Either the ECB Prints and Germany Walks… or the EU Sees a Domino Debt Collapse Followed by Systemic Failure

Phoenix Capital Research's picture

By now, even the mainstream media is realizing what I’ve been saying for well over a year: that the EU in its current form is finished.


I initially believed that we would see Greece kicked out of the EU. However, at this point it looks much more likely that it will be GERMANY who leaves.


The reason is quite simple really. Germany WILL NOT tolerate debt monetization. They’ve seen how that situation plays out (Weimar) and will not allow it again, END OF STORY. If the ECB opts to print money, Germany is out.


So… the only other option for the EU to last is the leveraged EFSF. However, as we’ve seen, that option is a dead end as well:


No new Euro zone money for debt crisis at G20


The Euro zone won verbal support but no new money at a G20 summit on Friday for its tortured efforts to overcome a sovereign debt crisis, while Italy was effectively placed under IMF supervision.


Leaders of the world's major economies, meeting on the French Riviera, told Europe to sort out its own problems and deferred until next year any move to provide more crisis-fighting resources to the International Monetary Fund.


"There are hardly any countries here which said they were ready to go along with the EFSF (Euro zone rescue fund)," German Chancellor Angela Merkel told a news conference.




Remember, the EFSF failed to even stage a 3 billion Euro bond auction without buying some of the bonds itself. And with no one in the G20 wanting to fund the EFSF, the EFSF is in no way going to backstop Europe.


So there are now only two REAL outcomes:


1)   The ECB prints (and Germany walks) resulting in the Euro losing at the minimum 30-40% of its value

2)   Massive defaults and debt restructuring accompanied by systemic failure in Europe


These are the facts. I know that the mainstream financial media and other “experts” like to proclaim that Europe can somehow muddle through this, but they’re wrong. The EU kicked the can down the road for over a year in terms of debt restructuring for Greece. Now it’s facing a problem it CANNOT possibly bail out: Italy.


In other words, the can has finally hit up against the wall. The market is not willing to lend to Italy at present levels. Nor is the market willing to lend to the EFSF. The only two potential backstops for the EU are now Germany or the ECB. And Germany WILL NOT allow money printing/ debt monetization to take place.


Folks, I don’t know how else to say this, but if Europe experiences just a 2008 type event, it will be LUCKY. The entire European banking system is leveraged at 26 to 1. At these levels even a 4% drop in asset prices wipes out all equity.


Add to this the fact that with unfunded liabilities included, the average EU member states sports a REAL Debt to GDP ratio north of 300%, and you’ve got the makings of systemic failure. Indeed, even Germany, the supposed beacon of fiscal stability has a REAL Debt to GDP of 200% (this data point comes straight from Axel Weber’s mouth) and has yet to recapitalize its banks.


And Germany is THE most solvent major member of the EU.


I cannot say just how bad things will be when the stuff hits the fan in Europe. But the EU is going into a banking/ sovereign crisis with WORSE fundamentals than the US had when it went into its own 2008.


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.


When this happens the entire system could go down. I’m talking about bank holidays, sovereign debt defaults, retirement accounts and pension funds wiped out, even food shortages in some areas.

So you NEED to take steps now to prepare for all of this. This includes having some cash on hand as well as actual physical bullion. It also means stockpiling some food and water.


And if you’re looking for specific ideas to profit from this mess, my Surviving a Crisis Four Times Worse Than 2008 report can show you how to turn the unfolding disaster into a time of gains and profits for any investor.


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).


Best of all, this report is 100% FREE. To pick up your copy today simply go to: http://www.gainspainscapital.com and click on the OUR FREE REPORTS tab.


Good Investing!


Graham Summers


PS. We also feature four other reports ALL devoted to helping you protect yourself, your portfolio, and your loved ones from the Second Round of the Great Crisis. Whether it’s my proprietary Crash Indicator which has caught every crash in the last 25 years, or how to stockpile food (where to get it, what to buy, and how to store it) our reports cover this information in great detail.


And ALL of this is available for FREE under the OUR FREE REPORTS tab at: http://www.gainspainscapital.com.


















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silverscouseparis's picture

there is another option-germany stays in and theres a lot of debt destruction and bank collapses first in europe then around the world.

electricgorilla's picture

<<<slowly picks up nickels off the bedroom floor, dusts off, then places in large bucket


boiltherich's picture

I do not even stoop over for quarters any more, they will not even buy you the calorie equivalent of the energy used to bend down and get them.  Might as well leave them there for the homeless people to pick up, and after all that is the GOP plan for less fortunate Americans right?


Clowns on Acid's picture

No Shiite Dick feckin' Tracy! Master of the Obvious....

jomama's picture

no mention of SDR's?!

(or aliens for that matter)?!

Crisismode's picture

WHAT? Your last World-Ending-Drama Did Not Happen On Schedule?


