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The Template For How the Next Crisis Will Unfold
Anyone looking to get their head around how the next round of the Crisis will look should consider what’s happening in Europe today.
Europe is ground zero for the whole debt bomb implosion, not because it has the most debt but because it’s politically and economically on the least sound footing.
Some 19 countries share the currency, all of them in varying degrees of socialism (the public sector accounts for roughly 1 in 3 employees in Germany’s allegedly “free market” economy), and varying shades of broke: even Germany a real Debt to GDP of over 200%.
In this regard, Europe gives the rest of us a front-row seat to learn how things will unfold when the real stuff hits the fan and the political and financial elite are at risk of losing their power and wealth.
We’ve been through this mess multiple times in the last three years. The most notable cases involved Spain and Cyprus. And the formula is as follows:
1) A problem first emerges.
2) Various political and financial officials state that the problem is contained and there’s nothing to worry about.
3) Months later, the market and mainstream media catch on… usually when the problem is already a massive crisis and a bank holiday needs to be declared.
4) Individual investors lose a LOT of money while the same folks who cause the problem A) are not fired, fined or jailed B) never come clean about the full scope of the problem and C) claim that they can solve the problem and have all the answers.
Consider the story of Bankia.
Bankia was formed by merging seven bankrupt regional Spanish banks in 2010.
The new bank was funded by Spain’s Government rescue fund… which received “preference shares” in return for over €4 billion in funding for the bank (all provided by taxpayers of course).
These preference shares were shares that A) yielded 7.75% and B) would get paid before ordinary investors if Bankia failed again. So right away, the Spanish Government was taking taxpayer money to give itself preferential treatment over ordinary investors (including said taxpayers).
Indeed, those investors who owned shares in the seven banks that merged to form Bankia lost their shirts. They were wiped out and lost everything when the new bank was created.
Bankia was taken public in 2011. Spanish investment bankers convinced the Spanish public that the bank was a fantastic investment. Over 98% of the shares were sold to Spanish investors.
One year later, Bankia was bankrupt again, and required the single largest bailout in Spain’s history: €19 billion. Spain took over the bank (again) and Bankia shares were frozen on the market (meaning you couldn’t sell them if you wanted to).
When the bailout took place, Bankia shareholders were all but wiped out and forced to take huge losses as part of the deal. The vast majority of these were individual investors, NOT Wall Street or its European equivalent (Bankia currently faces a lawsuit for over 140,000 claims of mis-selling shares).
So that’s two wipeouts in as many years.
The bank was taken public a second time in May 2013. Once again Bankia shares promptly collapsed, losing 80% of their value in a matter of days. And once again, it was ordinary investors who got destroyed.
Indeed, things were so awful that a police officer stabbed a Bankia banker who sold him over €300,000 worth of shares (the banker had convinced him it was a great investment).
Today Bankia is tied up in a massive compensation lawsuit whereby it is to pay out between 200 and 250 million Euros to investors who bought it during its initial IPO. Of course, this payout is based on accounting standards that are at best massaged and at worst likely outright fraudulent (this is, again a bank that has wiped out investors three in times in three years), so who knows what will happen?
While certain items relating to this story are unique, the morals to Bankia’s tale can be broadly applied across the board to the economy/ financial today.
Those morals are:
1) Those in charge of regulating the system will lie, cheat and steal rather than be honest to those who they are meant to protect (individual investors and the public).
2) Any financial problem that surfaces will be dealt with via fraud or lies rather simply allowing those who screwed up to be fired or go to jail.
3) When the inevitable collapse finally does hit, it will be individual investors and the general public who get screwed (not bank executives or politicians).
4) The problem will be prolonged as much as possible, likely fixed years down the road, if ever and individuals will have little or no say in how it pans out.
This is the template for what’s coming.
If you’ve yet to take action to prepare for the second round of the financial crisis, we offer a FREE investment report Financial Crisis "Round Two" Survival Guide that outlines easy, simple to follow strategies you can use to not only protect your portfolio from a market downturn, but actually produce profits.
