Tuesday, November 16, 2010

Is Europe Coming Apart Faster Than Anticipated?

The sky is black with PIIGS coming home to roost: I was going to write my customary long and boring think piece—but the simmering crisis in the Eurozone just got the heat turned up: Things are boiling over there!

“Euro Dead” by Ryca.
So let’s take a break from our regularly scheduled programming, and give you a run-down of this late-breaking news:

The bond markets have no faith in Ireland—Greece has been shown up as having lied again about its atrocious fiscal situation—and now Portugal is teetering—

—in other words, the PIIGS are screwed. I would venture to guess that we are about to see this slow-boiling European crisis bubble over into a full blown meltdown over the next few days—and it’s going to get messy.

So to keep everything straight, let’s recap:

The spreads on Irish sovereign debt widened, and the Germans are pressing them to accept a bailout—despite the fact that the Irish government is fully funded until the middle of 2011. But it’s not the Irish fiscal situation that the bond markets or the Germans are worried about—it’s the Irish banking sector that is freaking everyone out.

After all, the Irish government fully—and very foolishly—backed the insolvent Irish banks back in 2008. And for unexplained reasons, the Irish government is committed to honoring Irish bank bonds fully—which the country simply cannot afford. However, German banks are heavily exposed to Irish banks, which explains why Berlin is so eager to have Ireland accept a bailout.

Right now, European Union, International Monetary Fund and European Central Bank officials are meeting with Irish representatives, putting together a bail-out package. The reason the Irish are so leery, of course, is that any bail-out would be accompanied by very severe austerity measures: In other words, the Irish people would suffer the consequences of shoring up the Irish banks—which is the same as saying the Irish people would suffer austerity measures in order to keep German banks from suffering losses. Also, the EU/IMF/ECB bail-out would probably also cost the Irish their precious 12.5% corporate tax rate—a key magnet for bringing capital to the Emerald Isle.

Add to the Irish worry, Greece is once again wearing a bright red conical dunce cap: They’ve been shown up to have lied again about their fiscal situation. Three guesses what they lied about: If you guessed Greek deficit, you win—yesterday, the Greek government officially revised its deficit figures: 15.4% for 2009, and 9.4% for 2010 (as opposed to an original 7.8% projection). Odds are good that these figures will be revised—for the worse—soon enough: Nobody believes anything other than Greece is insolvent.

That’s what’s going on this morning—and as a reaction, the dollar (if you can believe it) is roaring back alive: As I write (noon EST), the Euro is at $1.3511, the Pound at $1.5870, gold down to $1,333 an ounce, silver $25.05 an ounce; the dollar is up ¥83.45.

There was no specific reason why things took a turn for the worse today—but this downturn of sentiment has been having a cascading/contagion effect through the rest of Europe:

As a result of the Irish not taking the EU bail-out, Portugal’s debt started to tumble—which has everyone worried. Portugal is looking an awful lot like Greece did five-six months ago: It’s debt spread over the German benchmark is 6.5%, and climbing. Even France’s debt yield spread widened against the German bund—it costs more to insure French debt than it costs to insure Chilean debt (I guess a good “Viva Chile!” would be in order?).

The reason the entire slate of Euro bonds are tumbling is because of Ireland—but the real worry is Spain.

If Ireland and then Portugal go down the tubes, then it would only be a matter of time before Spain is next—and Spain is far larger than Greece, Ireland and Portugal combined.

If Spain goes, then it’s curtains for the whole Eurozone, perhaps even for the European Union as a political entity.

So Germany, the EU, the IMF and the ECB all want to save Ireland as a firewall, against further bond market deterioration.

The problem is, the Irish don’t want to be saved.

Ireland isn’t the only country that doesn’t want the EU/IMF/ECB bail-out of the Irish to happen. Several other EU countries also do not want any more bail-outs, be it of Ireland or Greece or Portugal or anyone else:

Austria has just announced that it is withholding bailout funds to Greece, according to Reuters. The reason, as articulated by Austria’s Finance Minister, Josef Proell, is that they are sick and tired of Greece’s bullshit. He was much more polite, of course, but essentially this is what he said. So Athens won’t be getting any of Austria’s money until there has been “extensive debate”.

Now, the Greek bailout is to the tune of €30 billion—Austria’s end is a measely €190 million: Six tenths of 1% of the total package. But for the political impact of the Austrian government’s decision, their contribution to the bailout fund could be twenty or thirty times as large. More than one government, and more than one political party, is working on slogans along the lines of, “If the Austrians can do it, why can’t we?”

Finland is another country openly unwilling to play ball vis-à-vis bailouts: The Finns have made it clear today that they are unwilling to put pressure on Ireland to accept an EU bailout. Again according to Reuters, the Finns are opposed to bailing out Ireland because of an upcoming election, and popular opposition to more bail-outs. This makes sense, especially if you consider that Finland has been helping to bail out Iceland, and the Baltic countries, especially Latvia.

