Europe Will Make Lehman Look Like a Joke

Phoenix Capital Research's picture

So now that one day has passed and we’ve seen a ridiculous 3% move in stocks based on a “bailout” that is nothing short of moronic (Greece is still insolvent and didn’t take a big enough default), the financial world is actually asking itself questions such as:

1)   Does giving a bankrupt nation more money right after it defaults a good idea?

2)   Does requiring an additional $100+ billion in capital for banks that need north of $1.77 trillion in new capital really accomplish anything?

3)   Do bailouts involving more leverage and debt work when the entire banking system is insolvent?


Think about it… Greece is supposed to get its Debt to GDP ratio to 120% by 2020… Can you imagine being a political leader and expecting the markets to buy that?!? Greece had a Debt to GDP of 120% in 2009 when this whole mess started!!!


Already Germany is pouring cold water on it.


Eurozone bail-out: holes emerge in the 'grand solution’ to solve EU debt crisis


Jens Weidmann, the president of the Bundesbank and a member of the European Central Bank, sounded the alarm over the plan to “leverage” the fund by a factor of four to five times without putting any new money into the pot.


He warned that the scheme could be hit by market turbulence with taxpayers left holding the bill for risky investments in Italian and Spanish bonds. “It is tied to higher risks of losses and to increased sharing of risks,” said Mr Weidmann. “The way they are constructed, the leveraging instruments are not too different from those which were partly responsible for creating the crisis, because they concealed risks.”


Again, this entire deal is moronic. It accomplishes nothing. It’s a purely symbolic move. All Europe has done is use up the verbal intervention/ bazooka card.


Oh, and then there’s the issue of the German people and court system:


            German Constitutional Court Halts Special Euro Panel

Germany's highest court has issued a temporary injunction banning the work of a new panel convened by the country's parliament to quickly green-light decisions on disbursement of taxpayer funds through the euro bailout program. The decision could lead to further delays in German decision-making in efforts to rescue the beleaguered common currency.


Folks, this issue isn’t over… it’s not even close. The credit markets know this, which is why they’re predicting more Greece haircuts in the future. It’s also why IMF has decided to lend Greece another $137 billion… right as the country defaults.


The reality is the following: the. Euro. In. Its. Current. Form. Is. Finished.


We had the exact same market action after Hank Paulson’s “Bazooka” in 2008: a massive rally based on a pointless waste of money. Do people forget that the following 2-3 months after that was when the Crash hit?


That was only three years ago. Do you really think Europe, which is even MORE insolvent that the US, is somehow going to experience a different ending? They’re in far, FAR worse fiscal shape that the US was in 2008 (including unfunded liabilities, REAL Debt to GDP levels for most EU members is north of 400%... heck even Germany’s is over 200%).


How do you really think that will play out? EU banks are leveraged at 26 to 1 and need to roll over between 15% and 50% of their total debt in the next 14 months. How do you think that will play out when the PIIGS and Germany are having trouble with sovereign bond auctions?


Folks, Europe is going to go the same way we did in 2008. The only difference is that the European banking system is MASSIVE ($46 trillion in assets… an amount equal to 82% of global GDP)… so when it goes down, it’s going to make Lehman’s failure look like a joke.


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.

What happened in 2008 was literally just the warm up. The REAL DEAL is coming in the next 14 months. And it’s going to involve corporate, financial, and sovereign defaults.


On that note, 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: 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 the best most profitable strategy for individual investors looking to profit from the upcoming US Debt Default, my reports covers it.


And ALL of this is available for FREE under the OUR FREE REPORTS tab at:


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Fíréan's picture

Bollocks. Spread great fear and then offer, at a cost of subscription, to be the holders of all solutions.


So if you have not already taken steps to prepare for systemic failure, you NEED to do so NOW


But i guess that there are people who buy into this sales copywrite stuff.

I wish that ZeroHedge  would stick to the factual articles, though i guess they have to make money to run this show.

DTCC 1999's picture

According to Casey Research last September foreign central banks went from buying 500 billion in US treasuries to selling 1 trillion...  

Whether the largest drop ever was the result of China dumping our shit will be reported (maybe even accurately) in a couple months.

The trade war drums are beating with China and sure they would drop the dollar for gold or a basket of world reserve currencies - but is that fucking feasible all of the sudden that the EU is offering a unified bond when they are still in awful shape???  

Seems more logical that it was manipulation by the fed so that private interests could make a shit ton - kinda like last time around: 

Wish we were along for the ride - I liked this country. 

Politicians can't be expected to know what the fuck they are doing with all the issues going on that they have to be involved with.  But they should be expected to gather that information and act on it as well as possible.  

As for being the next super power - china doesn't stand a chance against those who pulled off total regulatory capture here in the US.  What's even the point of putting my already soon to be thoroughly fucked ass (for stupidly pissing off the wrong, possibly psychopathic, establishment dude) further on the line in providing examples - they are every where. 

