Spain, Italy and other European nations to be raided to save Euro

It is in their blood. Bankers are born believing they can risk people’s assets and then come back to ask for financial rescues to pay for the losses that weren’t even theirs.

By LUIS MIRANDA | THE REAL AGENDA | MARCH 26, 2013

What are the real chances that the European Union applies the same medicine to other members nations in an effort to ‘save’ the Euro? According to Jeroen Dijsselbloem, the Dutch chairman of the eurozone, more looting is possible in places like France, Italy and Spain, three of the most heavily burdened countries in the economic bloc.

Dijsselbloem said yesterday that the European technocratic organization would do what is necessary, that includes taking more money from depositors and investors in other countries, the keep the Euro afloat. The statement sent shocks and sounded alarms all over European markets.

The plan revealed by Mr. Dijsselbloem should not be a surprise for those who closely follow what’s going on in the old continent and almost everywhere in the world. The openness of many other countries to apply for the same kind of aid that Cyprus did this week will hold  shareholders, bondholders and even bank depositors hostage to the thirst of the European bankers who in in addition to causing the debt crisis are now demanding that the poorest in the continent pay for the losses of their gambling.

Given the uproar caused by his words, Dijsselbloem’s communication department quickly tried to soften them, but the stone had been already thrown. Now that people all over Europe and the world know of the bankers’ plans, it is likely they will proceed with caution. It is even possible that they delay further raids in other countries in order to calm the markets and the insecurity created by the statement issued on the same say when most details about the so-called Cypriot bailout was completed.

Dijsselbloem has revived fears that awoke while the Eurogroup endorsed and then rectified the confiscation of deposits in accounts with 100,000 euros or more by imposing a new tax. This measure is the first in the history of the European Union.

Banking professor Juan Ignacio Sanz Esade of Spain says it is possible that something similar might happen in Spain in the “medium or long term”. He emphasizes that “there is a great suspicion when trying to recognize our own responsibilities.” For Sanz, Spain’s Bankia is one of the first candidates to suffer the same fate as Litzki and Bank of Cyprus. “Bankia is likely to continue falling if the market remains in this situation” and states that “no banking unit will be strong in Europe until all banks are cleaned up.”

The European currency fell after Jeroen Dijsselbloem, announced that example of Cyprus can be the model for future takeovers anywhere in Europe. “If there is a risk in a bank, our first question should be ‘Okay, what are you in the bank going to do about that? What can you do to recapitalise yourself?’,” he said. “If the bank can’t do it, then we’ll talk to the shareholders and the bondholders, we’ll ask them to contribute in recapitalising the bank, and if necessary the uninsured deposit holders.”

The problem with this is that the bankers are only partners in crime with the largest banking institutions in the continent, so the public would do a disservice to themselves by believing that their local banks have their best interests in mind. Cyprus is a clear example of that. Neither can depositors or investors trust their politicians, because as it has been seen in Cyprus, they are easy pray for technocrats who use baseless threats to inflict fear on them.

It is important to remember that with the banking takeover in Cyprus two things became apparent. First, no one’s savings or investments are safe in any bank, and second, previous policies that protected savers’ funds according to the amount they had in their accounts have also been ditched. Now, according to Mr. Dijsselbloem, all accounts are fair game. It is expected that private investors and depositors be hit to pay for bad banking debts.

Unintended consequences of Political and Ideological Loyalty

By LUIS MIRANDA | THE REAL AGENDA | NOVEMBER 8, 2012

Is it possible that some Obama supporters do not care about the fact their children will live in servitude to the State for the rest of their lives? Could it be that they justify this horrendous future thinking that since they had to live under that system, it makes sense their children do it as well? Could it be that they see the current debt-based underdevelopment model as a way to guarantee their bribes for their elderly years? Perhaps this way of thinking is not a conscious one, perhaps it is. The fact is that blind loyalty to the party and to the ideology held by Obama brings along an endless list of unintended consequences.