Now, of course, the bitching and moaning by small-fry Euro-nations in and of itself means nothing—except for two things:

One, the European Financial Stability Fund (EFSF) needs a unanimous vote to be activated to save Ireland, or anyone else. If (and that’s a big if) the Irish finally tap this funding source, undoubtedly the EFSF would pay up—but in order to get that unanimity, a lot of political favors would have to be doled out to recalcitrant members.

And two, Austria and Finland’s objections to an Irish bailout is the visible articulation of differences that are raging privately in Berlin and Paris, and every other capital of Eurozone countries. The debate is between bail-outs, and letting the chips fall where they may.

Which brings us to a key point: There is clearly political exhaustion setting in. All these efforts to save all these small countries—Greece, Ireland, Portugal, the Baltics, Iceland—is leaving the European political leadership exhausted, not to mention leaving them out of bullets, as it were.

That’s because all these bail-outs have come at tremendous political costs, among the constituents of the nations doing the bailing out. The Finnish example—where clear and present political danger keeps the politicians from helping in a bail out—is a harbinger of things to come for the rest of Europe’s political leadership.

But even without this political exhaustion, one has to stop and consider an obvious truth: Some countries are simply too large to bail out.

What happens when Spain finally gets into serious trouble? It’s not an if question anymore—not when Spain is running practically 20% unemployment, and a projected fiscal deficit this year of 9.3%, according to Bloomberg. Just like Greece, Ireland and Portugal, eventually, the bond markets will turn on Spanish debt—it’s only a matter of time.

What will the EU and the ECB do then? Bail out Spain? Good luck with that—that’ll be like trying to hoist an elephant out of a septic tank with nothing but a smile: It simply cannot be done. Spain’s simply too big.

I think that these measures the European leadership is trying to carry out are simply postponing the inevitable. And what’s inevitable is a crash of the peripheral members of the Eurozone—the PIIGS plus Belgium. Because even if the Irish are bailed out in the next day or two, in a few months time, we’ll have another round of panic, this time over Portugal. And by next summer, it is going to be Spain—inevitably.

If Ireland is not sorted out—which at this point is in fact highly likely—then the Euro-bond market might well crash in the near-term, bring down not just Irish debt, but Portuguese, Spanish and Italian debt as well. Maybe even French debt. And that would be curtains for the Eurozone—maybe even the European Union. 

In my post just last week, The Tidal Forces Ripping Europe Apart, I argued that the stress of over-indebtedness coupled with an unwillingness to take haircuts and restructure the sovereign debt would rip the European Union apart.

I argued this would happen—I just didn’t think it would happen so soon . . . 

54 comments:

  1. Fiat money of the western variety is doomed. They're all going down the toilet, but who defaults first: UK, Japan, Eurozone or U.S.?

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  2. GL-
    I suppose if the Eurozone goes their own way, in a year or two, it derails the anti dollar reserve effort. Who are the Chinese going to team with then? As ugly as the dollar is, she may be the only girl with a figure. The others may just not be tempting once the dust clears. Truth is always stranger than fiction.

    Of course - the metals market will not like this as - the USD is really ugly guys in drag, and these guys like crack, not gold or silver.

    There is a train wreck around every corner.

    Jeff T

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  3. 1. the euro will crack down when germany leaves-they are the only net paying party.
    2. the "net payer" has always left
    3. german banks (deutsche, HRE) are heavily invested in Ireland and the weakest among the eurozone (contrary to the state of german industry)
    4. bundesbank is preparing a seperation of the euro, the new deutsche mark is already printed
    5. ireland is done
    6. when spain or italy falls, the whole game is over, the can't be bailed out-by anyone
    7. my guess is they take the system down at the same moment in the US and europe.

    THX

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  4. Hey Gonzalo ...

    I loved that metaphor ...

    "that’ll be like trying to hoist an elephant out of a septic tank with nothing but a smile"

    Good one!!! :-)

    The ECB needs to recognize the leprosy of serious contagion in the bond markets now, and realize they cannot head it off with half-measures. It boils down to two choices for Trichet and his band of merry men:

    1. Tell countries like Greece, Ireland, and Portugal (but not Spain) to take a hike. They did not belong in the union in the first place. My guess is that the ECB should draw the line at participation with Spain. Let Spain stay - but jettison the small fry now - and pray this works.

    2. OR else the ECB announces the "unthinkable" - its own version of a massive Quantitative Easing package. Just like Bernanke's version - no sterilized money operations this time. Flat out printing of euro's to bail out the PIIGS.

    Which step do you think they will take?
    I'd vote for #1.

    cheers,
    PeteCA

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  5. Thank you for another fantastic post.

    Count deKuntier

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  6. From Bruce Krasting at Zero Hedge

    http://www.zerohedge.com/article/us-eu-%E2%80%93-drop-dead

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  7. Hmm, I'm reminded of the book "How The Irish Saved Civilization." Well, they can save it again, if they have the courage to withstand the pressure.

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  8. The PIIGS will do what the USA is doing, and keep "Kicking The Can"

    However, the day of reckoning will come and the likely options are:

    1. Default on some or all of their debts
    2. Pay higher interest rates
    3. Cut spending
    4. Withdraw from the EMU
    5. Raise taxes
    6. Withdraw from the EU
    7. Wait for a bailout by the ECB.