"A mighty fortress is our G-d." Psalm 46  

Catch22's picture

Summers reminds me of Ashby Bladen who used to write for Forbes some 20 years or so back. Same song every issue. Funny thing, he was right...if about 20 years too early.

nothing can go wrogn's picture

Standby for more Greek riot footage.

How come nobody talks about Iceland anymore? Didn't they kick the bankers out? Now they're bundled up, sipping cognac, nibbling on some lutefisk and watching the world go by.

catch edge ghost's picture

Meh. The Market is a soap opera, scripted, full of quotes and fury, signalling nothing. 

You want a survival guide?  Put down the sour grapes. Put down the torch and fork.  Buy a mid-cap index and refinance your mortgage with a TBTF bank thru HARP so the bank can dump the original into Fannie's black hole for wayward securities frauds.  Simple.

- No matter. Try again. Fail again. Fail better.

MiningJunkie's picture

The "Vegas analogy" is flawed. Gold has protected me since 2001 because it insulates you from the bullshit. When you own it under $350, who gives a shit about 10% corrections? The risk was losing all of those assets in favour of rotting cash back in September paying some mutt 2 and 20 to do what? Lever you up and then get smoked out in an orchestrated margin call?

CASH is trash and hard assets are king because the policy-makers are in full-blown PRINT MODE. What ever the disaster outcome, the solution will be lower purchasing power of cash. Concentrate on preserving purchasing power of savings and you have it nailed.

Raskolnikoff's picture

Problem is gold is so heavy and hard to hide. let it leak out that you have any gold and I wouldn't doubt that someone would come to relieve you of whatever gold holdings you have. Gold is heavy and consequently just a sukosh-illiquid. However, I must admit, finding a way to spend/convert gold without losing it to bandits would be just the sort of problem one would like to have.

Ever read John Steinbech's short story 'The Pearl' ? I believe that is the kind of senario most gold owners are going to have to face. Life is so unfair and man is so unjust, eh?

I like the Chinese movie 'To Live' (Huozhe). A man gambles away his family fortune in the latter part of the Nationalists' rule in pre-Communist China, so he is penniless when the revolutionaries come, who then execute the man who stole all his money gambling dice with him.


eurogold's picture

This article must be some sad joke to make Americans feel good. So Sorry to burst the bubble, but Europe is in-fact still better off Economically / financially compared to the U.S.A.

Graham.....Does anyone take this moron seriously?

ZH.....Look at the numbers before releasing such trash.

ebworthen's picture

I enjoy his posts, to the point and accurate.

Just because the cotton candy stock "markets" are not tethered to reality at present doesn't mean they won't be or that Mr. Summers is wrong.

Hard to argue with this sentence:

"Again, this entire deal is moronic. It accomplishes nothing. It’s a purely symbolic move."

Greece has promised to move the retirement age from 65 to 67 by 2026, in 15 years!

Our noble representatives in the U.S. have already screwed us over and accomplished that move in the present.

The markets are not markets, the banks are insolvent, and this will eventually all end in a collapse greater than the "Great" Depression of the 1930's.

Reference history; ours is a more protracted and complex South Seas Company or Black Tulips bubble, period.



MiningJunkie's picture

Graham: I have a Special Report for you that says that essentially you are FOS. You have been trumpeting Doom and Gloom for at least the past two years and you have blown your brains out and missed the biggest monthly rally in decades because you fail to begin from the premise that "CASH" is rotting in bank accounts. Even a trained chimpanzee can take his cash and BUY silver coins or gold or Exon-Mobil or move the money to Canadian or Ozzie currencies in order to be protected. What we DON'T need is your "Special Report". is my new MUST-READ website that is required for you to survive.

Gigik's picture

How come nobody talks about Iceland anymore? Didn't they kick the bankers out? Now they're bundled up, sipping cognac, nibbling on some lutefisk and watching the world go by. Gigik from virus protection

Raskolnikoff's picture

I feel like I'm becoming a Buddhist with each passing event in this country and the world. Real wealth is an illusion in this country and world and soon this illusion will evaporate to such a degree that no one will be fooled by it's allure or false security it offers. So, maybe it's better to lose in the game that is the market now, as the supposed winners, annoited or not will be in a severe shock when they are ultimately fleeced by the harsh reallity the Fed and the world leaders are trying to hide from us now. 

StychoKiller's picture

Take the next step, alleviate some suffering:

RMolineaux's picture

Whenever anyone claims that you can "profit" from a coming crash, I immediately tune out.  It is precisely this vulture, screw your neighbor approach to investing that has brought us to this crisis.  Tell Summers to take his newsletter and get lost.

ebworthen's picture

Reminds me of my buddies who told me I was a fool for missing out on the action at the Craps table in Vegas, they were "Winning" and getting free drinks.  It was good for them for a time, but eventually the house won and their haggard downtrodden looks were all I needed to not feel like a fool for sitting by the pool watching the beautiful women.

Boston's picture

Oliver Sarkozy (Nicolas's brother) wrote an ominous piece in the FT a couple of days ago.

