So, What's Next Step Towards The Eurocalypse?

Reggie Middleton's picture



Okay, as I have been warning since the first quarter of 2010, Greece has defaulted. What I mean by default is that Greece did not honor the payment terms of its debtor agreements. I really don't care what this or that association decides to call it, if you bought Greek bonds you ain't getting the money that Greece promised when they promised they will give it to you. Just to add something official sounding to it, Fitch has declared it so, Fitch Downgrades Greece From C To Restricted Default. Of course, if you are on BoomBustBlog of following me, your probably smarter than to take these guys words for anything even remotely resembling predictive since they declared default status about three hours before Greece actually made it official they would default - plenty of time for interested parties to do something about it, no? Reference Rating Agencies vs Reggie Middleton, Part 3 and What Is More Valuable, The Opinion Of A Major Rating Agency Or The Opinion Of A Blog? Go Ahead, I DARE You To Answer!

But as I said in Greece = Kaboom! But Now Many Misunderstand The Consequences, the media, pundits, sell side analysts and unfortunately many investors fail to see the forest due to many trees standing in their way. Interestingly enough, Greece used coerce, retroactively applied, unilateral clauses tocoerce a voluntary bond exchange! Yeah, it does sort of sound like bullshit doesn't it? I commented on this foregone conclusion last year in The Banks Have Volunteered (at Gunpoint) To Get 50% of Their Money Taken - No Credit Event??? Irrespective of


Subscribers, reference the following sovereing reports 

File Icon Ireland public finances projections

File Icon Spain public finances projections_033010

File Icon Italy public finances projection

File Icon Greece Public Finances Projections 

Online spreadsheet - Portugal's Debt Ridden Finances: An Analysis of Haircuts, Restructuring and Strategy - Professional Analysis


whether CDS are triggered or not, if Greece gets away with walking away from 74% of their debt obligations, what in the hell makes anyone who even remotely resembles a person who has neuron or two to jump start synaptic activity think that Portugal and Ireland willNOTjump in line to stiff their creditors? Come on now, have we suspended the rules of human nature now as well. Greece's Problem Is Shared By Much Of The EU & Can't Be Solved Through Parlor Tricks. The use of said parlor tricks will (have) simply make things worse. I have warned that Contagion Should Be The MSM Word Du Jour… not Greece. As Greece gets away with an economic stick up (at financial gunpoint), Ireland and Portugal are looking for their Glocks! 

I walked through this scenario in explicit detail a year and a half ago in my "Guide to the Beginning of the Largest String of Sovereign Defaults in Recent History" or The Anatomy of a Portugal DefaultA GraphicalStep by Step Guide ...

This is the carnage that would occur in the OPTIMISTIC if the same restructuring were to be applied to Portugal today.

Yes, it will be nasty. That 35% decline in cash flows will be levered at least 10x, for that is how much of the investors in these bonds purchased them. A 35% drop is nasty enough, 35% x 10 starts to hurt the piggy bank! As a matter of fact, no matter which way you look at it, Portugal is destined to default/restructure. Its just a matter of time, and that time will probably not extend past 2013. Here are a plethora of scenarios to choose from...

This is Portugal's path as of today.

Even if we add in EU/IMF emergency funding, the inevitability of restructuring is not altered. As a matter of fact, the scenario gets worse because the debt is piled on.

The free/cheap money is doing more damage than it is good, just Watch As Near Free Money To Banks Fails to prevent European CRE Nuclear Winter…

As is usual, you can reach me via BoomBustBlog or by the following means...

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winter2012's picture

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winter2012's picture

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MrSteve's picture

When in Rome do as the Romans do! With the top dog reserve currency's central banker printing money, all the other world's central bankers are licensed to print and so the global devaluation goes on and on until it stops. A lot of folks think gold is too expensive to buy now. They are totally wrong as the number of dollars printed with which you can buy gold is going to infinity.

The ECB and FRB are tag teaming the market indices to forestall deflationary thinking but every inflation, e v e r y inflation has ended in deflation. The real world is a hard reality that won't yield to word smithing and Fed-speak forever. Follow the yellow brick road to oz. It was good advice for Dorothy and it is great advice for everyone today.