    All numbers apart from 6 & 4 are my prediction.

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  9. The entire fiat monetary scam of the Western Bankers is an immorall ponzi sheme which is crashing. Even if these attemps to prop it up delay the inevitable for a time, the end will be the same.

    As painful as this collapse will be, the result will be a return to sanity long over due.

    With this collapse will go the socialism which is a system of government control and lose of true freedom.

    It will alsoo bring about the end of the American Empire and leave the U.S. the option of returning to a freedom loving Republic, based on the solid principles upon which it was founded and later abandoned. It is the only way that the U.S. can ever regain its stature of a once great country and an example to the world.

    Hitting the reset button is the only way to rid the planet of the totally corrupt governments enslaving their people. and all free people.

    Let Freedom ring.

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  10. When shit hits the fan the crazies are the most likely group tp grab power. Like fascists, commies and the like. Don't expect common sense to prevail when an economy collapses.

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  11. and then we can all reign in the land of lollipops and gum drops & sunshine until jesus finally returns, right anonymous?

    Face reality. The US is over.
    And when this whole system goes, they'll impose an even worse, the new global, one-world system

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  12. I love the thought of the DeutscheMark coming back. I was living in Germany when this E Yeeeeew BS first started. Could not believe it then, No one would hear a negative thought about it. I sit here broken spirited but with a grin on my face. Turkeys.
    Same with the Laffghan mission. No one would hear me in the beginning regarding its utter ridiculousness and stupidity. RAH RAH WAR! they fulminated. My grin has changed to a smile. Idiots.
    Hug your kids if you have any. Don't want them slapping you around when they are old, as I fantasize about doing with mine.

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  13. I've enjoyed three trips to Ireland where I was able to do some exciting watercolor landscape paintings. All up, it was like a trip through the most remote parts of the USA, serene and casual like a kid's picture book.

    Following the ill-fated "computer revolution" & some subsequent property development, (aka: MacMansions,) I would say y'all should positively declare war on Europe, just as Iceland has had to do.

    Tell the IMF an American suggested "they should stick it where the sun don't shine!"

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  14. I'm a renter.

    With inflation certain, and hyperinflation likely, shouldn't I be buying a house right now?

    Some gold/silver investors are suggesting that I should hold out for 3-5 years, then cash in my precious metals for real estate and get a better deal. I don't understand quite understand.

    Isn't it better to take a 30 year, fixed rate mortgage now on a $300,000 house and then get most of the house paid off through dollar inflation?

    I'm confused.

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  15. A thought for Bernanke seems to be in order.

    Just think about it! This guy is doing his best to crash the dollar, and everytime he comes with a brilliant new scheme, like QE 2 recently, something trashes his party!

    And generally, it's the euro!

    Of course, poor Bernanke doesn't get much help from the herd of brainless sheep, grazing in the great plains of the financial markets.

    As soon as the wind turns, this herd abandons everything and runs to the dollar, right at the edge of the cliff, where Bernanke has pushed it.

    These lemur-like sheep are ready to follow each other (and the dollar) over the edge, like automatons.

    In the meantime, those who kept calm, watching the stampede with a look of disbelief, just have to pick up the gold, silver and other commodities left behind by the panicking herd.

    Life will definitely be better once the world rid of fiat money and its herd of worshippers.


    Click on my name to visit my blog.

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  16. To Mel:
    You really should study hyperinflation and where the money goes. Houses fall and cars fall in prices. People spend 90 some percent of their incomes on food. They walk from homes, sell them for nothing. It is happening right now. A $300 home may be worth $30 to $50K in 2 to 5 years. We were just in a huge housing bubble. It takes time to deflate. You best place your $ in physical food and physical precious metals, not on a bet 'against the odds' on a home that you are locked into for 30 years. The banks would love you to commit to a 3% loan in a zero interest rate market. You would put maybe 10% down and likely be tempted to walk from your home in a year or two. U would lose that money u put down and your credit is shot. Homes will be vacant. Vacant homes mean supply demand demands lower costs form rent. My home went from 300K to 500K in about 2-3 years, and then back down to 300K in another 2-3 years. (I live in California) Its going to fall farther. I think this is why the banks haven't foreclosed on all these properties, to make the market appear better than it is, to keep their books looking better. Similar to manipulating silver and gold to make the dollar appear better. Put your money on being self sustaining for the next few years, food, REAL money (not paper) and rent while the housing market stabalizes. That's my two cents. Educate yourself daily to make informed decisions. I love Michael Maloney's book Investing in Gold and Silver. It was a great review of history, much of what I was unaware. Good luck.

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  17. 2 more cents for Mel:

    You mention paying off your home with inflated dollars... Do you have a job that flows you extra dollars in an inflated currency? Does the Fed flow some of his QE2 directly to you? If you don't know how you are going to get extra dollars with the Feds Quantitative Easing (BS) then you likely are not getting any shares and it will only effect you negatively as it will most of us. It's not having the trickle down effect that they say it does.

