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Can The EU Freeze The Economic Debt Cycle At Its Top?
Earlier this week I interviewed with Benzinga radio discussing my
views on the Economic Circle of Life, and the global cartel of central
bankers who have conspired to manipulate said cycle, to the detriment of
fundamental investors, tax payers and market pricing worldwide! See an
excerpt below and click the link to here the full audio of the
interview.
Reggie Middleton: Economic Cycle Frozen at Top of the Bubble
Benzinga Radio recently had a chance to speak with Reggie Middleton, the founder of boombustblog.com.
Mr. Middleton is an investor who guides a small team of independent
analysts. His research is widely circulated among banks, hedge funds,
and institutional and individual investors. Reggie has appeared on
Bloomberg Television, CNBC, BBC World News, and CNN among others, and
his prescient investment calls have been detailed in publications such as Fortune and Crain's New York.
The
primary topic of Benzinga's discussion with Mr. Middleton centered on
the unfolding Eurozone sovereign debt crisis, which continues to hold
financial markets hostage. According to Middleton, the term "contagion"
or "virus" when describing what is taking place in Europe is misleading.
It is less a matter of market distrust and rising sovereign yields in
one country spreading to another, and more a problem of a faulty
foundation with regard to the entire EU and euro currency.
He
said, "the problems were inherent from the beginning - from the
inception of the Eurozone and the euro in general." He added, "a
building was built upon a faulty foundation." Middleton noted that one
of the core problems that is taking place in the EU is the fact that
countries such as Greece lack true sovereignty due to the structure of
the monetary union.
Follow this link for the full article and the full audio of the interview: http://www.benzinga.com/content/2138614/reggie-middleton-economic-cycle-frozen-at-top-of-the-bubble#ixzz1e4KdG349
The reasoning behind my comments in this interview stemmed from the posts Do Black Swans Really Matter? Not As Much as the Circle of Life and What Happens When That Juggler Gets Clumsy?: As excerpted...
Actually,
it is not the Black Swan events themselves that do the damage but said
event do serve as the catalyst that either bust a bubble that was
waiting to pop anyway, or break a structure that was hobbling along on
one leg as it was - where we happen to be now in many places of the
developed world - sans rampant propaganda, misinformation and
disinformation from less than disinterested sources.
I
have always been of the contention that the 2008 market crash was cut
short by the global machinations of a cadre of central bankers intent on
somehow rewriting the rules of economics, investment physics and global
finance. They became the buyers of last resort, then consequently the
buyers of only resort while at the same time flooding the world with
liquidity and guarantees. These central bankers and the countries they
allegedly strive to serve took on the debt and nigh worthless assets of
the private sector who threw prudence through the window during the
"Peak" phase of the circle of economic life, and engaged in rampant
speculation. Click to enlarge to print quality...
The result of this "Great Global Macro Experiment" is a market crash that never completed. BoomBustBlog subscribers should reference 
The Inevitability of Another Bank Crisis while non-subscribers should see Is Another Banking Crisis Inevitable? as well as The True Cause Of The 2008 Market Crash Looks Like Its About To Rear Its Ugly Head Again, With A Vengeance.
All four corners of the globe are currently "hobbling along on one leg", under the pretense of a "global recovery".
Simply
sit back and look at the (supposed, none of these should truly be
considered surprises) Black Swan Catalysts that we now face:
-
- US Housing, you know, the the thing that kicked this all of to begin with - The True Cause Of The 2008 Market Crash Looks Like Its About To Rear Its Ugly Head Again, With A Vengeance Friday, March 11th, 2011
- US and/or European Commercial Real Estate - Reggie Middleton ON CNBC’s Fast Money Discussing Hopium in Real Estate Friday, February 25th, 2011
- MENA, the Middle East & North Africa - Egypt’s Social Unrest As A Pan-European Economic and Financial Contagion? It Can Happen!!! Friday, January 28th, 2011 or First Tunisia, Then Egypt, Now Yemen: Will This Reach The Powder Keg That Is The EU & What Will Happen If It Does? Wednesday, February 2nd, 2011
- Japan - Can Contagion Be Avoided Considering The Magnitude Of Japan’s Woes? Tuesday, March 15th, 201
The list can go on. The most likely catalyst is described as follows...
