The EU’s Day of Reckoning: Italy Is Too Big to Bail Out

In the end the central theme of most articles reporting on EU events, is that all roads end up leading back to Berlin, the powerhouse of Europe.

And who knows, perhaps Mario Draghi’s upcoming resignation and a possible wish to be the next Italian president is a sign that he wants to go back and save Italy from the wrath that Greece has suffered: Complete capitulation to Germany in exchange to economically stay afloat and keep from descending into social chaos as a result.

Lest we forget what the European Union founders had in mind for the world’s next superpower (See also HERE and HERE), the United States of Europe led by modern day Assyria’s Fourth Reich.

 

Italy is one of the world’s leading tourist destinations. The ruins of the Roman Empire, in particular, the Coliseum, Palatine Hill, the Pantheon and the Forum, are major attractions. New ruins are now being created to mark the political decay at work at the heart of Italy’s democracy and economic policymaking. These new ruins could well include the country’s central bank and parliament as well as the Eurozone as the stage is set for Europe’s next big economic debt crisis.

At the center of the brewing storm is the issue of confidence. When investors trust sovereign debtors, governments have access to credit markets. When investors lose confidence in a country’s ability to pay, they head for the door. The cost of borrowing goes up and at some point it hits a level where it becomes unaffordable to raise money.

Such a loss of confidence afflicted Cyprus, Ireland, Greece and Portugal between 2010 and 2012, shutting them out of public borrowing, creating the European debt crisis and forcing them to seek financial assistance from the European Union, European Central Bank and International Monetary Fund. Italy barely avoided that embarrassment.

The experts who expect bonds funds to crash in 2015

Concerns have been rumbling for some time that bonds – whether issued by companies or governments – are due for a sharp crash.

At the start of 2014 many wrote off bonds and said that private investors should sell their bond funds and move into shares or other assets.

But those who ignored this advice and kept their bonds investments have done well over the past year.

In fact, as a whole, bonds have beaten equities so far in 2014.

So what does 2015 hold? Again, opinion is divided.

Jim Rogers: An ‘even worse catastrophe’ is coming

Jim Rogers has a two-word message for U.S. investors: “Be careful.”

“The U.S. is the largest debtor nation in the history of the world,” Rogers told CNBC.com Wednesday night by phone from Singapore. “We may well have a big, big rally in the U.S. stock market, but it’s not based on reality. I would encourage investors to know you’re in a fool’s paradise, be careful, and when people start singing praises, say, ‘I’ve been to this party before, and I know know it’s time to leave.'”

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“First of all, throughout American history, we’ve always had slowdowns every four to six years. That means that sometime in the next couple of years—three years, maximum—we are going to have problems again, caused by whatever reason,” Rogers said. “For instance, there was 2001 and 2002, and then 2007 and 2009 was much worse. Well, the next time it’s going to be worse still, because the level of debt is so, so, so much higher. Every country is increasing its debt at the same time.”

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“This is the first time in recorded history that we have every major central bank in the world printing money, so the world is floating on an artificial sea of liquidity. Well, the artificial sea is going to disappear someday, and when it does, the catastrophe will be even worse. Yes, it’s coming,” Rogers reiterated, adding: “If I was smart enough to tell you when it’s going to happen, I would get rich.”

JIM ROGERS: The World’s Savers Are Being Wiped Out, And History Says That Leads To Very Bad Things

For the first time in recorded history, we have nearly every central bank printing money and trying to debase their currency. This has never happened before. How it’s going to work out, I don’t know. It just depends on which one goes down the most and first, and they take turns. When one says a currency is going down, the question is against what? because they are all trying to debase themselves. It’s a peculiar time in world history.

BANK OF AMERICA: ‘This Is Not A Fluke’ — The Fed May Have To Ramp Up QE Again

“This is not a fluke: almost all of the underlying determinants of inflation point to weakness,” writes BofA Merrill Lynch economist Ethan Harris in a note to clients today.

For all of the talk of rising government bond yields and predictions for when the Federal Reserve will taper back its bond buying, Harris says, deflation is still a bigger risk than higher inflation – and disinflation could cause the Fed to actually ramp up QE if it continues.

Short US Government Bonds ‘Right Now’: Jim Rogers

Being that the USD is being printed up without end, it’s soon to be worthless as well as everything paper that is valued in Dollars. Bonds fall into this category.

With the Federal Reserve and now Bank of Japan printing massive amounts of money, billionaire investor Jim Rogers told CNBC’s “Closing Bell,” he is shorting U.S. government debt.

“It’s all artificial what’s going on right now,” Rogers said. “The Federal Reserve is printing money as fast as they can. The Bank of Japan said ‘we’re going to print unlimited money.'”

Russia ‘printing money for Syria’ claims report

Russia is printing bank notes and sending them by the plane load to Syria to help the besieged regime pay its soldiers and civil servants, a new report suggests.

Flight records obtained by the investigative website ProPublica showed that at least 120 and up to 240 tons of bank notes were delivered during a ten-week period between July and September.

On eight round-trip trips between Moscow’s Vnukovo airport and Damascus international airport, the “Type of Cargo” is listed as “Bank – Notes (30 Ton)”. Neither their denomination nor value was specified however.

Seven of the eight Syria Air flights were confirmed through international plane-tracking services, photographs from amateur plane-spotters and official air traffic control records.

