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WARNING: the EU Crisis is BACK and Will Be Worsening in the Coming Weeks

Phoenix Capital Research's picture




 

 

I want to issue a major warning to investors: the EU Crisis is going to get worse in the coming months.

I realize that most investors and analysts believe that the EU Crisis is over. Then think that because the S&P 500 is closing in on its all-time highs that things are fine in the system.
They are wrong.

The only item that held Europe together in 2012 was the credibility of EU politicians and ECB President Mario Draghi. Please note that nothing fundamental improved for the EU’s financial system: EU GDP has since re-entered a recession and EU unemployment has a hit a new record.

Indeed, the only reason things even looked better was because various Government engaged in massive interventions. In the case of Spain, this included raiding 90% of their social security fund to buy Spanish bonds so that yields would fall.

So… when you entire financial system is held together by the credibility of the political class… corruption scandals can implode the system.

MADRID — Spain’s governing Popular Party was drawn deeper into a web of corruption scandals this past week, after the Swiss authorities informed the Spanish judiciary that the party’s former treasurer had amassed as much as 22 million euros, or $29 million, in Swiss bank accounts.

The treasurer, Luis Bárcenas, resigned from his job in 2009, after being indicted in the early stages of an investigation, which is still ongoing, into a scheme of kickbacks and illegal payments allegedly involving other conservative party politicians…

Nonetheless, the revelations have brought a fast-growing list of corruption investigations, which have unspooled across Spain, to the doorstep of the conservative government of Prime Minister Mariano Rajoy, who has so far remained silent. About 300 Spanish politicians from across the party spectrum have been indicted or charged in corruption investigations since the start of the financial crisis. Few have been sentenced so far.

 Source: NY Times

The above story illustrates some key elements that all investors need to be aware of:

1)   EU politicians are so corrupt they make their US counterparts look clean by comparison.

2)   Having been put off for years, investigations into corruption are now reaching the point at which the rich and powerful are actually at risk of serious consequences.

Note in the above story that former Spanish Treasurer Luis Bárcenas has been under investigation since before 2009. The fact that the real smoking gun (his hidden Swiss bank account containing over $29 million) is only just coming to light should give you an idea of how corrupt the system in Europe has become (there is no way on earth it would take four years to find this information).

That this information is coming out now also tells us that things are getting so bad in Spain that heads are going to start to role. As we stated earlier, corruption only works until the consequences outweigh the benefits of being “on the take.” The above story tells us that we have finally reached that point in Spain. It’s taken five years for this to happen (the Crisis begin in 2008). But the system has finally reached the inflection point at which key players will face real consequences for their corruption.

With that in mind we can expect more and more such cases to begin to emerge in Europe. The fallout from this will be major both for the political class and for the financial markets.

Indeed, later in the same story we find the following tidbit:

On Wednesday, amid another property investigation, the president of Madrid’s regional government, Ignacio González, revealed that he and his wife purchased a penthouse last month in the holiday resort of Marbella for 770,000 euros, or more than $1 million. Mr. González, who earns 4,800 euros a month, about $6,380, is denying any wrongdoing, as well as any link between his acquisition and the property investigation undertaken by a local judge.

A regional President, earning less than $80K a year just bought a $1 million penthouse in a country where youth unemployment is above 50%, workers have gone over six months without being paid, and pharmacies are running out of medicine due to having not been paid some €500 million by the government.

The reason this is so important is because politics, not economics, drives everything in Europe. Please note that the entire EU banking system was pulled back from the brink of collapse last summer by Mario Draghi and other EU officials promising to do whatever it takes to end the crisis.

Since that time, the economy has actually worsened in Europe. Unemployment has hit a new record and the vast majority of the EU has re-entered recessionary territory. Thus, it has been the credibility of various EU officials, not any fundamental improvement in things that has made the whole system work

Now that major corruption scandals are breaking out regarding key EU figures, it’s going to be increasingly difficult for the EU political class to continue to convince the markets that the “everything is OK.”

Indeed, it's time that we get really honest about things and state that Europe is done. Finished.

The powers that be over there are rapidly losing control of the system. Spain's banking system is collapsing at a rate worse than that of the Asian nations during the Asian Contagion of the late '90s. Italy's bonds are imploding. Germany is finding its economy teetering on the edge of a cliff. And France is seeing auto sales and apartment deals collapse at a rate just as bad as that of 2008.

