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Europe Is Heading For a Crisis in May-June
Since August I’ve been calling for a collapse in Europe. Obviously I’m way early here, largely due to the ECB’s intervention in the markets. I also underestimated the extent to which leaders would push to hold things together. After all, Greece had already received bailouts in excess of 150% of its GDP and still posted a GDP loss of 6.8% in 2011. It’s hard to believe they’d want to accept more austerity measures and more debt.
Moreover, political tensions between Greece and Germany had reached the point that Greeks were openly comparing German Chancellor Angela Merkel and Finance Minister Wolfgang Schauble as Nazis while the Germans referred to Greece as a “bottomless hole” into which money was being tossed.
Looking back on it, the clear reality was that Germany wanted to force Greece out of the EU but didn’t want to do it explicitly: instead they opted to offer Greece aid provided Greece accepted austerity measures so onerous that there was no chance Greece would go for it.
Well, Greece surprised many, including myself, and went for it. And so the EU experiment continues to exist today. However, before the end of this issue I will make it clear precisely why this will not be the case for much longer and why we are on the verge of a systemic collapse in Europe.
For starters, unemployment in Greece as a whole is now over 20%. For Greek youth (aged 15-24) it’s over 50%. The country is in nothing short of a Depression.
Indeed, Greece has now experienced five straight years of contraction bringing the total contraction of Greece’s GDP to 17%. To provide some historical perspective here, when Argentina collapsed in 2001 its total GDP collapse was 20% and this was accompanied by full-scale defaults as well as systemic collapse and open riots.
With new austerity measures now in place there is little doubt Greece will see a GDP contraction of 20%, if not more. I expect we’ll see other “Argentina-esque” developments in the country as well. Put mildly, the Greek issue is not resolved.
The one thing that would change my views here would be if Greece staged a full-scale default. While the political leaders and others view a total default as a nightmare (and it would be for Greek pensions, retirees, and many EU banks), it is only a total default that could possibly solve Greece’s debt problems and allow it to return to growth.
Defaults are akin to forest fires; they wipe out all the dead wood and set the stage for a new period of growth. We’ve just witnessed this in Iceland, which did the following between 2008 and 2011:
- Had its banks default on $85 billion in debt (the country’s GDP is just $13 billion).
- Jailed the bankers responsible for committing fraud during the bubble.
- Gave Icelandic citizens debt forgiveness equal to 13% of GD.
Today, just a few years later, Iceland is posting GDP growth of 2.9%: above that of both the EU and the developed world in general. In plain terms, the short-term pain combined with moves that reestablished trust in the financial system (holding those who broke the law accountable) created a solid foundation for Iceland’s recovery.
Now, compare this to Greece which has “kicked the can” i.e. put off a default, for two years now, dragging its economy into one of the worst Depressions of the last 20 years, while actually increasing its debt load (this latest bailout added €130 billion in debt in return for €100 billion in debt forgiveness).
Iceland staged a REAL default, and has returned to growth within 2-3 years. Greece and the Eurozone in general have done everything they can to put off a REAL default with miserable results. I’ll let the numbers talk for themselves:
|
Country |
2011 GDP Growth |
2012 GDP Growth Forecast |
|
Iceland |
2.9% |
2.4% |
|
EU (all 27 countries) |
1.5% |
0.0% |
|
17 EU countries using Euro |
1.4% |
-0.3% |
* Data from EuroStat
The point I’m trying to make here is that defaults can in fact be positive in the sense that they deleverage the system and set a sound foundation for growth. The short-term pain is acute (Iceland saw its economy collapse 6.7% in 2009 when it defaulted). However, a combination of defaulting and debt forgiveness (for households) can restructure an economy enough for it to begin growing again.
However, EU leaders refuse to accept this even though the facts are staring them right in the face. The reason is due to one of my old adages: politics drives Europe, NOT economics.
And thanks to the Second Greek Bailout (not to mention the talk of a potential Third Bailout which has already sprung up), we now know that EU leaders have chosen to go “all in” on the EU experiment.
