The European Union is toast, now it's about national sovereignity

In few words, the game for the EU is practically over:

Everyone starts to claim his/her territory and refuses to pay for somebody else.

Miss Merkel is up front, since Germany has a substantial sum of funds to loose.

Many seem to think she is bluffing with her "no European shared liability as long as I live" approach, but it reflects the honest German position.

It will be a rough weekend.

Merkel: No European Shared Liability as long as she lives

I don't think, someone will kill Merkel right here, right now, exept perhaps somebody who happens to be the PM of Italy and threatens to resign if Eurobonds (those including the shared liability) will not be agreed upon.

By the way, there is a EU summit comming up tomorrow Thursday, June 28th.

Terrifying results have to expected considering the statements made by different parties previously.

The Germans will pull out of the Euro

Ambrose Evans-Pritchard passed the clear statement which has been made at the last Euro Summit held in Rome between Italy, France, Spain & Germany:

German Chancellor Angela Merkel has shot down calls for full mobilisation of the eurozone's bail-out funds to halt the raging bond crisis in Spain and Italy, ignoring unprecedented pleas for action from the International Monetary Fund.
"The Germans are blackmailing the ECB," said one official. "They have more or less threatened to withdraw from the euro if the ECB puts one foot out of line."

In other words:

If any sort of bailout will be orchestrated in a way that it will cost Germany more money (hint: Germnay itself is bankrupt, just nobody realized yet), they will withdraw from the EURO currency.

If you ask me, there are two really big players in the room, it was just not shown that way:

Player one: France, who basically wants out of the EUR since it's destroying it's own industry.

Player two: Germany, who is not generally unpleased with the EURO but absolutely unwilling to pay any sort of funds to other countries, directly or indirectly. So, after all, they might have realized the time to pull out of the EURO is now.

It's going to be an interesting week.

Greece vote - issue or not

There seems to be a great level of carefullness ahead of parliament votes in Greece:

Some EUROpean politicians postponed their visit to the G20 meeting in Mexico until after election results are given, bank employees all over the world are not allowed to take some days off.

To sum it up: Tension is rising.

If you aks me, Greece getting out of the EURO after an anti-EURO government will be elected would be not such a huge problem after all.

The real problem for the EURO lays somewhere totally different:

Spain - Problem No. 1

Italy - Problem No. 2

Both have something in common: They are just too big to bail. Spain received some rescue money under interesting terms, Italy will soon follow in my opinion. Once these two fronts brake, it's really over for Europe.

The continent will re-emerge, I'm sure of that, but in a completely different shape and without any supranational institution like the EU giving it's orders.

The Spain rescue dilemma

Just during past weekend, Spain was "awarded" a multibillion EUR bailout in order to stabilize it's banks.

However, in my opinion, EU leaders made a big mistake, since they were in a special kind of dilemma:

Technically, Spain is just too big to bail. Therefore, it was necessary to orchestrate a special form of bailout which only concerned Spain's banks without putting too much pressure on the country itself, since the country actually is intended to be part of the ESM - plan, on the payers’ side.

It took exactly one day until another country, Greece, which had to be bailed out much earlier, asked for the same bailout term offered to spain, e.g. a renegotiation of bailout measures.

Here's the problem:

Pretty much every country will ask for better terms right now, since the dam of "austerity" has been broken just over one weekend.

After all, they are just going to print money. Or break up the EURO and go back to national currencies, which would be a much more intellegent move.

The big picture

Let's try to put the current happenings in Europe aside.

There is one really big problem all over Europe and it will play out quite ugly I belive:

The Europeans, for the lack of a better word, have basically stopped reproducing:

However, some numbers are misleading:

You have to take out the reproduction rate of migrants, since they will be in trouble as well rather soon.

What's my prediction?

