http://albertpeia.com/lastpushbeforebigcollapse.htm
‘With most of Wall Street on vacation, those few traders manning their
desks are taking advantage of the low volume to push the market sharply higher.
This, combined with a large move up by the Euro has pulled the entire risk
trade up forcing the US Dollar lower.
This move was to be expected on some levels. Since 2002, there has been
a rally from just before Thanksgiving until the second week of December. This
year is shaping up to replay this move. Stocks and other risk assets were
certainly oversold from the preceding week and needed a breather.
However, from a larger perspective there is no shortage of truly
horrible developments in the world. EU budget talks failed to accomplish
anything. This comes on the heels of failed Greece debt talks from last week
(there is another meeting next week on this).
Meanwhile, France has lost its AAA credit rating, Spain’s bad bank plan
has been dropped due to lack of interest. And then there is Cyprus Portugal and
soon to be Italy’s issues to deal with.
At the end of the day, the whole issue in the EU boils down to whether
or not Germany will foot the bill for everything. The fact of the matter is
that it won’t. If Germany were to agree to fund things as they are (assuming
nothing worsens in the EU), it would amount of over 30% of its GDP.
Never in history has one country issued a transfer of that amount to
another. The single largest transfer in history (on a GDP basis) was the German
Marshall Plan, which represented only slightly over 6% of US GDP.
So forget about Germany writing the check. There will be political
machinations and games played to maintain the house of cards that is the EU…
but when push comes to shove, Germany will leave before it foots the bill for
everything.
And then of course there is the fiscal cliff in the US: the single
largest tax hike increase in US history (on a % of GDP basis). Ignore the media’s
spin on this, no one has a clue how to fix the problem, largely because math is
not partisan and we’ve been living beyond our means for far too long to fix
this with one deal.
The reality is that what we are witness today is the collapse of the
welfare states of the developed world. The real solutions (defaults both
sovereign and on social spending plans) are completely unsavory from a
political perspective, so politicians will do all they can to avoid what
actually needs to happen.
In simple terms, the great debt implosion has begun. It will likely take
several years to complete, but what’s coming will make the 2008 debacle will
seem like a picnic.
This is why I’ve been warning that 2008 was just the warm-up. What is coming
will be far far worse.
If you’re looking for someone who can help you navigate and even profit
from this mess, I’m your man. My
clients made money in 2008. And we’ve been playing the Euro Crisis to
perfection, with our portfolio returning 34% between July 31 2011 and July 31
2012 (compared to a 2% return for the S&P 500).
Indeed, during that entire time we saw 73 winning trades and only
one single loser.
We’re now positioning ourselves for the next round of the Crisis with several
targeted investments that will explode higher as the EU crumbles. Already three
of our picks are up more than 5% in the last week.
To find out what they are, and take steps to protect your portfolio from
the inevitable collapse…
Graham Summers’