    Unless you own metals that go up in value and have stored food to eat, you will likely end up in the bread lines, starving and broke. In the last moments people run to put their 'hot-potato-dollars' that they have left that didn't get squashed by the system, into something of value like food, before it is more expensive next week, or the next day, which also drives the prices up.

    Gonzalo: I love your articles. I won't be able to see your on-line presentation on Hyperinflation. I am hoping you will post it.

    I also love what you wrote, I sat back laughing, digesting and relishing...

    "that’ll be like trying to hoist an elephant out of a septic tank with nothing but a smile"

    (and hoping I can pull it out and use it, in the perfect moment) Thanks for your wisdom. :)

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  18. grab the rug, Bernanke and the private corporations--central bankers--0f the world are
    pulling off the the greatest scam, "fractional
    reserve," banking....and laughing all the way to the bank. money changers and congress need serious prison time.

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  19. RE: Austerity Measures

    In ireland we have allready been hit with austerity measures and we accepted it, we are also prepared to take more pain to save our country as long as it is fair. A lot of people here want the IMF to come in and fix the mess. The government are desperate to cling on to power and not been seen forever as the party that destroyed ireland and its independance. It is not the irish people who are the problem, it is five or six people in goverment holding us all to ransom to protect their ego's. So it is not 'the irish' refusing the bailout it is the irish government, please dont confuse the two asw they are not the same. Our government agreed to bail out the corrupt banks bankers and developers who caused the mess, nobody asked the 'irish people' if they had, this would never have been allowed to happen.
    Bring on the IMF and bring down out corrupt useless destructive government.

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  20. EU enlargement negociations
    President Boris Tadic of Serbia : “May I join you”
    President HermanVan Rompuy of the European Council : “Why, am I becoming apart ?”

    :-)

    Apart from this: Ireland is not a PIGS of the herd like the "Club Med" member states. Its problems are much more like those Iceland has been going through: an oversized banking sector with loads of bad credits in a relatively small country (even Portugal has twice the Irish population).
    Besides, until very recently Ireland was named "the Celtic tiger" because of its feverish economic growth rate, another similarity with Iceland before the bust.
    If the EU is offering to help the Irish out, self-interest is one reason: in case the Irish would abandon their collapsing banks, default contagion would spread across the banking sector in the rest of the EU.

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  21. How and where, of course, does SWITZERLAND play
    into all this ?

    Are they absolutely immune again from world turmoil ?

    Anybody got a real world answer?

    P.S. Great article !

    - Shipwrecked
    Akron, Ohio

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  22. Clever BABY! These small wars are not fixing the system beside they are not winnable. We need a very big one.Western EVILIZATION cannot survive any longer without the big one. Fuck capitalism and its communism partner.
    Jamal Shrair

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  23. Buy gold, buy silver !
    Fiat USD, Fiat EURO will be TOILET PAPER !

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  24. The quicker the eurozone fails, the better. Ireland is my ancestral root, I would love to go and visit there but it won't happen yet. The EU elite don't care what happens to countries or the people in them, they are only interested in maintaining their dream of world supremacy and control of the European nations.
    We in the UK detest everything that is currently happening within the EU political structure. We do not want to be ruled by a foreign power from Brussels.
    Why does Ireland not fight to leave the euro? It will still be chaotic but surely it would be better to go back to your own currency instead of prostrating yourselves before the IMF?

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  25. Look, What these politicians never tell you is that the process which formed the Euro currency is reversable. The Wikipedia article on Euro banknotes and their serial numbers show this. If there were any problems with defaulting nations, all the people would have to do is to highlight the first letter digit and maybe stamp their country code on it. (Eg; Ireland IRL Holland NL, Etc.). Then the different note could either "float" in exchange value or go back into group of banding like the ERM (European exchange mechanism) That preceded the hard currency Euro. Bank to bank transaction could also be done by using €NL, €IRL and so on.

    The real threat to the ambitions of the EU project are national sovereignty and democracy and not from defaulting nations. Letting the Euro float as national currencies would be bad for the EU project but it isn't the end of the world for the Eurozone people. They been here before when they had their own national currencies with a variety of pegging. It's de-facto the same thing when a national Euro is marked and identified as issued by a nation. It's only eurocrats that will have eggs on their faces. Polls show that a sizeable majority of Eurozone people want less centralised control from Brussels. The answer is right there on all the notes just waiting to be used as a solution.

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  26. Same problem in the US. Fake paper money issued by private banks, yet another violation of our rights. Add it to the list of gov’t violations of our right:
    They violate the 1st Amendment by placing protesters in cages, banning books like “America Deceived II” and censoring the internet.
    They violate the 2nd Amendment by confiscating guns.
    They violate the 4th and 5th Amendment by molesting airline passengers.
    They violate the entire Constitution by starting undeclared wars for foreign countries.
    Impeach Obama and sweep out the Congress, except Ron Paul.
    (Last link of Banned Book):
    www.iuniverse.com/Bookstore/BookDetail.aspx?BookId=SKU-000190526

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  27. None of us anticipated how quickly the wheels will come off.

