The EU Has Already Broken Up… They Just Haven’t Formalized Yet

Phoenix Capital Research's picture


I’ve often been labeled as “Gloom and Doom” in the past, but the situation in Europe today is beyond anything I’ve ever seen before. It is highly likely that the EU will not exist in their current form by the end of the year


I realize some of this may sound overly dramatic. But the following should give you an idea of how serious things are getting:


            A Vote of No Confidence in Europe


Germany and France's joint proposal to allow Schengen-zone countries to temporarily reintroduce border controls as a means of last resort might sound harmless. But doing so would damage one of the strongest symbols of European unity and perhaps even contribute to the EU's demise.


Germany and France are serious this time. During next week's meeting of European Union interior ministers, the two countries plan to start a discussion about reintroducing national border controls within the Schengen zone. According to the German daily Süddeutsche Zeitung, German Interior Minister Hans-Peter Friedrich and his French counterpart, Claude Guéant, have formulated a letter to their colleagues in which they call for governments to once again be allowed to control their borders as "an ultima ratio" -- that is, measure of last resort -- "and for a limited period of time." They reportedly go on to recommend 30-days for the period.


Granted, the Schengen system is not perfect. With the EU's eastward expansion, its external borders have become more porous. The problem areas are well-known: Greece doesn't sufficiently guard its border with Turkey, and Italy simply allows refugees through to continue their journey into neighboring countries. Doing so violates the Schengen Agreement, which stipulates that immigrants have to be taken care of by the country in which they arrive.


The above story have been almost completely ignored by the mainstream media. Let me ask you this… do you think Germany and others are really concerned about an influx of migrants? Of course not, the whole idea is ridiculous. Italy was supposedly upset about 25,000 migrants from North Africa… Italy has a population of 65 MILLION!


No, the move to create border controls is about one thing only: stopping people from fleeing with their money when the collapse comes. The political elite in Europe are watching the bank runs in Spain and Greece and know that when the big Crash comes similar runs will occur throughout the EU.


Consider the following, more recent stories and you’ll see what I mean:


Exclusive: EU floats worst-case plans for Greek euro exit: sources


European finance officials have discussed as a worst-case scenario limiting the size of withdrawals from ATM machines, imposing border checks and introducing capital controls in at least Greece should Athens decide to leave the euro…


As well as limiting cash withdrawals and imposing capital controls, they have discussed the possibility of suspending the Schengen agreement, which allows for visa-free travel among 26 countries, including most of the European Union.



Swiss eye capital controls if Greece goes


The Swiss National Bank is considering imposing capital controls on foreign deposits if Greece leaves the euro, as the franc comes under heavy demand from investors seeking a haven in Europe.


Speaking to Swiss media, Thomas Jordan, head of the Swiss central bank, said the Swiss government and the SNB were looking at ways of dealing with an expected flood of foreign money into the country in the event of a Greek exit from the eurozone.



This is not Gloom and Doom. This is reality. Talks are already underway of suspending the Schengen agreement and implementing border and capital controls. The Schengen agreement and freedom across borders was at the very basis of the Eurozone. And now the political elite want to suspend this?


Moreover, the fact that these stories are even making it to the media tells us point blank that the political leaders In Europe are absolutely terrified by the situation they have on their hands.


Indeed, the UK is implementing numerous contingency plans ranging from implementing border controls to literally preparing to help thousands of British expats flee the Eurozone should the banking system collapse and Brits around the EU find themselves without access to cash.


Speaking of which, here’s another story the media has been downplaying:


Natwest glitch: RBS chief Stephen Hester faces pressure to explain fault to public


Stephen Hester, the chief executive of Natwest owner the Royal Bank of Scotland, was under pressure last night to give a public account of the breakdown of the bank’s computer systems as politicians and small businesses attacked the bank’s failures and the crisis entered its sixth day.


Mr Hester admitted yesterday in an email to staff that RBS was not “out of the woods” with the bank drafting in thousands of staff over the weekend to try to deal with the issue. It now looks likely that the cost of the bank’s technical problems will run into tens of millions of pounds.


In his first public statement over the disruption to 12 million business and personal customer accounts of both RBS and its subsidiary, NatWest, which began on Tuesday night, Mr Hester told the bank’s staff that there was “more hard work ahead”.


In a confidential message sent to those working this weekend, a copy of which was seen by The Sunday Telegraph, Mr Hester said: “Behind the scenes, we are making progress on our task to clear the backlog of payments.”


That is correct, 12 million RBS customers have been shut out of their accounts and ATM withdrawals for SIX days due to a “glitch.” REALLY?


Let’s be blunt, the EU banking system is a $46 trillion toxic sewer filled with PIIGS debt. Even the ECB’s is not immune to this mess: over a quarter of its balance sheet is comprised of this garbage.


This is why the ECB freaked out and pumped so much money into the EU banking system. You don’t spend over $1 trillion in nine months unless something very very bad is coming down the pike. The fact countries are now actively putting together contingency plans to get their citizens out of EU should give you an idea of how fragile the entire system is over there.