In it, he pointed to $55 trillion in total European banking assets, not $46 trillion.

The ticking time bomb is even bigger than you thought!

max2205's picture

Tyler please get rid of this guy. PLEASE

DosZap's picture


and a recession will start.


You are kidding RIGHT?

Son we are IN A Depression NOW.

e-recep's picture

Yet another Graham Summers apocalypse classic. I'll skip this one.


tempo's picture

But with consequences so dire and with Obama's election within a year; it is unlikely that the EU will not continue to issues plans and agreements through 2012. 2013 is another issue. That's when both higher taxes, reduced spending, and a recession will start.

Bollixed's picture

"and with Obama's election within a year"...

What is this? A post from 2007?

viahj's picture

I don't think that the iceberg much cared what flag was waiving at the stern of the Titanic, nor what music was being played in the grand ballroom.

DosZap's picture


I sent the e mail for your  SPECIAL REPORT 2 days ago, I have not recieved ONE report.

Havesting emails???.

Where is the FREE REPORT?

Was supposed to recive it the next DAY????.

Elwood P Suggins's picture

Why did you send for it?  Since it would come e-mail it can't even be used for toilet paper - unless you're dumb enough to print it of course.

Phoenix Capital - the Disaster du Jour folks!


MGA_1's picture

Nah... Europe's gotta print a lot of money to hold things together - I think we rally like we did after March 09.

spartan117's picture

It's insane to go short against paper, when governments can simply print more. 

Ponzi Unit's picture

Right you are, spartan. I tried shorting the market 2009-10 until I FINALLY caught on -- pre-ZH, I might add. 

Hat tip to Tyler & Co.

BigJim's picture

... and when they need to, if only to put off the evil day of reckoning until they're safely retired.

Joebloinvestor's picture

You can't fight a group of great liars.


On top of that, the markets heard what they wanted to, never mind the details.


It is a matter of perception of success, until it unravels.

Tense INDIAN's picture

sadly SUmmers was one of the 1st authors I came across when I started taking interest in the markets ...wasted PLENTY of my time

sabra1's picture

if the markets were'nt manipulated, where would the indexes be? 

common_sense's picture

HUMMM... SP at 400 probably...

And the FED is againts some banks because they use privileged information, please, are u kidding, central banks??? YOU DONT USE THE FUCKING INFORMATION, YOU MAKE IT AS YOU ANS YOUR FRIENDS DESIRE...MAKING ALSO GOOD PROFITS OF COURSE...IS THIS JUNGLE OUT THERE... BUT NOT WITH ANIMALS... "HUMAN JUNGLE", EVENT WORST...




common_sense's picture

may be next year, this year the rally just starting... why? no fucking idea, or... may be in wall street they "see" how everyone is positioned and the read also market sentiment psicology, and MOST of PEOLE are short, so it's simple for them to be fucking BULLISH. Irrational, but VERY VERY VERY LUCRATIVE FOR BANKERS AND THIEVES. THIS IS CALLED FREE MARKET IN OCCIDENTAL COUNTRIES, I CALL IT "INTERNATIONAL BANKER'S GAME", ONLY INTERESTING FOR VERY VERY VERY RICH PEOPLE AGAINST OTHER VERY VERY VERY RICH PEOPLE... I'M HAPPY anyway, i don't need to be rich like them, is not my oobjective in LIFE... remember: ROSEBUD...THAT IS REALLY HAPPINESS, AND I GOT IT. FUCKING MARKETS, SPECIAL MANIPULATED AND INTERVENTION MARKETS.

BigJim's picture

But think of the many vintage, Orsonian sleighs you could buy if only you were rich too!

Buy! Buy! Buy!

Sudden Debt's picture

All prepared! Let the good times roll!.

FunkyMonkeyBoy's picture

How's that 'proven' crash indicator Graham? Still flashing red?

Mugatu's picture

Phoenix Capital and their "$500 prepare for Armaggeddon Kit"  are the Sham-Wow of the Financial World.  

Sham Wow works, but you can use a towel for nothing, so why pay?  

Just buy gold and save yourself $500!

Financial_Guardian_Angel's picture

I only peek at Graham's posts to see the hilarious comments ripping this waste of oxygen and photons.

He belongs in the Cramer hall of fame (shame).

Milton William Cooper's picture

You don't understand....this was the SAME indicator that went off during the Nasdaq bubble, Real estate bubble. etc.......lolz

FunkyMonkeyBoy's picture

Yeah, it's probably going off all the time... even as the DOW goes up over 1000 points in 2 weeks.

falak pema's picture

sounds about right to me for the USA too...So why did the banks sucker out?

As for the debt/equity ratio of US banks, if you factor in the dreivatives correction it blowns to stratospheric regions unattainable by Euro cumulative bank debt. And that derivative correction will occur if Euro caves and triggers an even bigger meltdown in USA.

eddiebe's picture

Sounds about right to me.

Pladizow's picture

OK then Graham, how would you collapse the world and make it beg for a NWO?