Obama’s re-elections doesn’t only mean that half of the country still supports him. It also means that they agree with the policies he seeks to implement and of course with the ones he’s already imposed on the American people. This outcome gives Obama a green light to attempt to complete his agenda with the intention to “transform the United Sates”. So it is only pertinent that we review what are some of the items on that agenda.

There isn’t a better place to start than the policies and legislation that Obama has supported and enacted himself, through executive orders during the past 4 years. Since Obama has said himself that his project is work in progress, we can only expect that more the same will be brought upon Americans for the next four years. So let’s take a look at what Obama supported during his first term in office.

1. Bailouts, for ‘too big to fail’ banks, so-called stimulus packages, quantitative easing and deficit spending.
2. Sending troops to protect others’ borders and sending American taxpayer money to foreign dictators.
3. The same interventionist foreign policy from the Bush era.
4. Federal restrictions on gun ownership. Obama has pledged to ban semi-automatic weapons which are now legal.
5. The Patriot Act.
6. Spying on American citizens without warrants.
7. Indefinite detention of American citizens without charge, trial or lawyer.
8. Assassinations of American citizens or anyone else without due process.
9. Socialized Healthcare through which the State will dictate who has the right to healthcare and who doesn’t as well as how much of it can an individual get (healthcare rationing).

If there is anyone out there seeking a one sentence answer to what the future holds for the United States and the rest of the world as a result of Obama’s election, I guess that sentence would read “unlimited expansion of the federal government”. As explained by Judge Andrew Napolitano, under Obama, the government will continue to write any law, regulate any behavior and tax any event it wants. In other words the Constitution be damned.

And so will continue the political, ideological and social divides. A clear outcome of Tuesday’s election is the clear separation of the American population according to their race, age and ideological blindness. While the gaps continue to expand among social groups, nothing changed in Washington. The Democrats go to keep the White House and the Senate, while the Republicans maintained power in the House of Representatives. Can we expect anything different for the next four years? Mark my words here: there will be no long term economic recovery in the United States and little to no recovery abroad.

Although the divided Congress suggests that there will be gridlock for the rest of Obama’s term in office, one cannot forget about the power of the pen, which is a perfect tool to pass legislation that intends to advance the agenda that works for Obama’s managers. That is how Obama got away with imposing the State’s will on the People regarding healthcare, the homeland security apparatus, financial terrorism, and out of control “stimulus programs” that only resulted in higher corporate bonuses.

What many Obama supporters perhaps forgot is that he won’t have to be accountable to the voters again. He will then let lose his real identity and agenda, which he has managed to conceal to a great extent with the help of the main stream media. The “Transformation of the United States” can go on unchecked.

“Just by re-electing Obama, that means the Affordable Care Act will continue to be implemented, and that’s very important because that’s one of the most important pieces of legislation in half a century,” said Theda Skocpol, a political scientist at Harvard University.

Tuesday’s re-election empowers Obama to continue strengthening his activist government, the same that stooges like Paul Krugman support. For example, the bailout of the automobile industry will be remembered as Obama’s achievement that saved an important sector of the economy. What people who think like that ignore is that through the 2009 auto bailout, General Motors and other companies were literally paid to fire Americans and move their operations to India, China and Brazil. In other words, the 2009 auto bailout was a direct incentive given to the companies to run abroad.

So what can we expect immediately after Obama’s re-election?

1. Further deterioration of the U.S. Constitution and the Bill of Rights
2. Expansion of the powers given to the Department of Homeland Security and the TSA.
3. More out of control federal government spending.
4. Enforcement of mandatory government healthcare.
5. Accelerated purchase of firearms and stockpiling of ammunition.
6. Persecution of veterans and people who oppose government policies.
7. More secret arrests of U.S. citizens in at home and abroad.
8. Acceleration of the legalization of 30 million illegal immigrants.
9. Rise in energy prizes due to Obama’s commitment to shut down coal plants without having any alternative sources available to people.
10. $600 billion in tax increases scheduled to take effect during the next four years and beyond.
11. Government’s debt reaching $16 trillion which will get the U.S. that much closer to the fiscal cliff.

