Brussels secretly wants a financial crisis to finalise the euro project
Posted on 22 October 2011 with 4 comments from readers
The eurozone financial crisis seems to be reaching a climax this weekend with leaders set to announce some sort of solution next week. Yet the chances of this coming anywhere near what is needed to satisfy markets about the future of the eurozone banking system look slim.
Italian debt yields of close to six per cent are near to the tipping point that pulled down Greece, Portugal and Ireland. Does the eurozone have the financial capacity to bailout Italy? Well, certainly not on any current proposals. Then there is still Greece.
Lehman revisited
There are more than a few shades of the 2008 bankruptcy of Lehman Brothers about Greece. Did the authorities miscalculate in letting Lehman go? Or was it deliberate to scare everybody into accepting huge bailouts rather than risk a systemic collapse?
European Union officials know their recent history and can see a political tool here to enhance their own power base. Give the eurozone a stark choice between banking suicide and centralization and the less of two evils is very clear. Ask the same nations to come up with and agree on a complex rescue plan and this is mission impossible.
However, as George Soros has noted the continual delaying of a settlement most probably makes the ultimate pain to be suffered much worse. Much of the eurozone banking sector could very quickly end up being nationalized at huge loss for shareholders and the loan ‘haircuts’ could become more of a full scalping.
The convulsions in global financial markets would make autumn 2008 look like a walk in the proverbial park. The ArabianMoney investment newsletter (click here) has twice before pointed to Bear Market ETFs as the only instrument likely to gain in this environment.
Big crash
How low could stocks go in a real market rout driven by a sudden nationalization of Europe’s banks, massive loan losses spread globally through ownership of credit default swaps and a major credit contraction all over the world? We are talking about once in 80 year lows.
It has to be said that the stock market rallies of the past week look like suicide notes for suckers. The assumption that the eurozone will come up with the goods is not worth betting on and there is no solid reason to think it will be different this time.
You even have the prime participants trying desperately to dampen market optimism but to no avail. The lights are going out in Europe.
And this is all a part of the European Union’s masterplan. The creators of the euro knew it would take a real crisis to create a fiscal as well as monetary union, and they are about to get it.
4 Comments posted by readers:
Tell ‘em They Ain’t Got Any Clothes On:
The worst part of all this is that the European ministers are “Emperors With No Clothes On”, as they continue to have one unproductive European summit meeting after another, tell extensive lies on top of previous lies, create false rumors on top of rumors, and then manipulate the markets to create the illusion that “all is well”. This circus has a significant negative impact on the rest of the world, which is growing weary.
Soon the Markets Will Start to Roar:
One has to wonder how much longer the stock/ bond markets are willing to tolerate this nonsense; soon, the markets will suddenly begin to speak loudly. Very loudly. Europe will not be prepared (so what else is new?) to deal with the ensuing crisis, and will come to the US FED with large beggar bowls in hand.
Enter: Massive FED USD printing.
Got physical gold or silver? Got both?
What is the author’s name?
Ed Note: Patrick Hennessy and Bruno Waterfield
Looks like a bull trap to me! As they say markets often climb a wall of worry and sell on the news. In this case they have kept the market in suspense for so long only to see Mr. market faithfully obliging without being even being given any details. I suppose gold bugs will be salivating at the prospect in sight which is often the time they get their heads handed to them on a platter. Gold is notorious for its false moves. The “big one” will only be a “big one” when gold bugs get wrong footed and start chasing the gravy train at all cost attracting the attention of the rest of the market. That will surely only happen when everyone’s fingers have been burned by totally unexpected moves. Check out the world of financial gurus regarding the crash of 2008. I have not heard of anyone who got it right. Certainly we have heard of those who recommended buying once the market had bottomed. Please enlighten me on any of the
above if you have are able to clarify.
Humbly at your service
Ed Note, with due modesty: http://www.arabianmoney.net/gold-silver/2008/09/29/dow-to-fall-to-7000-ftse-to-3300/
Ah ! Just to finish the above it appears the market will be disappointed with what the politicians come up with tomorrow and come down very briefly quite hard and fast with sufficient leverage to frighten the bureaucrats to such an extent for them to top-up their proposal giving the market what it actually wants which they will do probably over a weekend emergency summit thus averting a total meltdown. This will probably wrong foot a massive bear charge and hand them their heads with a catapult projection above recent highs and moving averages to compensate equally if not more for the previous sudden plunge.
Please do not comment after the event has already happened.
Humbly at your service
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