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The Most Dangerous Country In Europe
Submitted by Mark Grant, author of Out of the Box,
One of the primary focuses of "Out of the Box" is on where you might get hurt and, more importantly, seriously hurt. "Preservation of Capital," the first ten rules of my thinking, has reached epic seriousness in a world with interest rates at unsustainable lows and underlying economic fundamentals that cannot support today's yields. The irrational game goes on based upon one thing and one thing only which is the creation of capital by all of the world's central banks. The money must go somewhere and so it does but the disconnect between the equity markets and bond yields from the real world is frightening.
"Begot of nothing but vain fantasy."
-William Shakespeare
Nowhere on the planet is it scarier than in Europe. Made-up numbers, un-counted liabilities, four years of inaccurate projections from the ECB and the IMF and securitizations parked at the European Central Bank that have all of the credit worthiness of an empanada restaurant in Lisbon. Money flows in, yields go down, the amount of debt increases and few pay any attention to the entire equation which states that what must be paid is the interest rate times the amount of debt as the Draghi bravado overcomes everything. Scant mention these days of the total amount of debt accumulated by the sovereigns as the 3.00% debt limit has become the most elastic of road signs or a trivialized fairy tale by many accounts.
With the banking system in Europe now posting non-performing loans that have reached all-time highs while the recession on the Continent deeps and worsens with the passing of each week I have cast a weathered eye at Europe. Most of us are aware of the dangers in Greece, Cyprus, Portugal and Spain but a careful analysis reveals that these are not the most dangerous of countries. They have problems, they are in dire straits but they do not hold the title of the greatest risk in Europe.
That title, in my opinion, belongs to France.
The Germans ballyhoo and point fingers at Cyprus, Luxembourg, Malta and the like as being financial centers where the banks are much larger than the economy. Yet nowhere in Europe is this issue so pointed as in France. The French banking system is 400% bigger than the economy of France and this is the worst ratio in all of Europe. Please compare this to the American situation where our banks are roughly equivalent (100%) with our economy.
The combined tax rates for wealthier people is not the 75% number that we have seen bandied around but more than 100% for the richest of France. Even the Supreme Court of France has declared this not taxation but confiscation. Mr. Hollande does not want any more austerity but wants to increase social programs, add more sovereign debt, raise their equivalent of social security payments and lower the retirement age. Whatever political niceties that have been bandied about it is clear that Germany and France are in diametric opposition.
Then as France slips further into recession and as their non-performing loans increase and as their massive amount of securitizations rapidly decline in value; their banking system will come under extreme pressure. Much is hidden and cloaked in France but bills that must be paid will begin to take their toll and the uncounted liabilities do not disappear just because no one adds them up correctly. France, in my view, is a powder keg waiting for some fuse to be lit and it will not be a Belle Epoch Ball at Versailles when it does. There will be fireworks aplenty but no cheering crowd to accompany them.
If there is any good news here it may be that Chateau Petrus may once again be affordable.
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It had to be the best deal in town.
Ever since the HKMEX opened two years ago to the day the manipulating went on through the night. But lately with the relentless takedown and hammering the PMs have seen the HKMEX was “untill now” able to deliver gold or silver at spot prices. In south China the traders are accumulators of the physical metal, they will never trade real money until the true market price is revealed.
And this is what we are waiting for. A true default history is made!
Next London and New York
http://beforeitsnews.com/gold-and-precious-metals/2013/05/hkmex-to-cease-trading-will-close-out-cash-settle-open-contracts-monday-2502374.html
http://www.mondovisione.com/media-and-resources/news/hkmex-successfully-closes-out-all-open-positions/
http://www.scmp.com/news/article/1240917/hong-kong-mercantile-exchange-closes-its-doors
http://www.brotherjohnf.com/archives/171168
http://www.investorvillage.com/smbd.asp?mb=144&mn=114842&pt=msg&mid=12805145
/delete
The biggest risk in Europe is France..
Sorry Tyler, Italy wins this hands down...
France is very bad yes... But Italy........!
I dunno, Gary... I think that France may be the greater danger because it is perceived as stable. "Everybody" knows that Italy has big problems.
And let us not forget Luxembourg, with a very real bank run actually taking place, and 22 times GDP to bankster asset ratio.
http://blogs.wsj.com/deals/2013/03/27/luxembourg-malta-were-no-cyprus/
Though having a banking sector at 91% of GDP is no small amount, it pales in comparison to tiny Luxembourg.
Luxembourg — 2174%
so off-topic but +1
Around the world today, millions still speak French as either a first or second language. But with your continued support and help, we can wipe out French in our lifetime. Please leave a message in English at the tone, and remember, if someone tries to speak French to you, just say, "non".
merci beaucoup.
is it safe to assume that this guy is learning Mandarin Chinese?