    Reading this, it occurred to me there was something needing discussion: perhaps the Euro, in these extreme debt conditions, is a hindrance that will need to go away.

    If Spain and Portugal and Greece can't "pull a Bernanke" like they used to do in these conditions...then perhaps even capitalism fails.

    Perhaps having your own currency is a must for a capitalistic economy...because with the masses in debt...only cheaper prices allows them extra purchasing power. And printing up your own currency to play "begger thy neighbor" by making your exports cheaper allows exactly those conditions of healing lower prices.

    Without which you just transfer debt around, and around, and around. And like musical chairs....someone ends up standing in a pile of stinking debt no one will purchase.

    Just a thought.

    farang

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  28. EU is at its birth..full of flaws as it is, it's constantly changing and growing..I call on all of you to translate your rebellion towards the system (in any part of the world) into a burst of creative energy, burst of communications and information sharing worldwide. that's what's happening with david icke, he's one of the many that recognise the problems of this planet at their core. you all people are being ever more thirsty for information and knowledge, you want to upgrade your minds and your capabilities from level to level, just as in the pc games...thousands and millions of david ickes are all around you, hidden, disconnected, waiting to be found, heard and reconnected to an awakened state of mind. this is what's happening. NWO can't stop it, they're just another human mutation, bad genes and they will be consumed by the energy of the peoples of the planet Earth. so please everyone, concentrate your will and energy to a building process in your communities for those communities will form the ultimate one, sometime in the future. you gotta believe. and about Europe.. as a continent with its hundreds of millions of citizens whose personal and collective development was always disturbed by the flaws in human behaviour: wars, greed, thirst for power, control,,false ideals ans so on..EU is two things: first it is a set of ideals really worthy of respect and attention and the second, it is a battlefield of people like u and me and those that are trying soo hard to take the control of the whole fucking planet. they fight with all the weapons that coorporate industries and science can produce and WE fight with only two weapons, knowledge and love for all the mankind, this planet and this universe-endless reality with the endless possibilities. Europeans won't loose the fight neither will all of you! greets from Croatia

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  29. The ECB does not want to act like a central bank for the Irish banks, it wants to give the money to the Irish government first. Therefore, its no longer the ECB underwriting the black holes masquerading as banks in Ireland... but the Irish taxpayer and given the huge amounts of money need -generations of Irish taxpayers.

    Instead of re-structuring of debts and defaulting on a certain amounts of them and therefore sharing the pain in some sort of equitable manner between the public of Ireland (Irish Governments guaranteed banks) and private investors (German Banks), the solution the ECB are pushing for is to pay off debt with even more debt in a large scale pyramid scheme where the Irish people will be the patsies

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  30. Another Good Piece GL. Thanks. What we are seeing here is just another required "expansion" in order to keep the Oligarachy Scam Going.

    It started with individual countries and peoples as far back as teh Romans diluting their Gold Coins to take from the many to support the few oligarchs.

    As we evolved, teh scams did as well. The fiat systems were backed by gold, then taken off, fractional reserve banking of creating money out of thin air, then the oligarchy expanded into various Government Bond debt and now that it has all gone to shit the GIG is UP......Or is it?

    I beleive this latest will try and be "expanded" by a New World Order the Oligarchs will call it. It is little more than an attempt to expand again by taking ALL THE WORLDS' peoples.

    I hope it fails at the outset because it will ultimately fail and in such a way as the finger pointing / ideniticaiton of the root causes will be impossible adn that is what the Oligarchy are seeking.

    I say hoorah Ireland. Let the oligarchs eat their bonds. Hell Argentina has done it many times and still survived.

    The Irish may once again save the World.

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  31. Great article. Just say no to the one world central bank. Just say no to regional or a single world currency.

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  32. this must be another propaganda site because you deleted my comments and reference to freedom-school.com....WHICH CONTAINS THE TRUTH, and all answers related to the mess we find ourselves in.

    And you want a donation? For what? Censoring. I can go to the major media for that!!

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  33. Thanks for the post GL. I feel like I'm watching a tragic accident in slow motion with a terrible and certain outcome that I know I don't want to watch but I am mesmerized anyway. All the things I was taught about economics banking politics and government seem to be seriously in question. I am past 60 BTW. I believe that the US will survive Bernie Geithner Paulson Bush Clinton etal because at the end of the day we are still Americans and the things that bind us together as a people can not be destoyed by these one worlders be they in banking politocs or both.
    Rock on tea Party.

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  34. The Irish Bailout is pretty easy to understand. It's all part of the Rothschild Inter-Alpha group bailout of bankrupt RBS and related Irish and EU banks. It's all the same thing too. MBS and CDO derivative swindles. They've been bluffing governments for centuries. Santander will really be a much bigger deal in Spain when they get around to exposing that insolvency. The world has been run by a shadow global banking dictatorship for 70 years now, and you're just seeing the backend bailout of the latest and greatest con, which is really more like public funding of fraudulent earnings. Pure taxpayer extortion or "taxploitaion" as we call it. Wall Street's in on it of course. Rothschild over there, Rockefellar over here. Go to UKcolumn to get a real handle on the Brit's middle class viewpoint. That's a very ballsy British site that sees what's going on and lays it out. Here in America, we do the same at letthemfail.us

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  35. You can always tell when things are really bad - bring on the "diversion". Here in the UK the papers & TV are full of "The ROYAL WEDDING"

    "Never mind what's going on over there - look at this!!!"