Put another way, EU leaders will continue on their current path of more bailouts until one of two things happens:
- The political consequences of maintaining this strategy outweigh the benefits
- The European markets force EU leaders’ hands (hyper-inflation or widespread defaults and the break up the EU).
I firmly believe that we will see one of these happen in the May-June window of time. We have a confluence of political, fundamental, technical, and monetary factors occurring in that time period make the possibility of a banking Crisis in Europe higher than at any other point in the last three years.
If you’ve yet to take steps to prepare for this, I can show you how: my Surviving a Crisis Four Times Worse Than 2008 report is chock full of information on how to not only survive but thrive during the months to come.
Within its nine pages I explain precisely how the Second Round of the Crisis will unfold, where it will hit hardest, and the best means of profiting from it (the very investments my clients used to make triple digit returns in 2008).
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Best Regards,
Graham Summers
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"FRANKFURT CONTACT TELLS SLOG: EUROZONE WILL SHATTER BY AUTUMN--Spain and Italy cannot be contained”
http://hat4uk.wordpress.com/2012/03/23/frankfurt-contact-tells-slog-euro...
Global Directives, need some Initiative. I'll leave it @ that.
All analysis of the E.U., the euro currency, and the supposed "Euro-crisis", must be done within the context of the New World Order and its framework for global governance.
The author says he is surprised Greece "went for it" and took the austerity measures/bailout. As if they had any choice in the matter. As if the E.U. is democratic. As if the voice of the people means anything. Greece had its nominally democratically elected leaders replaced with unelected bankers.
That is the primary flaw from which all other errors in the analysis flow. The author is only looking at the surface, and not reading between the lines so the starting point for the analysis is one based in misinformation.
No nation will ever be allowed to retake its national sovereignty and exit the supranational E.U. government. Not peacefully anyway. It is simply an impossibility. And the "Euro-crisis?" Well it's as artificial as the one America is suffering through right now. All engineered by the NWO planners to batter national populations into submitting to reduced national sovereignty, less self determination, even less "Democracy" than previously, and more "international" control of their lives.
Spain or Italy will default Fall/ 2013 and the "fire" will reach Berlin. Green shoots for Madrid/Rome and the end of the Euro! Rajoy has them by the balls.
Graham cuts and pastes the same shit and regurgitates it a few months later! Eventually he will be right, but so could a monkey if it could write and said the same thing every week for a year!
Mr. Summers
You are a great analyst. I agree with you on almost everything.
However, strong advise to you: Please DO NOT put a date on your forecasts. Nobody knows when stuff can happen, nobody. Meredith Whitney fell for it, also. I call it, "prophetic rapture".
Analyst = good
Prophet = bad.
Take my advise, please.
Thank God I'm postmillenial. One world currency....whatever.
See, us young folks get it. These old guys think it's all chaos and anarchy. They think it's all falling apart. They can't see the forest for the trees.
One digital global currency. One global government. Every aspect of human existence tracked, monitored, graphed, profiled, and controlled.
Welcome to the New World Order.
Imagine them going all in on portugal or ireland...
see if they have it in them to go all in on spain....
Graham Summers,
Iceland did not default - its private banks defaulted without the goverment bailout. Greek sovereign defaulted. Can you see the difference?
Please get your facts straight before posting on ZH.
For starters, unemployment in Greece as a whole is now over 20%. For Greek youth (aged 15-24) it’s over 50%. The country is in nothing short of a Depression.
Thought for a second this was the US!
Socialism invariably leads to the decline of individual economic activity. Everyone wants a "job", but nobody can start a business. Too much red tape, too many regulations. Individual economic activity is stifled. This grants greater power and control to the government and its chosen monopolies (corporations).
Much the same as the U.S. today. It's called fascism.
hmmm... can this guy stop using ZH as a marketing tool to sell his "reports"?
I'm getting pretty sick of reading rehashed data that "points" to him trying to sell me a crumby newsletter.
Oh bullshit they're already in a goddamn crisis it just hasn't hit the mainstream news as they are still busy sticking the cock in everyone's asses until they bottom out. End of fucking story.