The
advice coming from both the government agents (ex. central bankers) and
those whom these government agents have pledged to rescue at the
absolute cost to the average tax payer (the FIRE sector, particularly
the banking cartel) has been absolutely horrendous. First let's take a
look at the most respected of these agency protected players - Goldman
Sachs. From my missive, Is Another Banking Crisis Inevitable? posted last month, I excerpt the following:
Today, Bloomberg reports that Goldman Sachs Turns Bullish on Europe Banks as Debt Risk Eases.The report goes on to state:
The U.S. bank that makes the most revenue from trading
advised investors to take an “overweight” position on banks, raising
its previous “neutral” recommendation, according to a group of equity
strategists led Peter Oppenheimer. Investors should pay for the trade by
lowering holdings of consumer shares, he wrote.
“For financials the narrowing of sovereign spreads in peripheral eurozone, which our economists expect to continue, is a clear positive,” London-based Oppenheimer wrote in the report dated Feb. 3. “Banks are one of the least expensive sectors in the market and the trade-off between their growth prospects and earnings in the next few years looks especially attractive.”
Unfortunately,
the risks of this particular trade were not articulated, and I feel
that the risks are material. Far be it for me to disagree with the “U.S. bank that makes the most revenue from trading”, but they have been wrong before – many times before. Reference Is It Now Common Knowledge That Goldman’s Investment Advice Sucks??? or Did Reggie Middleton, a Blogger at BoomBustBlog, Best Wall Streets Best of the Best?for more on this topic.
| Attention subscribers: A new subscription document is ready for download The Inevitability of Another Bank Crisis |
So where is the risk?
The
impact of the Asset Securitization cum Sovereign Debt Crisis to bank
balance sheets should become the market and media focus. The full cost
of cleaning up the balance sheets of financial institutions particularly
against the backdrop of adverse macro shocks emulating from sovereign
defaults is not fully known. Structural weaknesses in sovereign balance
sheets could easily spill over to the financial system due to the fact
that most banks are stuffed to the gills with sovereign debt – highly
leveraged, and marked as risk free assets at par. This can have broad,
adverse consequences for growth in the medium term.
Click here for the rest of this entry »
BoomBustBlog has taken the opposite stance: The
Inevitable Has Finally Been Admitted In Europe: The Macro Experiment
Has Ignited Inflation Without Commensurate Growth & Rates Will
Spike. I have queried many times in the past, Is It Now Common Knowledge That Goldman’s Investment Advice Sucks???.
Those who follow me regularly know that I have no problem running up
against these big investment houses in terms of analytical accuracy and
veracity. See Did Reggie Middleton Best Wall Streets Best of the Best?
to ascertain who has been most accurate throughout this entire fiasco
since 2007. I am not that smart, and I don't have a crystal ball. I
simply understand and respect the Circle of Life and I do not need to
screw my clients in order to make my profits. Let's see where the news
of today puts those Goldman proclamations in reference to my
perspective...
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Reggie, I always enjoy your writting. Try not hitting Enter wherever you think the end of the line should be, it really screws up the formatting. Please just leave it to the browsers to format your content.
The three year delay has provided time to ZH readers load up on precious metals, ammo, and other items that will prove to be valuable after the collapse / hyper-inflation. The can kicking gave me time to redeploy assets and get ready for a far different world than the past 30 years. The folks who have been paying attention have had three years to prepare than if everything had cratered in 2008.
Would it have ultimately been less bad if the financial world had cratered in 2008? I don't think so. The past 100 years of the Federal Reserve, GS, fiat currency, and the rest of the corrupt political / financial structure needs to be swept away for a clean restart. Needed and inevitable whether it started in 2008 or 2011. And it seems like it has started, and there is no solution. As Chris Mortenson says, we have a predicament that can not be solved. Every man now needs to decide what they will do given the inevitable. The current world situation is not a problem that can be solved. We were past the point of no return before 2008. Just a matter of how the predicament plays out.
Well said, Bisnessman. The only good news: the deeper it goes, the easier it is to identify the belligerence, the core and the mechanisms they have used to gain control of the world's financial system. The farther they go, the farther the pendulum's swing to the return to progress.
This all comes down to an economic system where we have never ending numbers growth that is not backed by anything real.
Read:
http://www.amazon.com/Simple-Wealth-Mr-Andrew-Costello/dp/1463523017/ref
I've read the reviews... Hope to get time to order soon.
Boombastic article Reggie, always a good read (getting more readable too:)
But may I split hairs (structures) with you... there is nothing inherently wrong with the way Europe was structured ...in so far as politics has no structure (excet for the monopoly).