    The Euro was always destined to fail due to the diverse nature of the economies of the participants - you can't mix oil and water and expect it to stay mixed for long...

    So what next? The only solution would appear to be to either revert back to independent currencies and allow them to float or, as is being quietly suggested, banding countries into Euro and Euro+ valuation categories, artificially producing a controlled currency float for selected economies.

    Or will it be option 3 (when things get REALLY bad) The IMF World Bank replacement currency to cure all ills, stabalise economies and encourage free trade across the Western World, all in exchange for a magical debt write off and system reset...

    Duro? Doluro?? Eurollar??

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  36. we're wasting our time debating this fiscal nonsense. screw the bankers and politicians. john locke once said that true wealth was in a man's labor. face it industrialism was a failed business plan. production models based purely on efficiency degrade man and destroy communities. carpenters, farmers, tailors, cordwainers...let's get back to the business of producing our own goods in our own communities.

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  37. I live in Ireland and i would like nothing better than to see us leave the euro we can make it on our own we dont need them yes we will have some hard times for a while but in the end we will win through without europe.

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  38. All is good the trian might be comming off the rails with us aboard but guess who,s sitting pretty. Yep you got it the bankers who created this mess, for the final I think they have something special like a good old fashioned war that sorts things out, and then you get all the goodies like new energy solutions. because we all know good things come from wars like the jet engine :)

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  39. The sad part is that the world economic collapse will be widely perceived as a failure of capitalism, which the common man understands to be the corporate-socialist fiat money ogliarchy we are currently victimized by. I hope Jesus comes soon, and restores the world to free markets and the gold standard. At the very least, I wish he would buy up all the copies of "America Deceived II" so this guy will quit spamming us. I don't ask for much.

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  40. I don't care how bad the US paints the EU as being financially worse off, yes, the EU are in trouble, but the US is in much more trouble than all the EU countries combined, yet few in the know will admit this!!

    Just wait until the sht hits the fan and the money runs out and the Fed can't or won't print anymore dollars, then you will see.

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  41. Look at the bigger picture! We are All in the Same boat! The peoples of all the nations are being assaulted by the elite!! It's time to join together, all the peoples of every nation. Together we can win!!

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  42. Rob I agree this is THE perfect oppurtunity for all nations to set aside our differences and join together and throw out those in "Power" and create a new world which is not built on corruption and greed but of peace and love. We don't even need a majority just a persistant minority to creat change!

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  43. THE OBAMA CODE

    The wolves sure know how to oHOWLma
    At the news which can make me oGROWLma;
    I'll never throw in the oTOWELma
    If we can get rid of oBOWELma !

    [Google "Madam Nancy Pelosi's Brothel District," "Michelle Obama's Allah-day" and "Obama Fulfilling the Bible."]

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  44. Does anyone TRULY see the BIG picture here? Illuminati and the real controllers of this world are enjoying their final push for the New World Order- their dream to bring back the glory days of ancient babylon. 1 world governance, 1 world currency, 1 world religion (Satanic oath/worship). This micro-chipping for the masses of human sheepels is well underway! As with anything they do, it'll start out small, in a form of a chip within a card, then it'll transform into implanting it into the human cattle. If you think what I'm telling you is totally insane, you better go and do your research on what's really coming. Oh, and watch out for another 9/11 style attack, accept this is going to be far worse, and would help justify their push for more wars and totalitarian fascist style regime on the masses. TOTAL CONTROL!!! Now go do your research, in the right places...

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  45. @MEL
    Here's my take on it (without knowing your financial situation). Gold is expected to hit $8000/oz (by 2013-2015). Silver should be $400/oz. As I write spot silver is $26.45/oz. If you buy 750 oz of silver today (at £29/oz) that will cost you approx $22K.

    The historic gold/silver ration is 1:15 i.e one ounce of gold buys you 15 ounces of silver. Today the ratio is 1:52. The ratio is expected to revert back to the historic 1:15 buy the time this bull market is over.

    At a gold/silver ration of 1:20, gold at $8000/oz gives you silver price of $400/oz.
    So if you have the cash to buy the silver bullion you could well be getting your house for $22K (invested today) or 750 oz of silver. No mortagage to worry about and no interest to pay to the greedy banksters.

