USA Watchdog | May 30 2012
You know things are heating up when the banks start with scare tactics. In Greece, the bankers are in full court press to sway voters for next month’s election. Reuters reported yesterday, “In a report released ahead of an election on June 17 that may determine whether the country stays in the single currency, the country’s biggest bank said the risk of Athens exiting the euro was no longer just a theoretical possibility, warning that the fallout from such a move would be dramatic. ‘An exit from the euro would lead to a significant decline in the living standards of Greek citizens,’ the NBG wrote ahead of a vote which parties opposed to austerity measures that have kept Greece in the euro so far have a chance of winning.” What would you expect from bankers who want the people to keep them in business as debt slaves? There is never any mention of pain for some gain. In Iceland, the people voted not to pay back much of their sour debt and, now, the country is in a real recovery.
I am not saying the problem is not real—it is. But what is the best way to fix it? Isn’t it funny how bankruptcy and criminal prosecution are never mentioned as a way to clear away the deadwood and start anew? Instead, the answer is always more money printing for even bigger bailouts anytime there is another approaching calamity. For example, yesterday, this story from the UK featured comments from the Bank of England if the Euro falls apart. It said, “A senior official for the Bank said the measures would ‘again play [their] part in mitigating the impact’ of Greece or other countries leaving the single currency. The comments come after the head of the IMF suggested last week that British interest rates may have to be cut to zero if the economic situation deteriorates. The Bank has already completed a quantitative easing programme, effectively printing more money worth £325billion and this may be extended again.”
Most people have no idea just how big the bank insolvency problem really is in Europe and beyond. Egon von Greyerz, who is a managing partner at Matterhorn Asset Management, said “trillions of dollars” will eventually be needed to save the financial system this time. Yesterday, Egon von Greyerz said, “The bail out for Spain’s Bankia is now up to $25 billion in refinancing requirements, but that’s just the beginning. We’re looking at country after country here where the dominos are falling. The refinancing requirements worldwide are getting astronomical, and they will escalate at a faster rate. I’ve said to you that I expect the requirements to be in the tens of trillions of dollars, and that’s just for governments. If you add to that corporate debt, private debt, mortgage debt, you are talking about sums that are hard to imagine.”
Any big money printing bonanza must include the biggest currency creator in the world, and that is the Federal Reserve. Will the Fed printing press try to save Europe? The answer is a resounding yes. Last night on Larry Kudlow’s CNBC show, former Fed Governor Randy Kruszner said this about the Fed/Euro swap agreement already in place, “They already have a big facility open with the European Central Bank (ECB) and so they actually don’t have to do anymore in order to allow more dollars to get there. The ECB just has to ask for it and it will come forward and my guess is they’ll be doing a lot of asking. I think, basically, they can get as much as they want.” Instead of Mr. Kudlow asking why the Fed is bailing out Europe—again, he was gleeful as if this was the only thing that could or should be done.
Never mind the inflation or possible hyperinflation. Just print, print, print all the digital money it takes to “fix” the problem. According to famed investor and newsletter writer Harry Schultz, the “fix” is in, and it was decided at the recent G-8 and NATO meetings, recently, in the U.S. Sunday, Shultz said on JSMinset.com, “President Obama is terrified that a financial meltdown of the Euro system will spill over into Wall Street and result in his losing the November elections. . . . The bottom line is that if Greece leaves the Euro, the contagion will spread overnight to Spain, Portugal, Ireland, and, perhaps, even Italy. So, the IMF, the Obama Administration and the ECB are all on board to further delay the reality of the financial and banking crisis through hyperinflationary measures. The idea is that the situation will take many months to fully play out, and Obama and his re-election team hope that the system will hold together past the November elections.”
There is no question the financial system is in deep trouble–again. The only question is how long can the dollar remain the world’s reserve currency while it’s abused to bail out the Western world?
- Why The ECB Will Print (dailycapitalist.com)
- Most Aid to Athens Circles Back to Europe (nytimes.com)
- The End Of The Euro: A Survivor’s Guide (baselinescenario.com)