And that's just the tip of the iceberg.

The debt contagion has now spread to Spain, Italy, and even France: all three of them are countries too big to be bailed out.

Which means... it's the End Game. No matter what, the defaults are coming and the Euro will implode.

This is the reality for Europe. The whole system will be going down, it's only a matter of time. And when it does collapse, it's going to make Lehman Brothers look like a joke.

I know the markets have yet to fully realize this...the S&P 500 is approaching its all-time highs. But back in late 2007, the last time the markets were at this level... did stocks get what was coming then too? Nope. And by the time stocks "got it" things moved VERY quickly.

So if you have not already taken steps to prepare for systemic failure, you NEED to do so NOW. We're literally at most a few months, and very likely just a few weeks from Europe's banks imploding, potentially taking down the financial system with them. Think I'm joking? The Fed is pumping hundreds of BILLIONS of dollars into EU banks right now trying to stop this from happening.

 

We have produced a FREE Special Report available to all investors titled What Europe’s Collapse Means For You and Your Savings.

This report features ten pages of material outlining our independent analysis real debt situation in Europe (numbers far worse than is publicly admitted), the true nature of the EU banking system, and the systemic risks Europe poses to investors around the world.

It also outlines a number of investments to profit from this; investments that anyone can use to take advantage of the European Debt Crisis.

Best of all, this report is 100% FREE. You can pick up a copy today at:

http://gainspainscapital.com/eu-report/

Best

Phoenix Capital Research

 

 

 

 

 

 

 

 

 

 

 

 

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Tue, 02/12/2013 - 21:16 | 3238690 Osmium
Osmium's picture

Please, everyone knows Europe has been fixed many times already.  What could possibly go wrong?

Tue, 02/12/2013 - 20:28 | 3238522 XenOrbitalEnginE
XenOrbitalEnginE's picture

Wow, I feel like I have been invited to my local Holiday inn for a free dinner and some Investingment advice on a nice postcard.

 

-1

Tue, 02/12/2013 - 20:22 | 3238495 walküre
walküre's picture

Spain is going to fail this year. Italy will pull out of the Euro and leave Germany and France hanging. Greece is a basket case and won't receive any further funding. They're on their own. The lenders can sort the mess out themselves.

Tue, 02/12/2013 - 19:37 | 3238351 ramacers
ramacers's picture

why do i have this gnawin' feeling that Benedict's hike out is related to this scenario?

Tue, 02/12/2013 - 21:16 | 3238692 klockwerks
klockwerks's picture

Here is another reason, GS says everything is great and bull market coming

http://www.cnbc.com/id/100453712

Tue, 02/12/2013 - 21:05 | 3238662 klockwerks
klockwerks's picture

Then add the insiders are selling their stock hand over fist and the recent ZH post of the fed flooding money into central banks in Europe and last but not least the dear leader is speaking tonight. All of the info I have read points to a March-June time frame for the shtf. One comment here mentioned about the sheep waking up during the chaos, sucks to be them as there will no help for them, to late.

Tue, 02/12/2013 - 19:25 | 3238294 Tanz der Lemminge
Tanz der Lemminge's picture

"so bad in Spain that heads are going to start to role."

 

Sure you didn't mean rowl?

Tue, 02/12/2013 - 19:17 | 3238263 tony bonn
tony bonn's picture

"The Fed is pumping hundreds of BILLIONS of dollars into EU banks right now trying to stop this from happening."

this is the real crime of the century....the completely unaccountable criminal cabal - a core constituent of the rockefeller axis of evil - known as the fed - also known as the 5th column - has shoveled money from americans to europeans in order to maintain the fraud and criminality....

Tue, 02/12/2013 - 17:51 | 3237936 The Trade Group
The Trade Group's picture

I'll bet you could pick someone at random waiting at a bus stop from almost any city in America (except maybe Detroit & DC). And that person would have more accurate predictions than Pheonix Capital. These guys have a horrible track record. Why are they even allowed to post on ZH?

Tue, 02/12/2013 - 18:05 | 3237987 RebelDevil
RebelDevil's picture

I'm thinking he's a better reporter than a predicter.