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Phoenix Capital Research
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<< Any financial problem that surfaces will be dealt with via fraud or lies rather simply allowing those who screwed up to be fired or go to jail. >>
Is this a re-write of the article you wrote here back in 2010? Sooner or later you will prove yourself right!
WASHINGTON, January 5 (Sputnik) — The United States is to be blamed for Ukraine’s use of cluster bombs since it hasn’t provided the country with different weapons, US Senator John McCain, who serves as a Chairman of the Senate Committee on Armed Services, told Sputnik on Thursday.
“I think that if we had provided them with the weapons they need, they wouldn’t have felt they had to use cluster bombs. So, it’s partially our fault,” McCain said.
Human Rights Watch confirmed in a report last November the claims of the Donetsk and Luhansk people’s republics that Ukrainian troops used cluster munitions in residential areas. The organization added that cluster munitions were used in the October 2 shelling of Donetsk by Ukrainian forces that killed an employee of the International Committee of the Red Cross.
UN report on the human rights situation in Ukraine released in November stated that the use of cluster bombs in eastern Ukraine is a violation of international humanitarian law and may be considered a war crime.
Cluster munitions contain dozens or hundreds of submunitions, which spread over a wide area, endangering anyone in the vicinity. So far, 114 countries have joined a UN treaty banning such munitions. Ukraine is not a part of the agreement.
Additional US military advisors will be required on the ground if the United States provides the Ukrainian government with lethal military equipment, US Senator John McCain said.
http://russia-insider.com/en/2015/02/08/3236
I know that 95% of the people are sheep. They will cower and bleat pitifully while the wolves prey upon the flock, terrorizing them all, tearing some of them to shreds. But where are the sheepdogs?
Why have the sheepdogs not killed the wolves, protecting the sheep from the wolves predations? It seems to me that there is a surfeit of wolves, here a wolf, there a wolf, everywhere a wolf, just begging to be killed. I strongly believe that were the sheepdogs to shred many of the wolves, leaving their blood soaked carcasses in the public squares to be photographed, but not lamented on in the least, that the wolves would become too busy checking their six, to be thinking up any new scams for a generation or two.
So, once again, what has happened to the sheepdogs?
Many of us left the sheep to die, when they become too stupid to even be called a sheep, I had enough and left the U.S. to rot in its own waste pool...
Actually sheep are being insulted by using them as an example. I have raised some sheep that will fight tooth and nail, if cornered. Americans have regressed past that point and need a new name?
The wolf has a free run in America...
The wolves....being cunning predators, have successfully manufactured an environment wherein they've convinced the sheep that sheepdogs are crazed psycho extremist loons, lurking behind every corner waiting to pounce on their wee lambs.
As a result the sheep are desperately bleating for the wolves to protect them, demanding these crazed sheepdogs be rounded up, for the sake of the herd's safety. Some of the sheep are waking up to this sordid state of affairs....but the wolves noticed and have turbocharged the never-ending contest of red-sheep vs. blue-sheep the designed long ago. As an extra bonus, the wolves have also collaborated with wolves from neighboring habitats in far more control....to allow mass influx of truly downtrodden sheep into the local herd. These new non-native sheep have never known anything else but life as wolf-prey, much less what a sheepdog is.
Ace, your comment was way better than the article. Paging cog or hh to do a full length article expounding on ace's comment.
Investors are not sheep they are possums crossing the road and when they get run over who mourns them, no one. Their greed and stupidity motivates them and they should be parted with their money as they are fools to buy into a criminal and corrupt system in the hope of profitting. Let them be slaughtered.
Magoo has it right, these are the convulsions of the old world order as the energy pair-o-dimes collapses. The central banks are trying to pull as many resources out of the middle class as fast as possible to save the old order, but the end game is coming into view in Ukraine. FINANCE, and it's embodiment in the USSA is shattering. The endless cuts taken by JPM, BOA, RBS, BOE, The Squid, and the rest, have killed the underlying productive hosts that are the economy. Energy could support production, but not with finance layered on top, and taking an ever larger share. Will it be nuclear winter, crop crash and die off around the corner?
So avoid the banking sector.
I think you're describing the last crisis, the next crisis is bound to be different.