All this will change, here's why:

1. Each and every system of social security (the biggest scam ever, ask Bernie Madoff where he got his inspiration from) will fail

2. During hyperinflation, which is something we will see throughout the major industrialized nations in Europe, whether the Germans like it or not, every Social Security payment of some sort will probably have the value of a leaf of bread, if you are lucky

3. Public or private pensions - forget it, the bread algorythm appears here, too.

After a period of brief transition, the racial and cultural tension this will lead to, people are going to recognize something:

After all, there is only one system of social security that works and has ever worked in some sort of un- or underdeveloped countries: Children.

And boy will they breed.

a culture clash is coming

I already stated my point of view considering the coming tension with migrants all over Europe.

However, these are just problems which will occur in different European countries themselves.

Let's take a look at the bigger picture:

We have on one hand some countries being huge industrial powers but member of the Euro Zone with some sort of "germanic behaviour" (Germany, Austria, Finland, the Netherlands).

On the other hand, you have the roman countries being members in the Euro Zone while also representing huge industrial power (France, Italy).

Third, let's take a look at some other Roman countries which are muss less industrialized however are part of the Euro Zone (Spain, Portugal).

Fourth, the cradle of democracy, absolutely NO industrial power but member of the Euro Zone (Greece).

Fifth, some rather small contries rarely mentioned, but member of the Euro Zone (Estonia, Slovakia, Slovenia, Greek part of Cyprus, Belgium).

To make a long story short:

This is never gonna work.

It is going to work even much less so, since many countries feel the Germans are trying to take over and stamp their rules of so called "fiscal responsibility at all other countries (which is totally idiotic by the way, since all these countries are more less in some sort of recession/depression baring huge public and private deficites). So called "austerity measures" are only going to make matters worst.

To say it in clear words: Basically, everybody among the Euro Zone except Germany tecnically requires some sort of high inflation / hyperinflation just to clean the system and receive a fresh start all over.

The Germans don't feel that way. They are right, considering their own country. They are terribly wrong considering all the other countries among the Euro zone. They are terribly wrong not to understand such circumstance and just mind their own business. The German Elites are doing a big mistake and it will cost them dearly.

The problem with migration in Europe

Migration, in general, has never been something unusual in Europe.

However, since the end of WW II, it got some kind of out of control.

What we witness right now all over western Europe, especially France, the UK, Germany, the Netherlands, Belgium, Italy are places and areas which are almost entirely covered by migrants and which have led to some sort of parallel universes.

It's a huge problem especially among the muslim population, who seem to radicalize more by the day.

There seems to be an issue with false media coverage as well, since many reports about crimes related with migrants are not reported or reported incorrectly. However, there seems to be some change to this recenlty.

It appears, that together with slowly (Germany, France) or rapidly ( Italy among others).

Here is my take:

Since the situation is deteriorating quite quickly over there, backlashes against the Muslims (who are watched as a non-integrated group by their own will) will occour and nobody will care.

The Muslims will work as a blow-off valve for the angered masses who are about to loose everything.

How the Euro destroys industrial capacity and variety

As written in - Why the Euro .. Part I

"Simple point: Cars: Before the EURO came, you hardly saw BMWs, AUDIs, MERCs, even Range Rovers in huge cuantities in northern Italy or France. They where simply to expensive, even for the well off and you where watched unpatriotic not to drive something “from home”."

Here is the evidence:

This Top Gear video was taken in the Mid 90s in France, featuring some street scene in Paris during the first minutes. The Video all around is quite enjoyable as well, so is the host, Quentin Wilson.

About PMs (precious metals)

I understand some of you have been asking me what the banners related to precious metal dealers are doing on my blog.

It's rather simple:

Paper money is going to die, worldwide, sooner rather than later, since all the currencies in the world are held together by one thing currently: Faith and trust.

Both are deteriorating rather rapidly.

There is just nothing tangible behind them since Richard Nixon took the world off the Gold Standard at August 15th, 1971.