    If you want more information I suggest you watch Mike Maloney's goldsilverDVD. Visit www.goldsilver.com

    Read about silver here:

    www.silverseek.com (click on Articles for last 10 silver articles)

    www.321gold.com(news analysis reports etc)

    www.kingworldnews.com (breaking news - excellent site)

    www.inflation.us (watch the videos 'End of Liberty' and 'Meltup')

    Youtube channels:
    www.youtube.com/maxkeisertv
    www.youtube.com/thebobchapmanchannel
    www.youtube.com/geraldcelente
    www.youtube.com/whygoldandsilver
    www.youtube.com/singletreefilms (watch the uploaded videos)

    If you agree then start buying Silver and Gold!
    Personally, I am buying silver and gold and looking to build my own home around 2013-2015.
    Checkout:
    www.CalEarth.org
    You can also search youtube.com for 'Eco-Dome Homes', 'Earthbag Homes', 'Earthship Homes'.
    Eco-dome/earthbag homes are earthquake/hurricane/fire/flood friendly homes built with natural materials! All you need is LAND! The best thing about them is anyone can build them! Workshops are popping up all over the world. You can also get training from CalEarth in california.

    Good Luck!

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  46. As an American, in my experience, whatever the banksters want, the banksters get...maybe the Irish, or the Finns or the Austrians have the sense and will to say NO to bailing out French and German banks by bailing out PIIGS countries...but right now I don't get a sense that there is a clear, screw the bank debt mandate from the Irish.

    Politicians will only represent the people over the banks when they are forced to by overwhelming pressure, be it cultural/peer pressure, threat of mob violence, etc. So far Greece and France have resisted their people protests, and those folks are the most willful, protest happy countries, light years ahead of US in organized response. Don't be fooled by coverage of Tea Party protests at health care debates. While American opinion on health care reform is split in polls because lots of the opposition came not jsut from conservatives who wanted no change but lots of opposition came from those that thought it should have gone farther, lots of folks okay with it. Compare the attention the minority completely opposed to change got compared to the vast majority that were 90 percent against our bank bailout, against TARP, against AIG counterparties being made 100 percent whole, agianst big bonuses at banks that should have failed and yet the small shouting matches at health care forums got more attention. Everyonen, black and white, religious and secular, poor and uppper middle class, conservative and liberal opposed the bank bailouts, but our Repub Pres and Dem Congress passed them. No shouting matches, no massive street protests, we just took it.

    Someone is going to have to tell the banksters NO a lot more forcefully than any country has to date, and it sure won't start with US, and even Greek and French people didn't win their protests that went way beyond anything US population could ever agree and organize to do.

    The only thing that gives me hope is gets more difficult and expensive by the day to bail out banks. Ireland implements austerity, but economy still tanks it and net is as much debt as before, so how do the Irish people come up with 70 billion for banks? when shutting down half their govt and paying all their income tax for 5 years to them sill doesn't save the banks?

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  47. Another incompetent and ignorant rant by GL...

    Just like the Fed, the ECB can print an infinite amount of money - they are just a bit less willing to do so.

    Ireland will be bailed out. Portugal will be bailed out. Spain will be bailed out. The EU will not fall apart.

    The only thing that will suffer will be the life standard of the Europeans. High inflation (but no hyperinflation) for many years will destroy the middle class and will cause increased political radicalism.

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  48. Gee, why don't you posters all cheer up? End of the worlders, jezus jumpers, illuminati lovers, mutant proof bomb shelter builders, gun and golders, etc.
    Go walk your dog, weed your garden, have sex with someone. GL just writes what he sees, as you all do. Some of you are blind of course, but you still write what you see.
    If all you see is hate and negativity and the end of the world, you might consider shutting the hell up and quit raining on everyone's parade.
    If the world ends tommorrow or next month or next year, babbling in endless negative rants serves nothing except your own ego.
    Get off your computer and go get laid or drunk or be nice to your kids, or if none of those are options, go outside and let the light shine on your skin and burn off those cobwebs and fungus that accrue from sitting in your bomb shelter all day.
    Life is out there. If disaster is coming, prepare as best you can, but don't worry about C.H.U.D.S or One World Bankers coming to collect, you won't have time for any of that. Enjoy yourselves now.

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  49. Anonymus
    Another incompetent and ignorant rant by GL...

    Sure and all is well in Anonymus's Wonderlands world.

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  50. Well as usual I thoroughly enjoyed GL's EU piece--got a lot of amusement and chuckles out of the descriptions and I am
    relishing the undoing of this experiment in "one world" governing. Ambrose Pritchard Evans or is it Ambrose Evans Pritchard? has an excellent companion piece on the EU's death rattles to this one. At the jsmineset.com site today one contributor suggested that maybe the EU's top mucky mucks' insistence that the small fry members accept the bailouts had to do with trapping them into the union via indenture--Jim Sinclair agreed that this was likely true. And Mel I think you should put your money into assets
    that are rising (gold, silver and their shares) and DO NOT put your money into assets that are
    declining in value (real estate). Caroline

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  51. The Tower of Babel: The myth or the parable or the
    Biblical story of the Tower of Babel explains why
    organizations like the EU are doomed to failure and
    the non Biblical view ( for those who shun any ancient Biblical wisdom) as espoused by CS Lewis also explains the EU's situation: "No clever arrangement of rotten eggs will make a good omelet".
    One trouble with these arrangements for a "New World Order" is that they pave the way for a One-World Ruler" (David Jeremiah) and as Ambrose Evans-Pritchard has highlighted--the rules of democratic process have been thrown under the bus in an "ends justify the means" approach of those elite at the top. Caroline

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  52. The comments mostly make me laugh. From wild conspiracy theories to absolute certainty for opposite outcomes! No one knows the future. For those who are certain fiat currencies will fall and precious metals will rise -- well maybe -- but precious metals can be manipulated too, and have been. Unless you have assets you can lose, I suggest diversification and caution are more wise than speculation, in any one sector. This includes precious metals, but not solely.