I think it will start with some goober named Sam Smith winning a grammy for singing an old Tom Petty song.
I have been reading these same predictions since the 1980's. We all underestimate how long the can can be kicked down the road. In the meantime, we all get gradually poorer, but civilization holds together a little longer.
Kick a can down the road long enough and eventually a truck will run you over.
There is NO hedge that protects against what is coming.
THE PERFECT STORM (see p. 59 onwards)
The economy is a surplus energy equation, not a monetary one, and growth in output (and in the global population) since the Industrial Revolution has resulted from the harnessing of ever-greater quantities of energy.
But the critical relationship between energy production and the energy cost of extraction is now deteriorating so rapidly that the economy as we have known it for more than two centuries is beginning to unravel.
http://ftalphaville.ft.com/files/2013/01/Perfect-Storm-LR.pdf
NAILED IT!!!!!!!!!
+ INFINITY
The hedge against what's coming is self-sufficiency. When the cities are burning and the masses are starving and rioting those backward natives in the Amazon won't even know there's a problem, just another day.
I'd probably pay attention to this, but for YEARS nothing they have predicted has happened.
I'm SURE it will EVENTUALLY, but the whole 'crying wolf' thing sort of comes into play when you see articles like this repeatedly. I don't even care anymore.
lol I don't give a damn what happens. Maybe a Comet will hit the planet, and just get it all over with.....
Maybe it will be Europe that 'starts' it, maybe not. At this point, there are so many points of weakness that any one of a thousand seemingly small things can generate the right stress at the right time, and there are both external stresses and those building up, unseen, within...
It's like trying to name the ONE snowflake that starts the avalanche.
Parasites feed off their host until the host either eliminates the parasites or dies from their infection; that is the choice we face.
Ah, you are forgetting the most important third type of parasite...the type that, faced with it's inevitable demise should it keep feeding indiscriminately, wises up and reaches a mutually beneficial agreement with it's host. It agrees to tone down it's greed, and allow the host enough of the shared resources to maintain good health, which insures the parasites continued survival.
It is a small group, to be sure, very few parasites manage to accomplish this. But those that DO can prosper as no other kind of parasite can.
Will big finance be a wise or foolish parasite? Only time will tell. But since no parasite can survive the death of it's host, they'd better get on with the decision-making process, cause this host ain't looking good...
Parasites can even engineer the election of a puppet with catchy slogans.
Thats why we must support Rand Paul and those who want to audit the Fed. Paul has Yellen shaking in her silk panties.
Yellen does NOT wear silk panties! Like all older women, she has learned that only plain cotton 'breathes' properly, and purchases her granny-panties in bulk from Sears.
All white, of course. You don't want 'sweat-bleed' from any colored dyes getting in there.
It's a waste of time, money and energy to support anyone as the system cannot be fixed. It must be destroyed that a correction in man's thinking and existing can be established. Until that time all that's wrong with the world will continue to deteriorate until it can't any longer.
Any day now, gold will be worth $5,000 (or $7,000, or $10,000) per troy ounce, and silver will be worth $312 (or $437.50, or $625) an ounce, and stackers will all be RICH, buying or building giant MacMansions surrounded by alligator-filled moats (to keep out the now-starving FSA), and lighting their Cuban see-gars with hundred dollar bills. Any day now!
https://www.youtube.com/watch?v=sUacKvDPYb0
A return to gold standard is inevitable as the only way to reestablish trust between nations for trade after the collapse of unbacked corrupted paper. This is obvious and not far fetched. To continue down this path of logic, the demand for gold by nations in order to establish trade credibility will increase the price of gold by multiples of what it is now. What that price will be and when it will happen cannot be predicted but it will come to pass and holding gold would be wise and your mockery proven foolish.
The more they smack it, the more I stack it. I'm loaded with FIAT already, so where's the harm in stacking PM's? and food, and weapons, and friends with legitimate technical skills.
Actually, I was just going to get a couple dozen Rattlesnakes, cut off their rattles, and throw them around the yard !!!