Get out and buy some money that has been used for more than 3,000 years and actually bears no counterparty risk, can't be inflated, has intrinsic value, etc.

Since not many people are doing it currently (but as always, the average guy on the street is too late when it comes to investments) you might see some healthy profits compared to other goods as well, e.g. you will be able to purchase much more stuff for the same amount of money you invested in PMs now since they are going to rise in value.

Casey Research informs you about the current background in Gold prices over here.

What current prices are, you can see over there =====================>

By the way,

Voltaire knew a thing or two about the danger of paper money:

"Paper money eventually returns to its intrinsic value -- zero."

Spain is going down

Hi everyone,

Spain is going down.

Well, actually it has been that way since the real estate bubble (one of the biggest Europe has ever seen apart from Ireland, the US-bubble was nothing compared to the magnitude in these 2 countries).

http://elpais.com/elpais/2012/05/27/inenglish/1338141675_882764.html

Improvising in Spain means in other words:

Guys, it's too late to get anything in order any longer and we can't deny the level of the problem any more.

Take a look at that one, the real war front:

http://www.pigbonds.info/

The 10 years spanish bonds are over 6 % yield, without any sign to lower again.

7 % yield is known as a critical level, once passed, Greece, Portugal, Ireland had to ask for coverage under the so called "European Rescue Umbrella".

Just let me make that very clear: All these so called Umbrellas, ESM (stability mechanisms) etc. don't work.

Just print the bloody money, the way Bank of England (BoE) is doing it.

The UK does not have much industry left either, but they seem to know how to rather inefficiently handle the situation until the inevitable sets in:

Hyperinflation, currency reforms (brakeup of the EURO) etc.

The EUROpean politician are just wasting their time. And the tax payers money.

Once Spain falls, no bailout will work.

The country simply is too big to bail.

It will be: Print or die. Great choice for the ECB (European Central Bank).

By the way:

Once there is a flight out of everything stating EURO on it, voila, we will have a currency crisis.

Just this time around, it will affect some 17 countries.

They will be quite pleased, especially it's people.

Forecast:

We might not see many countries using the EURO as their main currency any longer once 2013 sets in.

How is the current crisis in Europe playing out? - part II

You've had part I, here is part II, especially considering precious metals (PMs):

Now the big point: PMs:

The people just don’t bear the necessary financial education to understand what’s going on and what the outcome will be.

Some go to the bank and withdraw all their EUR cash and stash it under the matress (fail).

Some send it to Switzerland into a bank account (fail)

Some buy real estate, currently especially foreigners and nationals in Germany, (fail), especially in big cities (big fail).

A tiny minority buys PMs, this minority (people, not central banks) in Europe is almost entirely concentrated in the German speaking countries:

Switzerland (highest purchased per capita), Germany (2^nd highest), Austria. In those countries, you also have a rather well developed net of professional PM bullion shops/coin dealers.

France, Italy, almost none. Spain, Portugal, Greece: None.

A German/Swiss Professor once said he calculates about 1 in 2000 in Germany has substantial holdings of physical PMs, which would be around 40.000 out of 82 Mio. Inhabitants in GER.

How is the current crisis in Europe playing out? - part I

Hi guys,

another extract of a conversation considering Europe's current situation, my stuff, as known, in red:

I also believe we are incredibly close to a black swan event that will make the people in control realize that they aren't in control at all.  I think the origin of this in Europe will be that the Greek people reject membership in the EU.  I get a sense that they are beginning to say to themselves "as long as I'm going to starve to death, I'd rather starve to death as a Greek".  I think nationalism is deeper than the politicos currently comprehend.  We are also noticing bank runs in the PIIGS.  What are people doing with their Euros?  I suspect not many are buying PMs because they feel they will need the cash to live on soon?  How is the situation affecting tourism?  I am afraid it will be affected by the unrest and that will only exacerbate the situation this summer.  (I heard 30% decline in Greek bookings from German tourists).