Reggie is spot on as is Richard Russell who is also advising people to move into gold.

silvermaister's picture

BUY, BUY, BUY ...The owners of physical Silver and Gold will be ........


swani's picture

Yes, Reggie, this is true and you have been saying it for a long time. Unfortunately, the Central Banks manage to become preferred creditors no matter what, writing and rewriting laws if necessary, creating new or different sets of bonds and whatever other shenanigans the ponzi requires in order to continue unabated, all the while the same institutions are increasing the debt load of these countries and preparing to amass all of the hard sovereign assets of every sovereign nation that has been set up to be bankrupted in this manner;  sovereign gold, utility plants, electric grids, ports, roads, whatever else will be taken in exchange for worthless paper, plus they will get whatever payments the can squeeze and suck out of the tax payers until their isn't a drop of blood left in their bodies.

The Central Banks continue to win and since they seem to be making the most egregious rules, violating every treaty and agreement ever made, not to mention making a mockery of democracy, with no political will coming from anywhere to change the way that things are being managed and decided at the moment, the Central Bankers and their elected and non-elected puppets in government will keep going, until they are physically stopped by the angry populace. Until this happens, we will have to watch in horror as the world is raped and pillaged by neo-robber barons while we are fed propaganda and disinformation by the mainstream media conglomerates. 



illyia's picture

Thanks Reggie.

Swani - I guess the real question is: "When do the number become laughable?" There will be a point - don't know USA debt 20 T or 120 T (stated)- but at some point a politico or FedHead will be making a speech and someone will laugh in the audience. Maybe here, maybe Europe.

Maybe tomorrow, maybe June.

And, that will be "game over".

lemonobrien's picture

i don't think deflation will come because no one can fail. Greece defaulted and the bankers get bailed out with 0% loans for 3 years. I think they will just print away the debt and generally say, "fuck you" to the rest of the world; they can do this because of the police/military. Even in America, a rifle is useless against a squad of marines kicking down doors; drones overhead; etc.

the only way deflation sets in, is if a real total collapse happens; which they won't let happen; cause they'll just give every body money.

even if 100% of every dollar needs to be borrowed for every dollar the government spends; they'll have a bank holiday, and replace our money with different colored bills worth 100 to 1 ratio; it don't matter; these people in power, their families, are ruthless. same as it every was.


Carpathia's picture

Istill ask the basic question.  Will there be a period of deflation, before the inevitable hyperinflation?  I am stacking slowly, hoping the mother or all buying opportunities still awaits.  Is thqt but a fool's errand?

Troll Magnet's picture


my humble opinion is that you're doing the right thing by stacking slowly.  I don't know how much you own but if you already have some PMs (at least 10% of your wealth), I think you're doing okay.  And if PMs go through the roof and you miss the boat, so be it.  You've already allocated some of your wealth into PMs, so while you may not make out like bandits, you'll still be alright.  At this point, I wouldn't get caught up in the hysteria and buy-buy-buy!  Because as we've seen in the years past, TPTB can and will do whatever they can to preserve the status quo.  That means you could see more margin hikes, liquidations, naked shorting sellings and just general manipulation to keep the prices of PMs suppressed.  Keep buying the dips but don't get caught up in wanting to go all in especially if you already have some PMs.  If you don't, then be more aggressive but still, don't go into overdrive.  

Transformer's picture

Carpathia,  The deflation is already happening.  Prices of asset like things are going down.  Prices of things we used every day to live are going up.  At some point that stops and everything goes up.  Maybe then Real estate would not go up at the same rate, or maybe even stay the same as it is now, so that in gold terms it is going down.  whatever.  But the deflation is already happening.  Real estate, classic cars, used machinery, airplanes, etc., are all depreciating.  while milk and bread and gasoline cost more.   Many electronic parts made in asia that I use in my business have recently doubled and tripled in price.  

SHTF is here now.  It's just happening slowly.  Maybe Greek default speeds things up??



chdwlch1's picture

I wouldn't try to time this one, my friend...too much at stake.  PMs should benefit more than any other assett in both scenarios (including cash, which is being aggressively devalued right now!!). I'm amazed they've been able to delay the inevitable this long and would suggest taking the most popular ZH advice there is...when it comes to purchasing PMs, BTFD!!

puck's picture

Suck to be them. Suck to be me. At least there is some PM's for now!