Now we have a NEW WORLD-ENDING-DRAMA of the week?





AndrewCostello's picture

People should have a choice between the Euro and National currencies, then let the market decide.  The only thing worse than the Euro is the US dollar - sadly, people are fools and continue to buy it.




BW's picture

The ECB will continue to print and Germany will pretend they hate it.

bill1102inf's picture

If the Euro loses 40% of its value IM GOING TO AMSTERDAM BITCHEZ!!!

hivekiller's picture

Socialism is for losers. It rewards the weak and handicaps the strong. You'd think people and countries would figure that out after awhile. I think all they are doing is replacing the Euro with SDRs. The plan all along. They will crash the dollar and do the same here. One fiat currency to rule us all.

Freddie's picture

Oddly ZH has more than a few AH's who voted for Hope & Change though McCain was the Democrat Party/Soros back up plan. 

BTW - Holland is also talking about holding a referendum to leave as is Austria.

bill1102inf's picture

Americans believe socialism is a four letter word. Meanwhile, the most succesful non 1%ers in America are the socialists.  POLICE, FIRE, FED, STATE, LOCAL, DOJ, DOE, Post Office, etc etc etc.  are ALL socialist programs run off the backs not of the others in the program but the people who actually believe they live in some kind of 'democracy' without even knowing what that means, nor that they are suppose to be living in a Republic.  Truley amazing the lies Americans believe.

Milestones's picture

Here now,--hear,hear!!                Milestones

Freddie's picture

The unionized govt workers and union workers with the politicians are the elites or oligarchy living off the backs of others.  Attorneys and doctors create their own cartel as do investment bankers.

You also have people getting money from the govt in welfare, food stamps, illegals getting endless benefits.  They are protected classes by the oligarchy an dtheir foot soldiers.

The rest are the sheep paying for it. 

These MF'ers always throw out this propaganda that teachers, cops and firemen as like Mother Theresa or annionted saints.  F  unions and unionized govt workers.  

Bananamerican's picture

last i heard, Germany and all the other "Nordic" countries were doing relatively well vis a vis their "indolent, sunny, southern" EU neighbors...

and not a single Ayn Rand Free state in the Teutonic lot...

Quite "Socialist" in fact.....

Seems there isn't a single, monolithic, socialist paradigm...

Now get a haircut and pick a gender

AldousHuxley's picture

You have the opportunity to unionize in your place of employment or profession

You have the opportunity to go to law school and joing attorneys cartel

You have the opportunity to study in med school and join the medical cartel

You have the opportunity to go work for government unions

You have the opportunity to join wall st cartel as wall st. analysts

You have the opportunity to sign up for welfare, food stamps, free medical care at the emergency room

You have the opportunity to become a teacher, cop, firemen, mother theresa


BUT there is only one way to join the elite ruling class....be born in it or marry it.

Communism, Capitalism, Socialism....-isms don't matter they are equally vulnerable to corruption by nepotism.

caerus's picture

the true story next week imho will be the farce that is the "super duper" committee...they are already preparing a plan "b" and further delay of any decisions that mean anything of import to the supposedly free citizens of this country...the requisite cuts will not be made...decisions of any import will be delayed..and the sad charade will continue...the debt burden will grow and u.s. ratings will be cut...

"although the official deadline is midnight wednesday, the committee is legally barred from voting on any plan that was not made public at least 48 hours in advance."

deficit panel gridlocks as deadline nears

time has run out...these are not supermen nor superwomen...these are hardly citizens...

StychoKiller's picture

Gad, I hate being right about US Govt gridlock! :>(

Freddie's picture

What gridlock? Obama, GE, Soros, et al are looting the Treasury.  GE is making tens of billions in net income with their shit company that is a huge debt pig.  I support business but small and smaller businesses.  These mega crony capitalist companies are just like facist Italy under Mussolini.

Sadly the OWS people generally hate capitalism while the conservatives, which I am one, do not realize the mega corprations are by and large - shit.  This includes Apple which the lefties love.

I loathe John Stewart but the lady reporter on his show nailed it.  The f**ktard hipster refused to give up his brand new iPad with the others in the lower class section of Zucotti Park. The AH supported "personal property" not "private property!!!"  WTF does that mean?  Where did he learn nonsense like that? Harvard? NY Times?

In weatching the video - the smug wealthier Ivy League OWS marxists were far more evil than the poorer clueless lazy OWS crowd.  The Ivy League "aristocrats" which one of the poorer OWS group call them - wanted to have meetinsg are rule over everyone.  They were all f***ing ideal drone marxist bureaucrats for the Kenyan Muslim's Administration.  

riley martini's picture

 Before fascism took over the market loved grid-lock , now the (market) is dependent on the next bailout or bribe induced liquidity.

boiltherich's picture

Ah another episode of "AS THE EURO TURNS."