Black Swan event: Definitely close. I actually believed the new JPM “loss” would be the event, after listening to your interview I’m not that sure any longer whether they played or where played (by the EURO banks not buying “their sovereign debt”).

Nationalism: Big point, especially since the EU in Brussels overdid so much with their intended killing of the nation state. The pendulum is coming back and I think it will rather overshoot towards nationalism. Big ethnic fights against the Muslim minorities included.

Bank runs: I get rumors of such stuff from all over the EURO zone, they seem to just print (real paper) money like crazy to avoid the banks having to close and even some bigger panic setting in.

Why the Euro will never work - Part II

lets continue what I have been dealing with on Part I:

How does Europe see the US?

View toward the US:

Really hard to tell, I do have the feeling many just see the East Coast banking oligarchy and forget the real nation, almost as huge and as populated as a continent, behind it.

GS cooked the books or helped some countries cooking the books, that’s for sure. I really ask myself, how long the technocrat GS government in Italy is going to continue without raising real protest.

Greece: I really don’t know how much the media covers, sometimes some on the ground reports of people living in Greece are reported, and it’s really bad. However, out of sheer necessity many just have to go on with their daily lives, some are even forced to go back into agriculture and leave the huge cities. One thing is for sure: Greece is a bottomless pit , since all the rescue money is sucked up by the corrupt political class. Elections over there are on July 17^th. If the extreme leftist candidate will be elected, they will finally allow Greece to leave the EURO zone in order to get some stabilization into the game. However, the real battle front in my opinion is Spain from a Fiscal standpoint (no industry but huge country with by far to big banking system) and France/Italy (dying Industry).

Why the Euro will never work - Part I

Hi everybody,

the following article is an extract of a conversation conducted with a CPA serving high profile clients, my stuff is in red:

"It has long been my view that the Euro-crisis is going to trigger great social unrest if they try to hold the EU together.  It simply doesn't work numerically.  As each nation fails it increases the financial burden on the remaining nations to the point where even France fails and then France's failure is enough to cause Germany's failure.  (Germany's cost to bailout Spain alone is 17% of Germany's GDP). Is this your view also? "

Only concerning EURO-currency nations:

I think you are correct about the numbers. However, I do see a much bigger cause behind the numbers: Culture. The Germans, Dutch, Austrians, Swiss, Flanders (Dutch part of Belgium) have traditionally been savers, hard-currency defenders and are rather afraid of high inflation, especially Germany.

On the other hand, you have countries like France and Italy, which are huge Industrial powers (Italy in the north, which is oven completely overlooked, France is the 5^th Industrial nation in the world), but have traditionally used devaluation against their main trading partners in the north (Germany etc.) to remain competitive and done so rather well up to the start of the EURO.

Simple point: Cars: Before the EURO came, you hardly saw BMWs, AUDIs, MERCs, even Range Rovers in huge cuantities in northern Italy or France. They where simply to expensive, even for the well off and you where watched unpatriotic not to drive something “from home”.

Look at the streets of Paris, Milan, Torino, etc. now: All german, financed by low (German) EURO interest rates.

Simple point: It’s killing France’s and northern Italy’s industry, not only cars, but practically everything.

Spain, Portugal, …. Greece: Totally different case in my opinion, which is why I object the term “PIGS” cause it only characterizes different countries from a London Bankers’ point of view called “fiscal responsibility” without taking a look at the industry (which is not a big surprise by the way, since the UK is heavily de-industrialized).

Spain has never had a competitive national industry, so has never had Portugal and even worse Greece.

Greece came to a point in 2007 when they did not produce anything anymore, heck even the lemons (those to eat, not to drive) where imported from Argentina ;-)

Resume: This whole thing is never going to work, the sooner they end it, the better. The Germans are particularly frustrated, but I actually believe who wants out hardest are the French, since it is killing their industrial base, quite the opposite is the case in Germany.