"There will be fireworks aplenty but no cheering crowd to accompany them."
There will be cheering, and plenty of it, make no mistake about it lol
There will be an EU political crisis that is suddenly resolved with an new EU Constitution and a full federal union. And yes, there will be cheering, flag waving, and mass debauchery.
you must be flemish ! don't worry pal, you're soon to be pushed north out of this country like in 1830
uncounted liabilities do not disappear just because no one adds them up correctly
For those who avoid it, truth is the scariest of all things because it does not dissipate.
uncounted liabilities do not disappear just because no one adds them up correctly
No, but they tend to disappear quite rapidly with the judicial use of genocide.
mG back to Euro bashing. The market does not reflect this :
http://www.businessinsider.com/euro-equities-making-comeback-2013-5
Amazing how this Folies Bergere market mystifies people...
That's his point.
If you think stock market runups are all the good news you need go spend your $ in Argentina, or Zimbabwe for that matter. Another eg - the housing market didnt reflect the fundamentals .... until it did!
BTW..... Business Insider hahahahahahahahahahahahahahaha
K@
well that is what corporate america who runs this game says as well...BI is MSM viewpoint, for what its worth on this crazy train.
"You are either with us or against us"...Is their current song.
Roubini says they will continue to sing it successfully for TWO more years; then kapoom.
So chose your own scenario on that one.
"You are either with us or against us"...
Slightly OT, but I'm curious how many people know where that saying originates. I suspect only a few of us do.
hegemony of athens; melian dilemma. Thats my pitch, but history is sooo ancient and it rhymes.
Ps : this reference is prior to the references above made to the scriptures.
I believe it's attributed to Jesus in both Matthew and Mark?
Appears first in Joshua, then in Matthew and Mark, but also Paul's letter to the Romans and his first letter to the Corinthians. But the origin is the same in all cases.
"Every nation in every region now has a decision to make. Either you are with us,
or you are with the terrorists." - George W. Bush
No further explanation needed.
completely agree with the article. France is closer to Italy and Spain than to Germany. Also while both the people of Spain and Italy have in the past tolerated dictators like Franco and Mussolini, France cut the heads or worse of their last set of dictators...
With regards to the size of your liabilties, please understand that it doesnt matter for a. Long as you pay the interest payments on time. It doesnt even matter how you pay them for as long as you pay them, the how only matters to the people trying to see the future to de ide how much to charge you... as an example did GE or Ford ever pay their loans? The name of the game is free cash flow as it indicates yor ability to pay your debts. Also key is your access to the printing press, meaning, will you be able to just print your interest payments like the US isdoing?
At this point your question must be, until when can this go on? The answer is very complicated but in essence it will go on while other Countries still accept the US dollar to ship goods to us in exchange for them. Do you remember the typical native american movie with the local guy asking "can I eat this". that is where the buck breaks, not any earlier... will it break? I doubt it since the US IS STILL the least ugly place... dont believe me? Go abroad and live there for a while, a year at the least.
Until next time,
Engineer
Anyone think France would accept ECB 'conditionality' when the time comes?
in theory (depends from the scenario) I do. note that my prejudice against France is that they follow the "in doubt, nationalize" template
and in all fairness when Hank Paulson brought his "save the megabanks bill", if I had been in Congress I would have said: for that kind of money, a "French Solution" would have been more... responsible. as the British did, in part
though the question is IF the time comes. plenty of different scenarios possible, yet
Dsk agrees with that assessment all the while saying that Mutti and Draghi made the wrong decisions on Greece and Cyprus.
They should have written off Greece, thats what he wanted when in IMF, also for Ireland.
Now he says Europe LACKS structural competitivity and sees as solution an alliance between Europe and Africa where the growth potential is.
France will have to eat humble pie for many years; but as for Euro zone, it looks at a grey dawn for many a morn to come.
Africa is a powder keg under Pax Americana thumb and France's dumb play along with it to control RMs will have fall out.
Much disruption before anything positive will happen, unless the Chinese step in to hotten the competition, which they have.
China..step in to hotten competition?..Good lord, man...China owns the best arable land in Africa..Game over...Rice planted.
yes point taken but their activity limited to ex brit colonies like Sudan/kenya/Ghana should go continent wide...in next ten years.
How else can the derivative conundrum be solved, except by nationalization of the largest banks and actual netting of notional values? The money supply isn't big enough to unwind the positions without destroying the economies involved.
"....their banking system will come under extreme pressure."
Well, it's already under pressure. Why do you think Hollande made such twist and turns.
Someone (French) already said it:....
"Vive La France, F--k La Balance..."
Could it be that Mr. Hollande beats Mr. Abe to the uninviable position of preciding over having international capital markets lose confidence in his country's finances?
I didn't see that coming. But at least the German exporters will benefit when the Euro depreciates even more...
http://nipponmarketblog.wordpress.com/
C'est n'est pas possible...vive la France !
