May 10, 2012 By gpc1981
‘We have entered an extremely dangerous environment: one in which the primary prop for asset prices (Central Banks) are running out of ammunition. This will have profound consequences for all asset classes as well as the financial system at large.
This was the real problem with Central Bank responses to 2008 all along: by attempting to prolong a peaked economic/ credit cycle, they have set the stage for an even larger Crisis, one that will see the Central Banks themselves collapse along with numerous sovereign defaults.
These are the key take home points ALL investors must come to grips with:
1) Going forward the Easy Money props are going to be removed from beneath the market.
2) Sovereign defaults are coming. Whether it’s through hyperinflation, reneging on promised future social welfare / pension/ healthcare spending, or outright messy defaults (or various combinations of these) we will see most of the Western world defaulting on its debts in the coming years.
How soon all of this unfolds remains to be seen. The Multi-‐Trillion Dollar Question is whether the markets realize that Central Banks are virtually powerless sooner rather than later.
By the look of things, it’s coming relatively soon. Spain, which is now at the forefront of the Great Western Debt Default Collapse, has opted to seek funding from the mega-bailout fund, the European Stability Mechanism (ESM) rather than going directly to the ECB or the IMF.
reasons for this are clear: the IMF doesn’t have the funds (nor will it as the
Spain’s rating downgrade at Standard & Poor’s doesn’t alter Germany’s stance that banks can’t have direct access to Europe’s financial backstops, a senior lawmaker from Chancellor Angela Merkel’s party said.
German position is absolutely strict,” Michael Meister, the deputy caucus
chairman of Merkel’s Christian Democrats, said in a phone interview in
ESM funding idea is really just
German tempers boil over back-door euro rescues
Hans-Werner Sinn, head of Germany’s IFO Institute, said German taxpayers are
facing a dangerous rise in credit risk from a plethora of bail-out schemes. “The
euro-system is near explosion,” he told
“It is a horror scenario,” he said, warning that the euro system is splitting friendly countries into blocs of mutually hostile creditors and debtors, exactly the opposite of what was hoped.
this week, the Foundation for Family Business in
is the last thing Angela Merkel needs right now. Between this and inflation
Which means that the European mega-bailout funds (the
ESM and EFSF) will be much less likely to put out money for
Spanish lenders in talks over ‘bad bank’ plan
As their losses from mortgages grow, Spanish banks have begun discussions about creating a separate entity -a “bad bank” – to take on these assets and relieve pressure on the country’s financial sector.
goal of the new organization would be to reduce the financial strain on banks
and prevent the need for either a more costly government bailout or an
international rescue along the lines of
is similar to
The SoFFin is essentially
things improved, SoFFin was essentially put on hold
in December 2010. But in the last three months,
The SoFFin will give up to €400 billion ($524.24 billion) in guarantees for banks and provide up to €80 billion for recapitalization. The fund, which for the first time will accept euro-zone government bonds, will be operational until Dec. 31 2012.
The SoFFin and
This is the equivalent of just sweeping bad debts “under the rug.” The debts still do in fact exist and still pose a threat to the financial system. The markets know this, which is why Spanish banks continue to be nationalized/ under major duress.
With that in mind, I’m already positioning subscribers of Private Wealth Advisory for the upcoming EU collapse. Already we’ve seen gains of 6%, 9%, 10%, even 12% in less than two weeks by placing well-targeted shorts on a number of European financials.
And we’re just getting started. Indeed, we just closed our 50th straight winner today: a 10% gain in one week’s time.
you’re looking for the means of profiting from what’s coming, I highly suggest
you consider a subscription to Private Wealth Advisory. We’ve locked in 50 straight
winning trades since late July (thanks to the timing of our trades), and haven’t
closed a single losing trade since that time.To find
out more about Private Wealth Advisory and how it can help you make money in any market…Click Here Now!!! Best Regards, Graham
Summers, Chief Market Strategist,