Ireland

Anyone that thinks that the U.S. economy can keep going along like this is delusional.  We are in the terminal phase of an unprecedented debt spiral which has allowed us to live far, far beyond our means for the last several decades.  Unfortunately, all debt spirals eventually end, and they usually do so in a very disorderly manner. 

Without doubt, Iceland was the canary in the coalmine for the sovereign debt crisis that is unfolding across the world right now. Today, Iceland is held up as the model of recovery. 'Famous' economists like Paul Krugman praise the government for rapidly rebuilding the economy without having to resort to austerity. This morning’s headline from The Telegraph newspaper sums it up: “Iceland has taken its medicine and is off the critical list”. It turns out, most of these claims are dead wrong. Despite being so widely reported by the mainstream financial media, Iceland is not a story of model economic recovery. It’s a story of how to fool people. And for now, it’s working.

As the nations of Europe argue over and over that France is not Greece, Portugal is not Ireland, and reality is not fantasy, Bloomberg has in fact quantified just where each of these troubled nations stands for the next five years. The bad news for the Spanish - facing demands for Rajoy's resignation over the graft - is that they have the worst five-year outlook of all European nations. Worse than Portugal, notably worse than Greece, and dismally worse than Bulgaria. On the bright side, Norway - with the best outlook by far over the next five years - looks attractive (or closer still Luxembourg.)

Markit has released its global business confidence survey, and it makes for sobering reading. Due to sharp declines in business confidence in both the US and China, a new post crisis low has been reached in June. Only the UK was a notable exception, as business confidence there jumped. We would submit that this is no coincidence, as the pace of money supply growth is increasing sharply in the UK, while it it slowing down in both the US and China. The culprit for the slowdown in money supply growth in the US is lending by commercial banks, which is decelerating sharply even as monetary pumping by the central bank continues at full blast.

The recent decline in gold prices and the drain from physical ETFs have been interpreted by the media as signaling the end of the gold bull market. However, our analysis of the supply and demand dynamics underlying the gold market does not support this thesis. In our view, the bullion banks’ fractional gold deposit system is testing its limits. Too much paper gold exists for the amount of physical gold available. Demand from emerging markets, who do not settle for paper gold, has perturbed the status quo. Thus, our recommendation to investors is the following: empty unallocated gold accounts and redeem your gold in physical form (while you still can).

"Perhaps the success that central bankers had in preventing the collapse of the financial system after the crisis secured them the public's trust to go further into the deeper waters of quantitative easing. Could success at rescuing the banks have also mislead some central bankers into thinking they had the Midas touch? So a combination of public confidence, tinged with central-banker hubris could explain the foray into quantitative easing. Yet this too seems only a partial explanation. For few amongst the lay public were happy that the bankers were rescued, and many on Main Street did not understand why the financial system had to be saved when their own employers were laying off workers or closing down." - Raghuram Rajan

As everyone knows, the only reason to become a banker, and be subject to constant derision, abuse, scorn and hatred by the "99%", and potentially to a fate comparable to that of the aristocracy in France circa 1789, is a simple one: money. Specifically, get as much of in as short a time period as possible, be rewarded with a taxpayer bailout or two when massive bets go epically wrong, then convert all your cash into "hard assets" and escape to a non-extradition country before the latest credit bubble pops. In other words, a simple opportunity cost analysis. Which then begs the question: why are there bankers in the following European countries: Slovenia, Romania, Malta, Lithuania, Estonia, Czech Republic and Bulgaria. The one thing in common these countries have is that according to a just released European Banking Authority study, in the year ended 2011 not a single domiciled banker made over €1 million! In other words: bankers working for feudal peasant salaries. What a scam.

Using simply math, it's easy to calculate that the jig is up in Portugal. Between now and this time next year, we'll likely see defaults and/or restructurings.

"Our government tells us that this will be a better year. No one really believes them. But all we can do is be optimistic. Too many people are committing suicide."

It has all gone belly up if we look at the EU and we are honest. Yes, they might be trying to paper of the cracks and yes they might be shoving some super strong glue in their to stop everyone pulling in different directions, but if they are really truthful about it, the EU28 (now that Croatia has become a member since July 1st 2013)

Broke nations are bailing out other broke nations with borrowed money.  Round and round we go - where we stop nobody knows.  As of April, 41 different countries had active financial "arrangements" with the IMF. Sometimes they are called "bailouts" and sometimes they are called other things, but in every single case they involve loans.  And most of the time, these loans come with very stringent conditions.  It is a form of "global governance" that most people don't even know about. For decades, the IMF has been able to use money as a way to force developing nations to do what it wants them to do.  But up until fairly recently, this had mostly only been done with poor nations.  But now an increasing number of wealthy nations are turning to the IMF for help... so what happens when the nations that primarily fund the IMF start failing themselves?

Don't consider this investment advice, but if you leave your money in this bank after reading this article then your a fool who deserves to lose every euro that gets confiscated. Just my personal opinion, of course.

Our reality has changed in the last twenty-four hours. The Bank of England and the European Central Bank have re-affirmed their old positions since the Fed has changed tacks. It may well be, as Europe is in much worse financial condition than the United States, that there is a policy reason for the European positions but it may well also be a calculated move to devalue the major European currencies. Whatever the actual reasons, the European statements have certainly sounded the trumpet that the “Currency Wars” have reignited.  It is a dangerous game when the world’s central banks that have been working for the last five years in unison and now they head down different paths.

As southern Europe buckles under the weight of unserviceable debt and 60%+ youth unemployment rates, Germany is coasting along with an almost historically low unemployment rate; the disparity between Germany and its southern neighbors could not be more obvious. So it is ironic that Angela Merkel is leading the public pledge to ‘tackle’ the continent’s job crisis. Of course, European policy to deal with the jobs crisis is quite simple: print more money. Their latest initiative, a few billion more to fight the youth unemployment rate, was mercilessly eviscerated yesterday in the European Parliament by Nigel Farage... one of the few voices of reason left on the continent.

Things are turning from bad to worse for the real-life version of The Terminal's Edward Snowden, who a day after applying to 21 countries for political asylum has been flooded with rejection letters near and far, even as he was forced to cancel his application to his current host nation, Russia, after being told he would have to stop leaking secrets as a condition to stay. More from the FT: "The 30-year-old fugitive’s options narrowed further on Tuesday when China reacted coolly to the idea of him moving there, Poland rejected an application and other European nations said asylum requests had to be made in the country."