Remember "Debt Bomb-ya really turn me on"!
http://www.zerohedge.com/news/debt-bomb-bailout-oooh-you-turn-me
You mean to tell us that merging several bankrupt banks into one, new bank does not create a new healthy, financially sound bank? Impossible to believe!!!!!!
Putting lipstick on a pig is just about the only strategy left for the EU and ECB. If that does not work anymore, we will have to seek a bailout by the InterGalactic Monetary Fund. Or (GASP) face up to reality.
Yhere in America the people that work hard honest and ethical are getting screwed and can not get ahead period so we must be close
You may work hard but not honest or ethical for a dishonest and unethical currency.
Working hard has never paid off as well as just moving so-called money around the 'financial sytem' and never will, until enough people realise they are working to enrich the already rich more than they are working for themselves.
Keep an eye on what happens with the COMER lawsuit in Canada. It will be interesting to see how the government responds - I think they have about 7 weeks left to come up with something.
Take a look at this - only 5 minutes - worth the time.
Jump to 2:08 if you only have a minute or so.
https://www.youtube.com/watch?v=cgdyWPxLf1s
It was our so called great priminister Pierre Treaudue that changed the the way Canada created money. He allowed the banks to create money for the Govt. and for the citizens to pay the interest to the banks!
His son is now running for the next federal Priminister. He was asked in a speach he was giving "If he was elected as new Priminister would he go back to the law and have the Bank of Canada create the money for the gov, of course he avoided the question.
So do you think these politicians are bought off by the banking industry?
I have told many Canadians about this case (broke Canadians that are constantly complaining about taxes), yet they don't care about this court case.
What does it take to wake the people up?
In 1993 87% of Canada's debt was compounding interest alone.
Canada, like the rest of the world, controlled by banksters, what's different?
As far as I can tell, the significant difference is the absence of a clear legal mandate for the private banks (of Canada) to create fractional-reserve fiat dollars. TPTB in the USA at least went though the bother of passing a "Federal Reserve Act", so everything is all nice and legal.
I have been following this case for a while now!
Godspeed Canadian people. But I fear you will be crushed.
This could actually save us from unpayable debt. Well, maybe. I'm sure we'd still find a way to borrow from our Jewish overlords
Another history lesson. MUST we be enlightened? For me history is another way of predicting the future, duh.
Countries default,history! Banks default!
Decentralize and fuck the man. Do I need to trade mark that slogan?
The essence of this article can be summed up, thus:
" You are GOING to be screwed in the up coming crisis. Make no mistake!"
We know we are. Why do you think we've taken the positions we have? Why do you think we read Zero Hedge? We're on your side!
This article is clearly trying to drum up customers (nothing wrong there). But they're preaching to the choir here. They need to be publishing where people believe everything is rosy and great. Like the mainstream media.....
Phoenix capital writes pretty good articles. But throwing an ad at the end undermines the intelligence of the reader.
Everybody has an agenda. Everybody gets paid. You know that going in and don't forget it while you are there.
In the old days, when we had a rule of law, this would not have happened. Unfortunatey, those days aregone forever.
the next big crisis is the implementation of a transaction only currency, as money no longer has a store of value. you dont own bitcoin you use it, and while you want someplace to park your spending money you will probably buy gold. the fed is ironically making plans for this, their own policy is based on stopped money hoarding and getting money moving in the economy. they are sowing the seeds of their own destruction. that should be interesting. but i can make any number of reasons why gold and gold miners will be prominent in the new economy, just as at this very moment with zero interest rates why would you own paper money? it makes no sense at all, and with the currency wars the NAV of that dollar is plenty volatile, but a transaction only currency will break the link between gold and paper money.
Cut the BS
This is how it will go down: you wake up and everybody is broke.
Lol Everybody is already broke thus money velocity being what it is. People are not spending because they're hoarding cash, they don't have much cash. Duh
Bankia story sounds a lot like General Motors story.
Wachovia
I think it mimics the collapse of the UK motorcycle industry.
"I think it mimics the collapse of the UK motorcycle industry."
Oddball take on it, but shows thought.
One of my favorite books is titled, "Whatever Happened to the British Motorcycle Industry?" by Bert Hopwood.