Karl Denninger of The Market Ticker asks Is That A Bailout Or A Lit Fuse?:
The lesson here? We have not only fixed nothing the so-called “coordinated actions” of so-called “world leaders” have set up a potential catastrophe originating in Europe.
More than two years ago I predicted that Europe was the most likely place where the second leg – the real “Oh…. My…… God” moment – would originate in this economic mess. These ratios were the reason for my prediction, and all that has happened over the last two years is that they’ve gotten worse.
Neither Germany or the rest of the EU can fix this without massive reform – read that as restructuring and/or default – of the external debt in these nations, including Germany itself.
Go ahead and believe this won’t blow up if you want to. I look at today’s action, and indeed that of the last couple of weeks, as a clarion call and a warning that when we had the opportunity in the depths of 2008 and early 2009 to take the CDS monster out and shoot him – to lock up the fraudsters – to change the way banking works worldwide – we instead refused and let the “wise guys” off the hook.
As a consequence we have fixed nothing and the fuse has not only been lit, it is now much shorter than it was two years ago and may have gone inside beyond the reach of a pair of scissors.
The United States, ironically, is one of the better-positioned nations to survive what is coming. No, it won’t be easy for us, but of the developed world there are few who have the internal capacity to pull in the horns and make it – not comfortably, but to survive.
“Here it comes”
Europe is literally on the brink of collapse. Germany and the other big players in the EU have a big decision to make, and that is whether or not they bail out Greece. If they bail out the Greeks, then Spain, Portugal, Ireland and Italy will want a bailout too. But, just like here in the US, the bailouts will only prolong the problem longer, while also destroying serious value in the Euro as the EU would have to print trillions to make this work.
In any case, because nothing is being fixed fundamentally, no long-term resolution will come of it, and Europe will collapse financially in the future anyway.
It’s reminiscent of what happened with the USA and Europe in the mid-1920’s, when Europe was on the brink of collapse and got bailed out by the USA. Various European countries borrowed in excess of $7 billion to help with their economies, but eventually the USA got hit with an economic depression as well, and once the loans stopped, Europe fell apart, leading to the well known hyperinflations of the Weimar Republic, Hungary and Austria.
As was the case in the 1930’s, the current depression is global and this time it will include China and other Asian exporting countries. The economies of the world are interdependent and have yet to ‘decouple’ from each other.
If Karl Denninger is right and it is coming, then it is going to hit just about every developed and emerging nation on earth.
Hat tip Rick Blaine
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Still waiting for “it” to come. I have no doubt it will, just think it’s going to take a lot longer than most people think. I believed up to about 2 months ago that we were due for a large (25% or more) correction in the stock market and that we’d enter another deflationary spiral. I am now leaning away from that, instead believing we will have a smaller setback (10% max which means we’re almost done) and then continue higher from there.
Witness the rumors of the Greece bailout the other day. In a “normal” well-functioning market, an announcement that an entire country was in such distress that it had to be bailed out my the EU would signal that the system had failed and that things were worse than everyone thought. But not in bizarro world where we live today. Instead, it signifies that world governments will do whatever they can to keep the money spigots flowing, including throwing the kitchen sink at it. And the markets applaud, the Dennis Kneales and Larry Kudlows grin from ear-to-ear, and gold/silver gets hammered again.
Until we have a seminal, game-changing moment like China dumping US Treasuries or Iran bombing Israel, I don’t see anything changing over the next 12 months, because each country bankruptcy will just be greeted with more investor applause, all while food and energy prices escalate out of control.
Yeah there are some serious storm clouds out there… i’m losing faith in anyone’s ability to navigate them. I’m building my storm shelter.
Karl has been screaming bloody murder for over two years now. He has exposed a tremendous amount of the fraud, greed, and corruption in New York and Washington. Sadly, NOTHING will come of it. The crooks “run the showâ€. Karl’s predictions for future happens have been mostly correct and he will “man-up†and admit when he’s wrong (unlike ALL of the main stream media). He thinks there is a strong chance for the whole thing to implode. I agree. If that’s what is needed to “take it backâ€, then so be it. I wouldn’t want to be in a bankster or politicians shoes when the people FINALLY wake up to what has been done to them.
or Iran bombing Israel, What you should of said was Israel bombing Israel and blaming it on Iran. Ya-know that whole “false flag†thing they’re SO good at. Get another view of things from http://whatreallyhappened.com/
LMAO!
“…and may have gone inside beyond the reach of a pair of scissors.”
Boom! Been there, done that. Glad I had my goggles on!
Excellent writing, this Denniger fellow. Thanks Mac and Rick for the excellent commentary.
The three Fs rule. Get them in, get them locked down. Food: Enough to last you until you can either grow more or buy more. Fuel: You can’t go get food or do much without it, its a labor multiplier. Firearms: If you’re dead, you can not use the first two or get more, or the Golden Horde can come and steel the first two and you’re left with nothing.
…and don’t worry about “going to seed” on any of it. If its fuel, you can siphon it out and burn it later. If its food, you can just eat it up instead of rotating it. If its guns and ammo, they’re about like gold and if properly taken care of are just as good 50 years later. Nothing will go to waste if you use any sort of prudence in buying. Remember: a warehouse full or a tote full, some is always better than none. Feel like you can’t afford to prep? Nonsense! Spending only an extra dollar the next time you go to the store and throwing it in a tote in you basement is better than nothing. Get to it! Budget yourself and start today! Situational awareness demands that you do it now.
Also remember that food and fuel go bad. You have to rotate. Every six months, I siphon half of my fuel stock out and replace it with fresh. With food, I rotate. New stuff goes in back. Eat off the front.
Be sure to come up with YOUR OWN PLAN. As Jack Spirko says, only use his info as a guideline. Make your own plan and own it then you’ll know it and be more likely to stick with it and believe in it.