near future]. Words: 722
Europe may soon be choking on that plat du jour of government a la Hollandaise with the side of chopped Greek salad. The whole world, in fact, has got something like a giant hairball stuck in its craw. The hairball is composed of filaments of lies wound over a core of supernatural indebtedness. The lies are promises that the debt will be paid back. Words: 710
As many of you know, my primary forecast regarding Europe is that the EU will be broken up and/or collapse within the coming months. The reasons for this are financial, monetary and political in nature [with much of the latter dependant on what happens in Germany. Let me explain.] Words: 516
Europe is heading off a cliff! From one end of the continent to the other, the numbers suggest a double-dip recession is striking with brutal force…and with the world as interconnected as it is these days, what happens in Europe WILL impact our companies and markets here so now is the time to position your portfolio to weather the storm. Words: 900
Spain is a catastrophe [of major proportions and] to fully understand [why that is the case] we need to understand Spain in the context of both the EU and the global financial system. [Once you read what I outline below you will more fully understand why] I believe that the EU in its current form is in its final chapters. Whether it’s through Spain imploding or Germany ultimately pulling out of the Euro, we’ve now reached the point of no return: the problems facing the EU (Spain and Italy) are too large to be bailed out! Words: 1345
The European economic situation is explained very simply in the illustration below. Take a look.
The European politicians are totally committed to keeping the eurozone together. It’s a bad idea, but they are committed to it – and they are willing to spend everybody else’s money – especially German money – to do that.
On the surface, Spain’s debt woes have many things in common with those of Greece – bad age demographics and a toxic bank system – but you’ll note that, as we tackle each of these, Spain is in fact in far worse fiscal shape than Greece. [Let’s take a look.] Words: 700
In this article I lay out precisely why the coming Crisis in Europe will be THE Crisis I’ve been forecasting for the last 24 months, why it will have dire consequences on the U.S. and why the Fed can do absolutely nothing to stop it this time round. Words: 1334
On the surface things may appear to be calm, but I don’t think the European crisis is anywhere near its conclusion. Losses still have to be taken from Ireland, Spain, Portugal and possibly even Italy…There are a number of ways out of Europe’s problems. One of them is higher inflation…[which] is going to be very positive for gold… because the central banks will be under pressure to print.
When the supply of something is increased sharply relative to demand, the value of that commodity will decline. If the supply continues to increase rapidly and indefinitely, then that item will become worth less and less, with the potential to finally become nearly worthless. This is the Developing Disaster facing the US Dollar and the world. This is the factor that could become the single most important criterion in investment allocation decisions and possibly even for individual financial survival…[Let me explain this further by reviewing the 7 major problems facing the U.S. (and thus the world) and how they all will lead to problem #7 – devolution.] Words: 1520