Politics has no structure, nor planning, nor strategic or policy direction whatsoever. Politics is about twats supported by useless/skill-less civil servents who wing-it on the hoof by the day and deal with other groups or peer to peer.
Their only skills are blagging, bullshitting and ingratiation. They wouldn't know a structure if it was the size of an elephant sitting on their lap nor know what to do with it. Politicians are clueless
It was not the sturcture of Europe that was wrong (except for being a cabal of monopolies). It was the usual retards seeing what they could raise, spend, siphon off and going irresponsibly ape. Getting away with it.
The current tragic situation and who goes tits up first is nothing structural nor is it anything to do with the currency and its 26 central banks (as many wrongfully blame). The key and the tipping point is plain and simple, the mountain of unpayable debt that was wracked up ...notice how they hit it with 'surprise' (ie. no planning, no foresight, no structure in place)
Politics is a shambles from the people to the process. Structure and planning are not in the house. It is a clown show rolling on the hoof, stumbling and falling like a drunk on the way home from Pub
I like a touch of bombasticism myself. Yours was rather heartwarming Zero Govt.
these clowns have come un-stuck just servicing the interest (the smallest part of the repayment) ...there is no plan whatsoever to repay the much larger capital sum
The US Govt has wracked up a $15 Trillion debt mountain yet there's not a single sentance anywhere, let alone sight of a feasable plan, on how the US Govt will pay off any of this/its collosal bill ..ditto nearly every country in the EU and Japan.. you couldn't make this crap up!
http://www.thetrader.se/2011/11/17/the-trend/
You can't stucco over this financial mess with more paper mache debt. The currency bubble is going to burst. Those deepest into the debt game will be swallowed up first, taking their financial constituencies with them.
http://georgesblogforum.wordpress.com/2011/11/02/the-daily-climb-2/
Powerful blog! I've already referenced one of the articles... Thanks!
Frame it incorrectly as the financial media will, Reggie, your article is a keeper, an economic compass that cuts through the dense economic fog to unmask the truth.
It’s interesting and ironic that the priority now for Mario is a crack-down on organized crime. It’s like the crime bosses meeting in New York to decide who will be the primary manager of the rackets. At the moment, it’s the central bankers.
The EU as you say, has “a faulty foundation," and one of its core problems is that “countries such as Greece lack true sovereignty due to the structure of the monetary union.” And the bankers have loaned on the future until they’ve arrived at the end of the cliff. We and they are there.
The international bankers use fascist-socialism against the producers. The mantra of socialism is that we will all share as long as somebody works and produces. It is a violation of human psychology that there always will be somebody who continues to work while the others don’t or are enabled; that’s why socialism has a shelf life. It’s happening now, it’s decayed on the shelf.
This crisis was brought on by incredible corruption and fascist-socialism combined. The Keynesian rulers used fascist-socialism for state control and eschewed individual free enterprise because it is fragmented and seeks representative self government and the central planners can’t control it. But you can’t pay for something with nothing, not even if you’re a bankers issuing fiat currency. There aren’t enough real assets to go around!
They're going to try to stick the landing. But it won't work because theres no net new cash to feed all the compounding rents. The debt in service : cash in circulation is bound to blow up. Understand that from 1980 - 2008 hundreds of trillions of $ "money" was created outside of legal channels and then spent into th real economy. The bankers are shooting at a hurricane with a bb gun.
Pretty twisted. Govts take the mkt for granted, and treat these issues like a PR annoyance. Easy to understand their position in that up to now....everything floats along and their cululativfe economic decisions have been hidden from view. I seriously doubt many appreciate how hot the fire is or what would happen if the mts were allowed to work properly.
http://mikenormaneconomics.blogspot.com/2011/11/it-doesnt-get-much-more-...
Only two replies. Seems kinda light.
The underlying "real" economy is what matters in the long run. Those who think it is just big boy money pushing everything is delusional at best.
lets hope frau merkel has the balls to make the ponzi collapse; its time someone had the balls. Lets the TBTF spiral down; lets have debt jubilee and make those Oligarchs pay in fiat blood the money they stole to balance the fiat denominated sovereign debt write offs. Clean sheets after the shit has hit the fans and the meltdown has brought risk assets where they belong.
And let the people free of debt cloud.
The only balls Merkel has belong to Sarko.
fundamentals always rule @ the end of the day. always remember. the truth is most hated.
http://expose2.wordpress.com