Who the fuck cares what the tax rate for the rich is in France?
Those with money have never paid it anyway, they were never to be part of the third estate and now are playing the 'crisis' for their own benefit.
All these panicing articles are becoming the modern "The Boy Who Cried Wolf'.
"In an age that is utterly corrupt, the best policy is to do as others do"
The French are assholes anyway. The sooner they go down, the better. Let's get this financial collapse rollin' !!
it just doesn't matter
+1 for caddy shack referance.
+1 for truth in brevity.
“In politics, stupidity is not a handicap.”
- Napoleon
The EU elite are in a rush to push the integration of Europe as quickly as possible before the wheels come off. On the fringes of EU meetings rapid horse trading is going on as they try to agree a united states of Europe, however they have forgotten the Scrooge truism – “them that has the gold makes the rules” and these guys are too deep in debt. The end is coming and what happened in Yugoslavia is the model for events in Europe.
Terror is only justice: prompt, severe and inflexible; it is then an emanation of virtue; it is less a distinct principle than a natural consequence of the general principle of democracy, applied to the most pressing wants of the country.
- Robespierre
spot on except for ONE minor detail : you cannot be judge and party; as he found out to his own dire dismay.
He fathered the birth of totalitarian state in Europe. Awesome privilege, after Julius Caesar did it as military dictator of an Empire which Robespierre's successor tried to emulate but failed.
France is iconic european nation having produced the best (very ephemeral privilege à la Lafayette) and the worst ( recurrent) of Europe's leaders.
I prefer chardonnay to all other whites.
During an emergency, the seemingly impossible suddenly becomes doable. Once the crisis hits, they will cobble together the EU Federal Constitution in the dead of night and ram it through all Parliaments the very next day. You won't even know what it says until they enact it. Any State that wishes to leave the EU must do so before the crisis hits, because then the trap slams shut.
And then what? They still won't be able to pay the bills or all their unfunded liabilities except then they would all be lumped together. You make it sound like somehow what you wrote is a solution to something. What would happen in your scenario is that working class people would either simply give up (and stop working) or would go even more so into the underground economy. Either way, the glorious federal EU state long dreamt of would implode.
You know the saying : "when you travel to a foreign counry you use English to talk to waiters and taxi drivers, and you use French language to talk to artists, intellectuals, university teachers and... beautiful women".
Works every time for me... ;-)
I get all my stock picks from shoe shine boys !
and you use flemish to talk to ... erm noone actually, nobody understands that stupid dialect anyway
and for Gomez Addams, " Querida? .. You Spoke French"
**** WARNING ****
ZH is being targeted by FedGov spambots & human operatives saturating the comment sections with garbage and disinformation in addition to down voting certain posters.
They are not harmless trolls, they are professional operatives attempting to undermine and discredit ZH via multi nic sock puppets. ('heart' would never do that :)
Attacking this post by constant down voting speaks for itself.
Case closed.
Really ? This is a test .... of the civil liberties defense of artistic freedom committee .... for humorists .... "Niggers suck !" .... your regular programing will resume .... this was a test !
Exactly how are they undermining and discrediting ZH based upon mindless trolling and down voting?
Oh, that's right, we're all too stupid to come to our own conclusions.
Big government help us. There's too much mindless trolling and down voting on ZH. Save us!
Tyler, get right on this. You need another statement against mindless trolling and down voting to match the disparagement clause.
Of course, without all the mindless discourse and up/down voting, would ZH even exist?
All upvotes to the HypnoToad.
Sacré bleu! the lizardmen are coming? Quickly, time to arm ourselves and head to the bunkers...
Spain and Italy should take HUGE ECB handouts right now (quick) before everyone realizes France is going down the drain in magnificent fashion. And then the Euro will follow soon after...
And here is the new national anthem:
http://www.youtube.com/watch?v=CM_lXwJpZCg
Down voter: If you can't enjoy that tune you are either a irredeemable Francophile or an idiot.
Some basic thought. Holande wants more integration and closer financial setup. Yet, retirement age in France is 62 while in Germany is 67(?). How about hours worked per week.
None of the proposals would pass through a popular vote in France, Germany or any other countries. They would have to do it the way we did it with FED setup and vote: a day before Christmas at 11 PM.
The French work, I think, roughly a half-day less a week (about 10% less time) than do the Germans. France's overall productivity is about a fifth lower than Germany's.
Every day, France looks more and more like Italy, not Germany (or Holland, or Finland, etc.).
One of my favorite Demotivators has a picture of twilight over Paris with the caption:
HARD WORK
It won't kill you.
But it is illegal in some places.
Not to forget Germany - which is rapidly losing its bright sunny-boy type of image; see here: http://esocap.com/uploads/files/IHT%20130426.pdf