    I certainly agree that the banks should not be bailed out and should be allowed to fail. Governments should not bail out rich people who make bad investments! Capitalism rewards a good investment with profits and penalizes a bad (or speculative) investment with losses. (I don't necessarily like capitalism, but it is the system we have, and these are the rules!)

    Finally, the European Union has problems which are well publicized, but people are ignoring the problems in the US. Many big states, such as California, are essentially bankrupt. Economically, California is as big a player in the US economy, or bigger, as Spain is in Europe. If I had to bet on one or the other of the fiat currencies, I would take euros over dollars. (Though Scandinavian currencies might be safer!)

    Larry

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  53. By Leaders Announced Agreement, Ireland and its banks received a seigniorage bailout from The EU, IMF, and the UK on November 22, 2010. This lending establish the UK as a fully integrated part of a European region of global governance, and disannulled the sovereignty and nationhood of Ireland.

    Jean Claude Trichet, Dominique Strauss-Khan and David Cameron are now Ireland’s sovereigns and seigniors. Their supranational budget rules impose regional global governance, specifically economic governance, upon Ireland. The bailout clearly constitutes intensified fiscal federalism in the Eurozone, and unifies not only Ireland, but the UK into a European region of global government. The Leaders’ Agreement waived Ireland’s national sovereignty. It is no longer a sovereign nation state. This is simply part of the vision of the Club of Rome in 1974, when it called for the creation of ten regions of global governance. Ireland’s budget is now directed by others from outside and this means more internal devaluation, that is more austerity.

    International Monetary Fund chief Strauss-Kahn, in a speech at the European Banking Congress in Frankfurt, Germany, spoke of sovereign crisis according to Phillip Aldrick of The Telegraph. The crisis is now held in abeyance, it has not been abated.

    There is a trigger for all things economic. It was German Chancellor Angela Merkel’s call for a Permanent Crisis Mechanism, a commonly accepted tool which would be used in the event of a sovereign default, as Econogirl reported on October 28, 2010, that lead to a blast higher in periphery European sovereign debt interest rates in November 2010, as well as a run on Ireland’s banks, that brought about the negotiation of seigniorage aid for Ireland.

    I ask why would Mrs. Merkel suggest such a thing? I believe it is because the Germans, knowing that they have a strong and export productive economy, can do without a common currency. The announcement of Germany to push for the Permanent Crisis Mechanism, together with the Basel III requirements is the kiss of death for all of the all European Financial Institutions, EUFN, and accounts for the 4.5% fall in Banco Santander Madrid, STD on November 22, 2010. Lending via European banks died, November 22, 2010 with the announcement of a Ireland bailout agreement.

    In as much as Mr Strauss-Kahn says there is a sovereign crisis, I believe a sovereign will arise to address the crisis. Perhaps this person will be Herman van Rompuy.

    And I believe the sovereign will be accompanied by a seignior, an old English word meaning top dog banker who takes a cut. He will provide credit seigniorage to all European Financial Institutions and corporations and persons residing in the currency union.

    And in so doing he will command great authority. An example of such authority is EU’s Economic Affairs Commissioner Olli Rehn’s October 2, 2010 statement in FT article, Ireland May Have To Sacrifice Low Tax Status: “In the coming decade, it’s a fact of life that after what has happened, Ireland will not continue as a low-tax country, but it will rather become a normal tax country in the European context,” he said.

    I believe the seignior (perhaps it will be Mr. Rehn), will pave the way for a global currency system, to replace all current currencies, as they expire in the current bout of global debt deflation that commenced that November 5, 2010, when the currency traders sold most of the world’s currencies, as the bond vigilantes sustained the Interest Rate on the US 30 Year Government Bond above 4%, causing the US Dollar, to rise.

    Evidence abounds, and is clear, cogent and convincing that fiscal seigniorage has failed in Europe. As the end of credit approaches, then a Supra Government, of the Sovereign And Seignior, will be the Federal Government of Europe, and sole fiscal and credit seignior. This triune power will be the first, last and only provider of credit in the Eurozone.

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  54. I keep wondering what the ripple effects will be here in the USA of the European turmoil. At some point, the bond markets are going to awaken to realize that US debt is just as toxic as the debt of some European countries.

    They seem to have already awakened to that eventuality in the U.S. muni bond market. Even corporate and US government debt have dropped in value somewhat, despite the Fed's irresponsible QE2 treasury purchases.

    What are the immigration policies of Chile? I have been wondering.

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GL