Tue, 02/12/2013 - 18:31 | 3238088 The Reich
The Reich's picture

I'm thinking he's neither nor

Tue, 02/12/2013 - 17:48 | 3237922 Chip
Chip's picture

"the powers that  be over there"????

Tue, 02/12/2013 - 17:46 | 3237913 TeddyBear
TeddyBear's picture

 

 

 

Last 15 years:

'the top five finishers in the HFD’s 15-year performance ranking do not engage in market timing:

  • The Investment Reporter (Marc Johnson): 10.8% annualized

  • The Turnaround Letter (George Putnam): 10.4%

  • Investor Advisory Service (Douglas Gerlach): 10.4%

  • The Prudent Speculator (John Buckingham): 10.4%

  • The Buyback Letter (David Fried): 9.8%

For comparison, note that the stock market as a whole (as judged by the Wilshire 5000 total-return index) gained 5.2% annualized over this period."

http://www.marketwatch.com/story/an-overlooked-bear-market-strategy-2013...

Follow some of these to max $ gains:)

three decades of research at the Hulbert Financial Digest (HFD)

 

Tue, 02/12/2013 - 18:03 | 3237977 Jack Sheet
Jack Sheet's picture

Such percentage gains are always calculated optimistically by newsletter writers and in many cases are impossible to attain by subscribers, who have to be able to buy the recommended stocks at or below the recommended price and sell at or above. Brokerage commissions and expenses are ignored.  I submit that annualized returns are bullshit. Buy in January at 12, sell in April  at 15 (assuming no round-trip brokerage fees) and that is 100% annualized. Did you double your money that year?

Tue, 02/12/2013 - 17:38 | 3237865 Jack Sheet
Jack Sheet's picture

WARNING:  My dog craps better stuff than this.

Tue, 02/12/2013 - 19:31 | 3238319 cornflakesdisease
cornflakesdisease's picture

Most accurate thing I read on the internet today.

Check out this financial letter writers after hours drink/confab

https://www.youtube.com/watch?v=Xe1a1wHxTyo

Tue, 02/12/2013 - 17:38 | 3237863 Cult of Criminality
Cult of Criminality's picture

LOL

Tue, 02/12/2013 - 17:36 | 3237855 Squid Vicious
Squid Vicious's picture

looks like I picked the wrong week to stop buying silver, and sniffing glue

Tue, 02/12/2013 - 19:19 | 3238273 Darth Stacker
Darth Stacker's picture

+1 for the Airplane! reference

 

Tue, 02/12/2013 - 17:29 | 3237841 mrdenis
mrdenis's picture

Yawn .................

Tue, 02/12/2013 - 17:19 | 3237799 cpzimmon
cpzimmon's picture

I'm guessing that they pay ZH to sell the newsletter. The same outfit that said that the Fed would not go to QE3. I wont buy their newesletter either.

Tue, 02/12/2013 - 17:37 | 3237861 The Trade Group
The Trade Group's picture

Don't forget he said that Europe would implode last summer. He has been consistently wrong for 3 years straight. Oh well, if he keeps predicting it, eventually it will happen...

Tue, 02/12/2013 - 17:16 | 3237794 espirit
espirit's picture

Preaching to the choir, Bub.  Let the liars and deniers in the U.S. start being indicted and accounts seized permanently, then we begin anew.

It is troubling though that havoc must reign before the sheeple wake up.

Tue, 02/12/2013 - 17:06 | 3237770 bigkahuna
bigkahuna's picture

zzzzzzzzzzzzzzzzzzzzzzzz........ZZZZZzzzzzZZZZZZZZZZzzzzzzzzzzzzzZZZZZZZZZZzzzzzzzZZZZZZZzzzzzzz!

Tue, 02/12/2013 - 17:44 | 3237907 DoChenRollingBearing
DoChenRollingBearing's picture

 

 

zzzzzzzzzz.............buy gold.............zzzzzzzzzzz

Tue, 02/12/2013 - 21:26 | 3238718 boogerbently
boogerbently's picture

 weakening EU leaves the "perception" of a comparatively strengthened USD, means falling gold price.

Tue, 02/12/2013 - 17:01 | 3237756 Encroaching Darkness
Encroaching Darkness's picture

"1)   EU politicians are so corrupt they make their US counterparts look clean by comparison."

I don't think so; rather, the EU zone media are so sleepy they make the US media look efficient and insightful by comparison. But do you think Menendez is the only child-raping, corrupt, cronyist Senator in the One Hundred?

