Art Cashin Exposes The Behind The Scenes Panic In Europe

Think "all is fine" in Europe after today's largely irrelevant Italian bill auction (the auction was for 6 month debt - even Greece can raise that kind of money)? Think again. Here is the Fermentation Committee Chairman explaining why Europe is so hard pressed to create a fake sense of calm, allowing those who know the real story to take advantage of the situation while they still can, and sharing the behind the scenes truth you won't get anywhere else. Certainly not SWIFT. 

From UBS:

Europe Rumbles Continue Beneath More Upbeat Headlines - Ever since last week’s liquidity operation, most headlines out of Europe have leaned toward the reassuring side. Beneath those headlines, however, there are signs the strains remain and may, in fact, be growing.

European banks are making great use of the ECB’s overnight deposit facility. Last night they parked $590 billion at the ECB breaking the record they had set the night before. They are clearly unwilling to lend to other European banks, highlighting the distrust and fear in the interbank marketplace. While the ECB’s lending initiative calmed the markets somewhat, it apparently has done nothing to free up the logjam blocking interbank lending.

The distrust on the streets is said to be growing also. Barroom gossip says that safe-deposit boxes are in a demand that borders on frenzy. They allow you to take your Euros and covert them into something of value (gold, Swiss Francs, etc.) and sock it away in a safe place.

Others are said to be buying property in London and elsewhere lest you awake one day and discover that your Euros have reverted to drachmas or lira.

Savvy bankers are said to be setting up personal and communal trusts domiciled in places like the Bahamas, the Caymans or the Isle of Jersey. Some banks are offering depository accounts denominated (and repayable) in alternate currencies like the dollar or the yen.

We think a Lehman-like event would most likely be triggered by a run on a bank or a series of banks. The scramble for currency (value) protection among the public could turn into that bank run in the same way that a crowd can instantly turn into a mob. Watch the money flows out of Greece and Italy very carefully. The pot continues to bubble

Comments

[Bam_Man]

But the "Bank of Sealy Posturepedic" doesn't pay interest. And neither does gold.

 /sarc

[cristo]

it's all about return of capital not return on capital these days

[carbonmutant]

Beware of Government regulated prices for Gold.

[jmcadg]

UK housing is currently twice what it's worth. Look for a US style crash in 2012. Buying in London, yeah good luck!

[xcehn]

"The real story, which the mainstream media is neglecting, is that there are signs of an underground run on Europe's banks. Almost nobody's talking about it, but there are indications money is already moving out of the European Union (EU) faster than rats abandoning a sinking ship."

http://www.marketoracle.co.uk/Article32170.html

[kelpie-capital]

"2012 is The Great Denouement – I don’t believe the can gets kicked into 2013. Austerity leads to slower activity, which requires more austerity, which forces further slowdowns. We are in a death spiral. Every day that the cost of funding is above the GDP growth rate, and this is the case for every single Euro economy as of today, their debt dynamics get worse."

Fate would dictate that the PIIGS have a massive amount of debt rollover in 2012 – more than 300bn Euros from Italy and 100bn from Spain, much of it focused in Q1.

http://kelpie-capital.com/2011/12/22/2012-outlook-predictions/

[wtlf555]

I think that most on this blog think the final resolution of Fiat and ZIRP is through expansion of the MB or a govts inability to sell bonds. I don't believe this is the case. We are at a point where the CB and govts are "all-in" to protect the status quo. The ruling class can effectively increase MB to infinity and they can become the only buyer of debt. Rates can be zero and those not at the table (individuals) no longer matter. The end-point comes from a different mechanism. It comes when flight of demand deposits ruin the reserve banking system.

MB and CBs balance sheets can expand to infinity - it doesn't matter! What matters - IMHO - is deposits. While these are a tiny fraction of the numbers involved in global debt they support the reserve banking system which supports a countries currency. Focusing on monteary base and central banks expansion of balance sheets is barking up the wrong tree. Now that individuals are close to being out as buyers in the debt market, increases in MB does not effect their purchasing power of deposit or currency. "Money" is already now effectively valueless other than as a medium of exchange.

I have been tracking what I think is the key - the ratio of currency per capita to non-institutional deposits per capita. When this grows it is the signal that belief in money as a medium of exchage is eroding. This is what sets off hyper-inflation. It has been stable over the past 40 years.

When countries finances are widely disparate such as Argentina in the 90s or Germany in the 20s it comes when currency flees one country to another and like a fever breaking the currency is destroyed. Now, with most all countries insolvent I'm not sure that will happen  

[Cicero50]

I've got a question that hopefully someone can answer:  I want to get my money out of the brokerage firms and buy physical (PMs and Real Estate), but two of the accounts are retirement accts.  The majority of my wealth is tied up in these accounts which if I liquidate will be taxed plus penalized an additional 10%. Yet if I leave them in money markets and stocks Fed money printing will wipe me out.  What to do?

Are stocks a good investment in a hyper inflationary environment?  I'm afraid of GLD and SLV in the mid to long term becuase when the shit hits the fan there won't be any PMS backing the shares.

Suggestions?

[Juan Carlos Cantu]

The crisis of confidence is becoming unsustainable.

http://thechinonomist.blogspot.com/2011/11/financial-totalitarianism.html