So if you’re not already taking steps to prepare for the coming collapse of the EU, you need to do so now. I recently published a report showing investors how to prepare for this. It’s called How to Play the Collapse of the European Banking System and it explains exactly how the coming Crisis will unfold as well as which investment (both direct and backdoor) you can make to profit from it.


This report is 100% FREE. You can pick up a copy today at:


Good Investing!


Graham Summers


PS. We also feature numerous other reports ALL devoted to helping you protect yourself, your portfolio, and your loved ones from the Second Round of the Great Crisis. Whether it’s a US Debt Default, runaway inflation, or even food shortages and bank holidays, our reports cover how to get through these situations safely and profitably.


And ALL of this is available for FREE under the OUR FREE REPORTS tab at:






Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Joshua Falken's picture

The hole is this theory is that Italy is in the Schengen Zone

EverythingFubar's picture

"That is correct, 12 million RBS customers have been shut out of their accounts and ATM withdrawals for SIX days due to a “glitch.” REALLY?

Yes REALLY!! What has a botched upgrade of software by the outsourced Indian office of RBS got to do with anything you wrote? Nothing, nada.

Conspiracy theories are a staple diet for some ZH'ers but there has to be a tenuous link with reality and trying to tie in a rather boring, completely normal IT stuff-up with the end of the World as we know it, just loses you credibility.

supermaxedout's picture

You are for sure not living in Europe.

The Schengen area allows to move goods and services freely without, duty and tax.  If you have a business and you order goods from a another Schengen country you do not even have to pay value added tax, because the VAT is only paid at the end of the value chain by the local consumer. There exist already a functioning tax system within Schengen collecting and distributing VAT to the member states financial agencies.

Trucks, trains, ships, planes move freely within Schengen area carrying goods and persons. This is the reality. To re;introduce border controls would be mass murder to unnumbered enterprises big and small. The free movement of goods and persons is an essential part of their business model. So this is never going to happen.

As far as capital controls are concerned nothing changed at all. It is since many years the law in Schengen, that each person holding more than 10,000. Euros in cash while moving from one member state to the other has to declare this.  The chance to get caught is small but there are since ever custom officers in civil patroling the main inflow and outflow roads. 

The only difference is when one enters Switzerland. There trucks and other commercial transporters are checked (but by the Swiss only!!). But the hundred of thousand private cars crossing daily the borders back and forth can do this without any control. They only pick from time one but this is marginal.


billsykes's picture

Fails to mention the 19% german import vat on industrial goods from other EU countries, and the various rebates/export incentives for german manufacturers.

supermaxedout's picture

The VAT applies for private persons only as I just explained. Its in all Schengen countries the same otherwise it could not function. Only the VAT rate is differing but its everywhere appx 20 %.

EmileLargo's picture

The consequences of a break-up would be disastrous in the short-term for Germany. Actually, it could be something close to catastrophic. Some German Government studies indicate a 10-15 percent GDP contraction and an ADDITIONAL 5 million unemployed. Ergo, they won't let it break-up. Band-aids, cool-aids and whatever other form of aid is needed shall be employed and the SYSTEM shall be kept running in the short term. EVENTUALLY, the whole thing will collpase but this won't happen in six months.  

Jack Sheet's picture

Depends which study you consult. Be assured that the elites will propagate the catastrophic consequences of EUR break up - as in their mouthpiece "Spiegel" this week - to protect their trillions of €s of derivative "investments". Other equally convincing studies (for example Prof. HW Sinn, or Wirtschaftswoche) come to the exact opposite conclusions.

Tekrunner's picture

That's a... pretty poor counterargument. If said trillions of derivatives do explode, you can rest assured that the resulting collapse would, in fact, make GDP and employment fall off a cliff.

Snakeeyes's picture

Germany realizes that it is on the hook for the Med countries and no longer wants to play ball. Hence, end of EU. At least realistcally.

France - begin to panic!

Lord Peter Pipsqueak's picture

So over forty years of planning by bankers to control western Europe with one government,one currency, and one central bank is to be discarded at the first sign of trouble?,don't make me laugh. Bankers always create crises and market panic to achieve their aims and long term goals.

Expect the European politicians to acquiesce to the bankers fait accompli at the climax of this pre-planned collapse,as it is totally predictable.I'm amazed it has taken this long,but eventually they will get there.

Carl Spackler's picture

This is not a crisis manufactured by the bankers. 

Rather, it is a crisis of European Socialist governments' making.

By taking everything on balance sheet over the past decade and by continuing to live beyond their means, relying upon the Ponzi scheme, the Socialist sovereigns of Europe have chosen to drive down Collapse Path.

The bankers are in the car, along for the backseat ride on this one but unprotected by airbags of strong capitalization from a head-on collision with sovereign economic collapse.