Not a chance. Maybe soon we'll find out about some more of them.

Tue, 02/12/2013 - 17:23 | 3237820 Gamma735
Gamma735's picture

Hopefully Harry Ried will be next.

Tue, 02/12/2013 - 18:41 | 3238134 tenpanhandle
tenpanhandle's picture

What's to find out? US politicians don't have to hide their loot. They create policy that has the color of law and that exonerates them and their thefts.

 

Policy has been the new law since at least Clinton (the policy wonk).

Tue, 02/12/2013 - 17:00 | 3237754 The Reich
The Reich's picture

Are you argueing the Eurocrats lied when they said the crisis is over?

 

That's just not possible!

Tue, 02/12/2013 - 17:00 | 3237751 rsnoble
rsnoble's picture

I just got in.  Less than 55 million on SPY today? Uh oh.  A big serious uh oh.  Game over.

Tue, 02/12/2013 - 17:24 | 3237823 LawsofPhysics
LawsofPhysics's picture

Why?  No one is selling, bernanke is the market, all those 401kers are "rich".  Please do tell why the game is "over"?

Tue, 02/12/2013 - 17:42 | 3237888 rsnoble
rsnoble's picture

I'd expect more from someone with the username "LawsofPhysics" lol.

No, I completely hear you.  Just for various reasons if things were to start flying apart, how crazy it may soon, conditions are looking ripe.

Tue, 02/12/2013 - 17:45 | 3237906 rsnoble
rsnoble's picture

And as far as previous conditions looking ripe.........well actually they were.  Nothing happened because it was papered over and kicked down the road.  Eventually the game will end but no one knows win but I can't think of the so-called 'can' that's being kicked being anything more than a couple of molecules and pile of dust by now.  Or atoms or whatever term for something really small is.

Tue, 02/12/2013 - 19:02 | 3238215 LawsofPhysics
LawsofPhysics's picture

Indeed.  Still waiting for those fusion reactors.  All I know is, that which cannot be sustained, won't be.   Same thing for all these paper-pushers as that which cannot be "paid" won't be either.  

Tue, 02/12/2013 - 16:58 | 3237742 falak pema
falak pema's picture

how many times have we heard graham say that; let summer come after spring...

Tue, 02/12/2013 - 16:22 | 3237653 e-recep
e-recep's picture

damn, who could have seen this coming...

Tue, 02/12/2013 - 17:56 | 3237951 Matt
Matt's picture

How the hell is this possible? If I use a Canadian mortgage payment calculator, 30 year mortgage amortization, 20% down, monthly payments, with a 5-year term at 5.24%, the monthly payment is $4384.83. How can someone who makes $6300 per month afford this? He must not pay any taxes, because if he did, the mortgage would be equal to or greater than his after tax income.

Tue, 02/12/2013 - 18:15 | 3238024 rsnoble
rsnoble's picture

You're not taking into account his "stolen money" business, otherwise known as politician.

Everyone might think it's cool as hell for the elites to get popped.  Seriously think they'll just sit on their hands and do nothing?  They're capable of anything including blowing all our asses up to stay out of jail.  Sad to say but true.

Tue, 02/12/2013 - 16:10 | 3237603 disabledvet
disabledvet's picture

First off I agree with this. Second "I hope the President is watching THIS" instead of all the distractions put in front of him making it SEEM like he is being empowered.

Tue, 02/12/2013 - 15:53 | 3237560 Tango in the Blight
Tango in the Blight's picture

The Eurocrisis has never gone away.

And no, I won't buy your newsletter.

Tue, 02/12/2013 - 17:17 | 3237792 RockyRacoon
RockyRacoon's picture

I was seeing it the same way.  The so-called crisis is not getting worse, it's just becoming more obvious. At least it is by by those who don't have their heads up the arse of denial.

Tue, 02/12/2013 - 18:55 | 3238194 Theta_Burn
Theta_Burn's picture

One day, while all of you nay sayers are mealing on Donkey and Dog Mr. Summers is going to come in here and say "i told you so"

One day......

Tue, 02/12/2013 - 17:27 | 3237835 TSA gropee
TSA gropee's picture

Arse of denial. For some reason I like that, not sure why or whether I even understand it. But I like it nonetheless. =)

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