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Today As Was The Case a Month Ago... It All Hinges On Germany
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Today as was the case a month ago, everything ultimately hinges on Germany. Political intrigues aside, Germany is just about out of money. And Merkel has to decide… save Germany or save the EU. Only one of these options is even possible at this point (save Germany) as the EU is beyond saving.
Why do I say this? The EU banking system is €36 trillion trillion in size. Total Eurozone banking deposits stand at €15 trillion. Even deposits at the current EU “problem” countries (Spain, Italy, Portugal and Ireland) are €5.5 trillion.
Germany doesn’t have the funds to backstop even 10% of this. That’s a fact. No one does. The money simply does not exist. And if the ECB decided to print it, Germany would walk out of the Euro (it may in fact do this regardless of what the ECB does).
These are the facts pertaining to Europe. Everything else (all the claims of new plans/ new strategies, all the stories of secret meetings, all of that garbage) is just one great big distraction.
Europe’s tired engine
As the euro zone goes into another recession, Germany is slowing down
Until the end of last year, German growth seemed to be gathering speed. Then some warning signs started to appear. The business-climate index of Ifo (Institute for Economic Research), which started falling in August 2011, has edged more or less persistently down. In July business expectations hit a low not seen since mid-2009. The Markit/BME purchasing managers’ index, which measures the state of manufacturing, also started to fall last year; in July it too hit its lowest level since June 2009. This fall was reflected in a drop of 1.7% in new contracts won by German companies in June, compared with May—including a drop of 2.1% in domestic orders and of 4.9% in orders from the euro zone. “And we don’t see the orders that were cancelled,” points out Thomas Hüne, an economist at the Federation of German Industries.
http://www.economist.com/node/21560601?fsrc=nlw|wwb|8-16-2012|3117721|38031410|
The majority of Germans are fed up with Greece, worried about inflation, and want the Deutsche Mark back. Also bear in mind that Angela Merkel is up for re-election next year. So while Germany has voted to ratify the ESM, look for increased tension to escalate between the ECB and Germany going into year-end.
Swing by www.gainspainscapital.com for more market commentary, investment strategies, and several FREE reports devoted to help you navigate the coming economic and capital market changes safely.
Best
Graham Summers
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Cheap cheap score again. So it's all peachy eh? Prove it. Yeah, you can't. I thought so. Empty words no balls.
Crap
(That confused guy is consistently wrong about everything)
Most of the time yeah but it's really easy to criticize from the sidelines. I don't see you making any valid points or sticking your ass above the grass. Grow some balls and PROVE him wrong. I'd love to see what's in your crystal ball.
No. YOU tell me what exactly is the added value of that endless repeat of that "europe is doomed" propaganda.
Graham, I am assuming that your investment advice is primarily PMs. If so then your poor track record for your predictions doesn't really matter.
As of Thursday, any investment advice is primarily PMs.
Western World Debt Jubilee!
http://en.wikipedia.org/wiki/Jubilee_%28Christianity%29
Fifty years ago would be 1962, it's time.
The only way Germany (or any other country) can decouple from EU is a brave bottom-up movement. The politicians in EU countries are all wired up to the ponzi. Few dreamers like Schauble are about to wake up soon.
It's all Germany's fault.
If they hadn't lost the war in Europe, there wouldn't be any complaining, they wouldn't DARE.
LA LA LA UM UM UM AW AW AW AW GE GE GE GE (hands over ears)....stop that noise!!
Graham, Germany is screwed because it cannot leave the Euro. If it did, the DM would soar so high that it would kill its export economy (2/3 of Germany's exports go to Europe). Germany also cannot support the Euro, as you correctly pointed out, there is just not enough money for that. Thus, Germany is in a "damned if you do, damned if you don't situation".
And the German banks, insurers and pension funds are all vulnerable from Germany's excessive lending to the southern countries - the Germans are on the hook, that is their dirty secret.
Southern countries borrowed too much ... Germans lent too much. Behind the rhetoric those are the facts they all know. It is 'everybody's problem'.
Germany leaves the euro, then German banks and insurers blow up, German worker pensions are half 'vapourised' ... Merkel herself has come around to the view that all of that, is worse than printing money.
The real drama upcoming is Greece, Italy, Spain and Portugal finally saying f*ck you to the euro, because of 'austerity fatigue' ... people in the southern countries have just about had it, with banksters getting bailouts and common people getting cuts and 'austerity' (not ZH's definition of austerity 'overall less debt', but what people understand as job cuts, income cuts, pension cuts, health care cuts, benefit cuts).
The EU-Troika has mis-calculated the political fallout of ravaging the lower classes, and f*cking over the Greek common people, which now has Spaniards and Italians thinking they should leave the euro and default and devalue, before they become Greece.
Maybe this fall, maybe in 2013 ... but sometime in the next 30 months the fragmentation of the euro-zone and 'bank holiday time' are at least 50% likely to happen. Berlusconi in Italy, re-elected on an anti-EU wave, might be the one who does it. Sweet revenge on the EU-ECB that pushed him out last year.
Berlusconi is one pissed off billionaire who is not used to losing or being made a fool of. He is indeed a dark horse in the game and he owns a shitload of media outlets. You can bet he has some prime dirt on the troika fuckers too.