Buck Johnson's picture

As the Euro turns down the toilet bowl.

Gordon Freeman's picture

Summers, like all the doomsayers, you are dead wrong.  OF COURSE, THE ECB WILL PRINT, YOU MORON!  AND GERMANY WON"T SAY A WORD!

Do you honestly think that Germany would PREFER to see its economy DIE along with the rest of Europe, based on some hypothetical scruples about hyperinflation??  Do ANY of these people strike you as being in any way principled??

Europe will take the same gamble as the US: fix the problem with the printing press, and worry about the consequences later.  Result: equity rally, commodity rally, Asian rally, etc, and everyone gets re-elected.  All resulting inflation will be disguised: that's what the US and China do, and Europe wil do it, too.  They're just waiting for 1) the point of maximum pain 2) that all "concerned parties" have their bets placed in the desired direction, for maximum profit.

Plus c'a change...

buyingsterling's picture

All of this has one consistent element: Even if the unravelling has been anticipated for years, the speed with which things are now happening seems to be exceeding most peoples' expectations.

catch edge ghost's picture

I hate this fucker's posts.

High Plains Drifter's picture

what if germany stays in the eu and the ecb prints anyway?  what then?   weimer?  so what?   its not about what the germans want. gads....

masterinchancery's picture

Hyperinflation kills, while it is destroying the middle class, as more than 30 examples show.

SirPlayomic's picture

Switzerland was smart enough, since it didn't adopt the Euro or even join the EU.


dolly madison's picture

Yes, Switzerland is awesome.  They also have the most participatory democracy of any western nation.  They have a constitutional amendment that forbids their soldiers to fight on foreign soil.  All able bodied men are trained to fight and given a rifle to take home in case they need to use it to defend their country.  They also have banking secrecy, which may irk other countries, but I think it is a good thing.  Secrecy of the individual and transparency of the government is the optimal way.  Switzerland is worth copying IMHO.

New_Meat's picture

dolly, banking secrecy in the past tense.  - Ned

theprofromdover's picture

Germany wil 'never' walk, until Sarko finally admits how much France needs to stay afloat.

Anglea will be soooo surprised.

High Plains Drifter's picture

i have been hearing this kind of stuff for years.............i know its coming but when......but when........

Diogenes's picture

When you least expect it. That is, long after you get tired of anticipating it and go look at something else.

I've been waiting since 1971. Does anyone remember Robert Ringer? How about Harry Browne? I liked calling his followers the Harry Browne people, it made them sound like a bunch of Rastas.

technovelist's picture

I remember Harry Browne. In fact, I met him and did some work for him in the 1970's, and was sad to hear of his death a few years ago.

Uchtdorf's picture

In 1971 my father was reading the same material and predicted a crash in 72-73. The can kicking has been going on a long time.

Landrew's picture

There was a crash! Are you re-writing history? People were wiped out, Nixon left the gold standard! People all over the world were wiped out in the bond/equity crashes! Read some fracking history!

High Plains Drifter's picture

the biggest mistake anyone makes is to underestimate the cleverness and the resourcefullness of the jewish money lenders..........

Sabremesh's picture

The systemic crash didn't happen in the seventies, but gold increased in value by over 2,000% during that decade. Just sayin'.

Bollixed's picture

"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."

So ask yourself...Has this guy Summers ever been wrong?

Zero Govt's picture

"It also means stockpiling some food and water"


I've got 2 bags of popcorn and a 4x pack of Red Bull... will that do?

...anything more and i'll pop down the shops if that's ok Mr 'Bunker Batty' Summers

Haddock's picture

Hasn't this entire 'article' been cut and paste from Tyler posts?

Am I missing the joke?

butchee's picture

You are correct about this "contributor".  No value added, cut and paste hack.

JamesBond's picture

similar to george washington

willien1derland's picture

So referring to Graham Summer's options & we assume Germany remains & begrudgingly allows the ECB to inflate the Euro - would the Euro truly devalue 30-40%? What occurs within the Foreign Exchange risk worldwide?

When you consider the other Central Banks who are also engaged in inflation; BoE, BoJ, U.S. Fed, SNB - then you have the PBoC who have invested quite a bit in Euros at much higher values - Negative real interest rates would abound & the race to the bottom becomes a bit contentious, no?

What about commodity prices? If the U.S. Fed QE2 program was truly responsible for the inflation of soft commodity prices which attributed to 'Arab Spring' what happens when most developed nation's Central Banks invoke the printing press solution?

Do all Commodity, Equity, & Futures market around the world modify their quoting systems to accept scientific notation?

max2205's picture

I love this shit

rambler6421's picture

Print baby Print.  Gold and silver to the ROOF!



Sudden Debt's picture

PM's will keep their current value, all the rest will fall off a cliff.

StychoKiller's picture

Same difference -- Au/Ag becomes more valuable!