They will continue to do bailouts till it all comes apart EVERYWHERE in Europe and then they'll go for the old trick... a ``global solution is needed``... which will end up with a REAL AND POWERFUL EUSSR.
New World Order.
Call it what it is. Been in planning for 50 years.
Everyone knows that the Greek economy is not self-sustaining. The only thing keeping it afloat are the bailouts. Everyone predicted, through sound reasoning, that Greek, and perhaps the EU should have collapsed long ago. It didn't because the Elitest (illuminati?) controlled banking system hasn't decided to crash it just yet. They will decide when. Since they control the world Monetary system, they do indeed control the world. And also, they possess the greatest weapon mankind has ever known, "Total Secrecy". If we don't now what they are doing, what their plans are, we can't stop them. Even if we do know what their plans are, we are powerless to stop them. They will wait for the right time when they will crash everything all at the same time. The stock market, the US bond market, the derivatives market, the US dollar, the US government, the EU, etc. This will provide them with the greatest impact to help bring about their New World Order. Right now I believe we are experiencing the calm before the storm. And what a storm it may turn out to be. It may turn out to be the biggest financial storm in the history of the planet. So bad, perhaps, that some of us will probably wish that Dec. 21, 2012 will be the end of the world. But it won't be. We will have to suffer through it.
Yes, the only way they can dig the hole even deeper, after it became painfully obvious to everybody that common currencies are a bad idea, is to crash the system(at an opportune moment) so that people have no choice but to accept whatever 1 World Currency they get implanted on a chip under their skins
Most likely this would happen during a full blown crisis like a war(Iran) or maybe a natural disaster(if it happens) or maybe an epidemic(from a lab) or a major terrorist incident(false flag) etc. 1 thing is for sure they are not giving up just as their multi-decade plans converge on a Final Solution
There won't be mandatory chipping of humans. Just unique numerical identifiers (social security numbers happened almost 100 years ago). And the digital currency will be accessible via various digital means, like credit cards, smart cards, cell phones, etc.
Trust me, they don't need to chip anyone when buying and selling without being "in the system" is impossible and the only currency is purely digital and has perfect audit trails and attribution. Not to mention facial recognition software which is getting extremely advanced.
the idea we're "powerless" sets us up for that old chestnut of being a victim ...when truth be all it takes for men to be corrupted is to sit back on their arses and do nothing
the fastest, easiest way to kill the corruption is to slaughter the tool of coruption and the financier of it: Govt
Stop Paying Your Taxes
no excuses Gentlemen, the longer you sit around and do nothing (but moan) the worse this shitstorm will be.. try anything but slacking on the sofa playing 'victim' as a method for changing anything
Total world domination is when they control each and every one of us with this rfid chip implanted under our skins "no one will be able to buy or sell without the mark (chip?)" Revelations 13:17. If we disobey, they will turn it off. We will lose everything since our digital currency will be taken away. And if it is fitted with GPS, they will find us wherever we are. The technology is here for this to take place. Hopefully it doesn't happen in America. As Christians, we were warned. But hopefully it doesn't happen anywhere. I heard that by 2013 the Elite want everyones medical records digitized. Once they are digitized, they can then be put onto an Rfid chip, which will then be implanted under the skin. In this way, anywhere that people go, their medical records will be available on this chip, which will be with them at all times. And any doctor anywhere around the world can simply scan it to view these medical records. It all sounds like a good thing for us, but it is really meant for evil purposes. This will be the first implants.
Your money in bank accounts and brokerage accounts is already purely digital. They can "turn it off"at will.
Can the crazy mysticism crap and talk reality. You're making the rest of us NWO believers look bad by association with your insistence on quoting nonsense from the bible. And your obsession with "chips" detracts from the real threat that people WON'T be required to be "chipped" but every other aspect of the system you describe will become reality. You'll be able to carry a card, cell phone, etc. that serves the same purpose as the "chip" you so fear. But the end result is the same. Except, I guess it doesn't violate your "sanctity of the human body" religious belief.
As for the actual technology, you seem unclear on a few things. IF people were "chipped", the data wouldn't be stored on the chip (at least not much, maybe a few critical details). The chip would primarily serve as a unique identifier which would be tied into any number of databases containing all manner of information about you as an individual. From personally identifiable information to medical records to consumer habits.
