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21.07.11, 08:54
I tak systemu nie da sie uratowac...
Europeans are finally realizing they cannot bail out six countries for more than $4 trillion without pushing themselves into insolvency. We pointed this number and possibilities out 1-1/2 years ago. There will be a Greek default followed by five other defaults, which will lead up to the end of the euro and perhaps the end of the European Union, that unnatural association. Such defaults over the next few years would wipe out most European banks and that will spread across the world. The catalyst for world financial catastrophe. The money being additionally loaned by EU sovereigns reaches Greece and does a U-turn and returns to European bankers to service debt. In the meantime via austerity Greece descends into a great dark pit. IMF funds take the same route of which almost 20% comes from US taxpayers. In addition the European bank exposure in Greece in part is covered, or insured, by American banks for $160 billion. The reason the banks do not want a default is that the US banks will have to pay off and they do not have the funds to do so. That event could trigger a world banking collapse, or another bailout via US taxpayers and the Fed. There is now no question that the euro will pass into history as another utopian nightmare. For those who were paying attention Greece and Italy should have been bailed out in 2001, not be admitted to the euro zone.
Contagion is doing its work and it is only a matter of time before the dominoes fall. Italy’s public debt to GDP is world class at about 120% and as interest rates climb servicing gets more expensive. Italy and Spain are the real linchpins. If they default everything in those six nations collapses. As we said previously the financial contagion will not only take down the euro and euro zone, but probably the EU as well.
As a result of onerous debt Greek bonds have lost 50% to 75% of their value and the bonds of the other five insolvent countries are in fact in negative pursuit. In just the first quarter Greek spending has fallen 40% just as salaries have. As a result tax revenues have plunged, as we predicted they would some time ago. This is no way to help an economy.
Greece has $480 billion in debt outstanding and about $160 billion is insured by credit default swaps sold by NYC legacy or money center banks. The same thing is true regarding Ireland. Needless to say, the CDS exposure is a guess because there is no reporting or regulation on OTC derivatives. These banks and others as a result just make arrangements that please them. This is why these instruments of financial destruction should be totally banned.
The writers and users of credit default swaps and other derivatives are aiding in continuing this speculation by forces within governments, prominent people such as Sir Alan Greenspan and the media. A change in derivatives reporting is out of the question, so that they can be bought and sold unhindered. In the end when the writers get in trouble it is the taxpayer who guarantees the bill and gets to pay for it.
As you have seen recently in Europe there has an outcry concerning derivatives and the ratings dispensed by rating agencies. Russia and a number of other nations will no longer accept the ratings of S&P, Moody’s and Fitch, because they are bogus and are politically motivated. What agencies do is write a report on a company or nation. Presently the report and demand the entity pay for the report. If they do not pay more often than not a new report follows that is not so flattering. It is called extortion. Wall Street and banking control these agencies. Look at the fraud and criminal collusion in the MBS-CDO market. Outright criminal fraud and the courts refused judgment. These people, who run these companies, should be in jail. They are not because they are part of those who run the system. The Europeans have known this for years, but for whatever reason they have tolerated it. The ratings given by the raters, and the massive use of derivatives have been responsible in great part for the credit crisis. They prompted massive speculation on a scale previously unheard of. It was used for enrichment as well as to keep the system functioning.
What comes to mind is the recent flurry of credit rater downgrades of weak European countries and their sovereign debt. The problems these countries have were known more than ten years ago and now all of a sudden they become a major issue. If Wall Street and US banking control these agencies and the agencies keep downgrading these sovereigns what can be the motivation? We surmise the problems in Europe serve as a distraction from America’s problems, but there could be a more compelling reason. That could be that the powers in NYC and Washington want to destroy the euro as an alternative to the US dollar as the world reserve currency. There could be a major conflict taking place at the highest levels behind the scenes, as to how the world will be run and finances are at the heart of the conflict. It is something to contemplate. We have already come to that conclusion. In this process lower sovereign debt ratings lead to higher interest rates that put more and more financial pressure on these already crippled countries. You can never fully contemplate what goes on in the twisted minds of these predators. Plots so diabolical and evil that the normal descent mind cannot comprehend them.
As we have pointed out the European Central Bank, ECB, has made many mistakes. This is a central bank, which is a semi-federal institution, which gets pressure from all sides. This state of affairs leads to hesitancy, which becomes incompetence. At the beginning of the credit crisis they had to be backed by the Fed that lent them trillions of dollars just for the ECB and other member banks to stay afloat. That was and is a dreadful state of affairs. It could be that the condition was in large part caused by the bonds rated AAA by raters and Wall Street, which were in reality BBB bonds. Those European institutions lost trillions of dollars and what is very strange is that there were no civil or criminal legal action regarding the fraud. Of course, when elitists are involved cases never reach court and when they do no one goes to jail. It is what we call a criminal culture.
theinternationalforecaster.com/International_Forecaster_Weekly/Deficits_And_Stimulus_Only_Delay_The_Inevitable_Collapse
