http://albertpeia.com/needtoknow.htm
‘The markets in
Europe continue to rally hard despite the fact that Europe’s financial system
is totally insolvent.
At the center of
this mess is Spain, which now barely functions as a country. Spanish
pharmacies, owed $500 million by the government, are running out of medicine in
Valencia. Strikes have resulted in trash not being collected for 20 days in
Jerez. Over 2.2 million children live in poverty in Spain (the countries entire
population is just 47 million). In the region of Andalusia some government
workers haven’t been paid in eight months and are working for free while begging
for food.
The banking system
is in even worse shape. Having experienced a housing boom that made the US’s
look small in comparison, Spain’s banks are packed to the brim with garbage
debts which are worsening by the month.
Spanish housing
prices saw their biggest quarterly drop since the crisis began, falling an
average of 15% in the third quarter. Spain’s number of bad loans has hit a new
record, moving up at the fastest pace since June 2012 when the entire Spanish
system almost imploded. The default rate on real estate loans is an astounding
30%.
The Spanish
Government’s response during the crisis has been to merge one totally insolvent
regional bank or caja with another. Bankia, the large bank that had to be
nationalized last June was in fact the product of a merger of seven bankrupt
cajas.
Spanish banks are
drawing over €365 billion from the ECB to keep the system afloat. The entire
market cap of the Spanish banking system is only a little over €100 billion.
We’re talking about an entire banking system that is bust and on life support
from the ECB.
And yet, somehow,
the investment world is convinced that there is a way out of this mess. Spanish
yields are falling. The Spanish Ibex rallies. Spanish bank stocks are up over
10% in the last month and a half. Why? Because of more money from the ECB and
EU? Short-covering? Who knows. But there is absolutely no fundamental
improvement to Spain’s finances, its economy, or its banking system.
And sometime down
the road, this whole mess will come crashing down.
If you’re looking
for someone who can help protect yourself from this mess and even profit from
it, I can show you how. 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).
All told, 77 out of our last 93 trades have made money. In
fact we just closed our 77th this morning: a 6% gain in just TWO DAYS. 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 4% in the last week.
To find out what
they are, and take steps to protect your portfolio from the inevitable
collapse…’
Graham Summers