To store data on the chip like medical records would require it to be writable, which is bad design and compromises its security. They'd rather it be hard coded and non-writable with all of the dynamic data stored in central databases they control.
All of this is pretty much already here, just get in trouble with the law(especially on financial terms) and see how quickly all your bank accounts get frozen, so you can't even hire a decent lawyer(if thre's such a thing?)
But yes today there is still cash so the system isn't fool proof, but that will be 1st phased out(for convenience sake) than banned altogether, and with GPS tracking and unique person identification(already possible if you have a mobile phone and use a CC) they will be able to pull the plug on you with a press of a button, Minority Report was Yesterday
And what difference do elections makes? What difference do elections make here in the U.S.? Both are run by banksters.
There are minor differences. Democans are a Zionist-Socialist aggregate, and prefer to spend debtbux on govt salaries, group-entitlement handouts and the like. Republicrats are a neo-con Zionist aggregate, that prefers to spend debtbux on Israelite wars. After much huffing and puffing - cf. the "debt-ceiling debate" - they then cut a deal that maximizes the Ponzi.
You got gut putting a date on the crisis. we'll see if you're right.
The gap between Greece and Iceland performance will continue to widen. The gap between euro debtpayers attitudes and Icelander's attitudes will continue to widen.
How long will it last - nobody knows. There is always a last straw, something seemingly small, stupid, unpredictable.
Try oil at $250/barrel. Real soon.
The Euro just has to be standing the day after the dollar is not. voila...new reserve currency...supports gold at market prices
Wrong. There's no way the sheeple would be stupid enough to pile up under "yet another piece of worthless paper" after such a shock as worldwide monetary collapse.
Merdekel's "it'll be my way or no way" will burn down in flames too.
The very meaning of "sheeple" suggests they will beg (unknowingly) for their own enslavement, as long as it relieves immediate pain.
That's right...one of these days. It's all Bullshit as long as these banks can keep printing and can kicking.
Something will always happen in May-June. Which year by the way?
Last year. Or the one before.
Europe is fine.....long past colonialism's prime days but still have Asian/Russian/American/Arab suckers buying into Euro luxury brand.
they're still buying European luxury brands alright
..but Govt is no such thing, it's sub-prime garbage with a very dodgy credit record (but those banks just keep on lending)
"The one thing that would change my views here would be if Greece staged a full-scale default. While the political leaders and others view a total default as a nightmare (and it would be for Greek pensions, retirees, and many EU banks), it is only a total default that could possibly solve Greece’s debt problems and allow it to return to growth."
speaking words of wisdom, let it be, let it be.
Thank you.
Good article.
Hard to get the timing right.
AS long as Europe pulls new rabbits out of its hat (LTRO!!!) it can push out day of reckoning, I reckon.
LTRO has bank problems and country problems intertwined; can't untangle them now, and since banks owe to ECB the ECB is entangled and suspect.
Because of Germany I do not see inflation as a solution But Germany (& strong countries) could leave the Euro then all bets are off.
These are all political 'solutions' for Europe...I don't think they have let an economist near the deliberations. Even German 'hard money' demands (austerity) are non-starters as solutions. None of these EMU moves make sense except as the most flawed-short-term stop gaps.
After reading two of your "articles" here on ZH this week I could be convinced you are a contrary indicator. Thanks for your opinion.
Anymore info on the Iceland debt forgiveness for citizens part?
Please correct if wrong, but Iceland allowed its BANKS to default, it was not a soverign default; meanwhile, Greece had a partial soverign default of around 75 percent on a portion of the debt, but not all of it.
You will be right one of these days
Between Graham and his leprechaun crew one day they will be right; until then Graham's $360/oz of gold special deal to subscribers is still being offered and Santa Claus is ready to sell his bridge and reindeer for cheap.
sadly, it almost always happens that TSHTF when you are at at your most vulnerable.
the sea level will rise noticeably as a result of the massive amount of worldwide tears that will follow the mad max scenario about to unfold before your eyes.