Each manifest detailed a circuitous route over Iran and Iraq, countries that are friendly to the Syrian regime, rather than the most direct route over Turkey, which has become a foe of President Bashar al-Assad.

QE3: Dollar Killer

Until recovery or destruction of the Dollar. As surely as the sky is blue, the latter will happen. QE3 is the nail in the coffin. When was the last time you borrowed your way out of debt?

If you really want to know what is going on in the economy, ignore what the Fed says and watch what it is does.

So what is the Fed doing? Bernanke’s announcement says the Fed will now spend a whopping $40 billion per month—$480 billion per year—purchasing mortgage-backed securities from the big Wall Street banks.

He says this is an effort to push down mortgage rates and get more people buying and building houses, and thus create jobs. If this is the best the Fed has to offer, America is in big trouble. Mortgage rates are already at historic lows, and people are not buying houses. Pushing record low rates a few fractions of a percent lower won’t do much. What is more likely to happen is that the big banks will finally have an opportunity to unload all their garbage subprime-mortgage-backed securities at the expense of taxpayers. This is probably the real unspoken motive.

But if that part of the Federal Reserve’s announcement wasn’t shocking enough, what it said next should blow your socks off. The Fed said it was writing itself a blank check for how much it could spend until the labor market improved “substantially.” It gave itself no predefined limit on how long, or on how much it could spend under this new QE3 program. It is completely open ended. It can go on forever.

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Printing money to buy things is “Zimbabwe policy.” We all know what happened to Zimbabwe when it tried this. Eventually it cost Zimbabweans billions of dollars to buy a banana. This is where the QE road leads.

It is happening already. Within just a few hours of Bernanke’s statement, the dollar had lost over half a percent in value. On Friday it lost more than half a percent again.

In two days, the dollar lost more than a percent of its value. And that was due to just the announcement. The dollar printing has barely started.

The Federal Reserve’s QE policy will drive the dollar “through the floor,” says Peter Schiff, ceo of Euro Pacific Capital.

“This is a disastrous monetary policy; it’s kamikaze monetary policy,” Schiff told cbnc. “The dollar … is going to be in free fall at some point … ultimately there’s going to be a currency crisis.”

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America needs to prepare for massive economic upheaval. America’s top banker has signaled that it is quantitative easing or sudden death for the economy. There is no choice. If the money printing stops, America stops. But that means the dollar is going to get killed. QE will destroy the dollar, and America’s standard of living.

Tough times are coming.

Full article: QE3: Dollar Killer (The Trumpet)

Euro Fall Would Raise Stakes for China, US

With the possibility of Greece, already in shambles and under consideration of exiting the Eurozone, the Euro most likely could afford to absorb the loss of one member nation. However, with Italy and Spain on the brink of disaster themselves, there is no way of controlling what will be an outright implosion of the EU. Should that happen, and it’s likely a gaurantee at this point, you could likely count the days on one hand until the United States follows suit.

The situation in the euro zone has become so bleak that it is giving rise to the most improbable rumours. The latest to make the rounds of European hedge fund managers suggests that the euro will be tied to the dollar at close to parity, a dramatic fall from its current level of just under $1.30 and one that would involve the printing of hundreds of billions of euros.

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If the euro collapses that will be especially bad news for China though, since 18 per cent of China’s exports go to Europe. In April, Chinese exports to the euro zone were down 2.4 per cent from a year ago, according to broker CLSA. Some of those exports were from German makers in China itself. For example, Pakistani textile mills have recently imported capital equipment from Siemens plants on the mainland. But if the euro sinks, German manufacturers will export from home rather than from their Chinese factories.

Some analysts suspect that China has been trying to support the euro and indeed, data from BNY Mellon suggests that as the growth in Chinese reserves slows, the euro falls.

Meanwhile, the liquidity from the excess printing of money especially in the U.S. continues to spill over into the rest of the world.

Full article: Euro Fall Would Raise Stakes for China, US (CNBC)

Counterfeit Money, Counterfeit Policy

What is the difference between printing money and counterfeiting? There is none.

Counterfeiting is illegal because it is the false creation of value. The counterfeiter takes low-value paper and turns it into high-value money, which is fundamentally a claim on the real productive value of the economy that issues the currency and recognizes it as a proxy means of exchanging that productive value.

Counterfeiting is illegal because the counterfeiter creates no additional value–he creates only the proxy for value. Creating real value–adding meaningful goods or services to the economy–is tedious, hard work. How much easier to simply transform near-worthless paper into a claim on actual goods and services.

If this is illegal, then would somebody please arrest the Board of the Federal Reserve for counterfeiting? The Fed has blatantly printed money without creating any real value to back up their added claims on productive value. Hence they are counterfeiting, pure and simple. A government based on rule of law would arrest these fraudsters and cons at the earliest possible convenience.

And while you’re drawing up the indictment, can you also charge them with counterfeiting competence and policy, as they have demonstrated the Peter Principle par excellence: the Board has risen to its highest level of incompetence. Their counterfeit policies have wreaked incomparable damage on the real productive economy.

The essence of counterfeit policy–a fake policy that claims to be something it is not–is “extend and pretend.” And the sole goal of “extend and pretend” is self-preservation and the preservation of the Financial Elite which has tightened its grip on the nation’s throat as a direct consequence of Federal Reserve policies–notably “extend and pretend.”

Full article: Counterfeit Money, Counterfeit Policy (Financial Sense)