BudFox2012's picture

Europe might last longer than most think.  Never underestimate TPTB's ability to kick the can down the road.  No matter how bad it looks, they always have another "slight of hand trick to play", until they don't.

tony bonn's picture

rbs / natwest fiasco is a convenient and engineered event to staunch capital and think that it was due to "natural causes" is fucktardedness of the highest order.....that bank is another insolvent zombie doing its best to hide its condition, much of which i predict is due to proprietary trading failures to say nothing of a balance sheet resembling a sewer....

bigkahuna's picture

You critics know whats really going on do you? Or is all you want to do is shut down the guy's point of view/research? Sit back and read, it does not mean you are being indoctrinated.

Jack Sheet's picture

I can understand your point of view but when we get gems like this

"The above story have been almost completely ignored by the mainstream media."..

when the stories referred to have been cut and pasted from the mainstream media themselves (Spiegel for example - an elite-controlled publication), credibility goes down the tubes.

I work in the EU and I would not dignify this contributor's posts as "research" - to put it very diplomatically.

Joe Davola's picture

European "states" are supposed to enforce the union's immigration laws - here they try but aren't allowed.

Jack Sheet's picture

Bring Back Brusca

Eddy Vluggen's picture

Suspending the Schengen-agreement is old news, and the talk was started to halt the immigrants in various northern European countries.

Your proposition that the talk was initiated as a preparation for a breakup based on the economic situation does not help in gaining credibility.

ghenny's picture

What absolute nonsense.  What kind of dummys does this guy think we are.  

Zero Govt's picture

"This is not Gloom and Doom. This is reality."

Aha! no cherry-picking and heavy on the shrill side Graham?!

like the Champs Elysee is usually rammed with traffic most nights but you turned that (the mundane) into the 2nd coming of the French Revolution!!

..we're still waiting for that well-balanced article since you got off the Valium prescription and went screaming chicken around the farm yard

shovelhead's picture

A Dunkirk moment for Brit ex-pats?

"We will flee the Euro by land, sea and air. We will prevail."

Tekrunner's picture

Okay, so I'm not saying that capital controls won't ever be reinstated, but that Spiegel article about the Schengen agreements was published last April. Right in the heat of the French election campaign, as Sarkozy was doing everything he could to appeal to far-right voters. Claude Guéant was playing a major part in that strategy, and that announcement would have quickly been forgotten after the elections, even if Sarkozy had won (and in fact, did you hear anything about it after the interior ministers' meeting that the article mentions?). But he lost, and chances of border controls in the EU are even lower now.

Signs of the end's picture

All I know that the ship is going down; no amount of Bailing gonna stop that! The only question is how long before the Bailers bail themselves, and let the Plebes go down with the ship?

Treeplanter's picture

When the bailers bail, we should get the moonshot in gold and silver miners.

Dekker's picture

Dear Phoenix,


Schengen agreements have nothing to do with the movement of Europeans within the European Union.

The European Citizenship does.


Except if you take Grecs's european citizenship away, you won't be able to prevent them from escaping the country.


So yes, it is really about 25,000 migrants from North Africa.



Squid-puppets a-go-go's picture

agreed. I hear italy has to cope with over 12 000 immigrants from Africa every MONTH. So, sure the economy is phukt, but let's not read economic collapse into EVERYTHING, Graham. There's plenty of border control issues in play here that are about....wait for it.... border control.


Treeplanter's picture

The EU is a totalitarian system where your rights can be cancelled.  Like free speech in Canada.

Dekker's picture

I guess you got your megaphone confiscated recently...

Eddy Vluggen's picture

Don't confuse us with the US. Even if it were, that hardly counts as an argument for the statement of the article.

Haddock's picture

Why let simple facts get in the way of another crappy cut and paste "article"

reinhardt's picture

breakup is doubtful

Zero Govt's picture

i agree

Graham is looking for the Apocalypse Event and heaven knows we've got enough of those pumpers in the blogsphere

this is going to be a slow melt (political) dis-integration. There is so much face (posturing) and embarrasment to lose for the political (under)class they're going to stretch this out for years more and cover it in snake oil to cover their tracks

reinhardt's picture

It would/could possibly be analogous to the u.s. disuniting because of financial troubles in new jersey or california or pennsylvania.  The reason nations unite is to solve expected labor cost issues.  Nations rarely if ever do things that result in labor costing management MORE especially during industrial revolutions.

Zero Govt's picture

if the Trotsky Tossers (progressives) that have bankrupted California thnk they're going to be bailed out by Texans they've got another thing coming (and it ain't cash or anything that can be described as help)

America will fracture and split just like Europe ...that's good news all round quite frankly

Nations do not "unite to solve labor costs". People are forced to accept the false construct that is nationhood by the usual cabal of parasites and their political puppets wanting control over society.. nations are pure folly kept alive by fabricating flags, anthems to sing and putting up borders to mark (piss on) the territory only to benefit the suckers wanting to live off societies backs

Society is docile and puts up with it ...only the brainwashed swallow it and believe in the nation state ..most people just ignore it day in day out and get on with their lives which is wise as nationalism is one of the most vacuous and insidious fabrications with nothing good (ever) to come of it