These and many more will be the “unintended consequences” of electing Barack Obama to drive the car for the next 4 years.

Is the best really yet to come?

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The World’s Debt is China’s Wealth

By LUIS MIRANDA | THE REAL AGENDA | AUGUST 30, 2012

Debt is never seen as a positive outcome, however there are times when someone’s incapacity to handle finances becomes wealth for others. A clear example is the current state of economics in both the developed and developing worlds, where indebted nations are the subject of hefty fees and interest rates on loans they cannot mathematically pay. In fact, the irresponsibility of politicians and bureaucrats to manage their countries monies has made them slaves of their own greed.

But for other countries like China, which has bought most of the debt from countries like the United States, a nation’s hell has become a bonanza. China’s leverage has allowed to accumulate a gigantic purchasing power, which many people also attribute to the Chinese management of their currency value. China, they claim, purposely devalues the Yuan, in order to keep its products at more competitive prices. China’s currency manipulation and the fact that its labor is one of the cheapest in the world allowed the country to accumulate large amounts of wealth.

Where is all that money going? To purchase land and resources all over the world. But China’s race to acquire land, mainly to plant food for its growing population, and to sell it to other countries, is not unique. Countries like Saudi Arabia and organizations like the UN are also investing their cash in large portions of land. The practice of buying land abroad is also known as the third wave of the outsourcing movement, although many call it a new form of neocolonialism.

The Chinese have gone everywhere they find open arms to effectively acquire property and infrastructure, sometimes hiding their purchases behind a veil of bilateral agreements or simply financial aid that is not expected to be returned. The Chinese government has built soccer stadiums in Costa Rica, offered millions of dollars to local governments in Brazil, bailed out the US in multiple occasions by purchasing its debt, and now, it is buying Europe up.

If anyone is in doubt about where do European bankers get all the money they’ve given to their corporate friends in so-called ‘rescues’ and ‘bailouts’, please look at two main sources. First, massive electronic creation of money; as in typing digits on a computer keyboard and charging the interests generated from those ‘rescues ‘to many generations to come, and two, Chinese purchase of European Union bonds. The latter is the same mechanism used by the United States to get cash flow or liquidity to maintain its gigantic empire going.

The Chinese couldn’t have come to Europe at a better time, because not even Germany, the sudden shiny house at the top of the hill, was able to handle the scandalous sovereign debt catastrophe that most EU members are into. Meetings and conversations already begun, with German Chancellor Angela Merkel and Prime Minister of China, Wen Jiabao, providing a quick pick into what they call the first fruit of their encounter, but which in reality could be a rotten fruit. The president of the Asian giant has confirmed that his country would continue to buy sovereign bonds in the EU, but also deeply analyze their risks.

After the meeting with German Chancellor Angela Merkel on official visit to China, Wen said Beijing would improve consultation and communication with the EU, the European Central Bank (ECB), the multilateral financial institutions and major countries to help the most indebted European states to cope with their problems.

In this regard, he said that China hopes that the EU can achieve a balance between fiscal austerity and economic stimulus, a formula that is the fundamental way to solve the crisis.

Cooperation with Germany and the EU as a whole, said the Prime Minister, should focus on boosting confidence. “We must let people see hope, oppose trade protectionism and promote collaboration to explore the markets,” said Wen.

Meanwhile, the Chancellor said that the euro zone has the political will to address the crisis. Wen and Merkel led today the second round of intergovernmental consultations between their respective countries, with the participation of seven German ministers, which accounts for half of Merkel’s Cabinet.

Following the meeting of the two, China announced the purchase of 50 Airbus A320 model, the value of 2,790 million euros ($3,500 million).

It seems that the Chinese financial rescue of the European Union has begun, except it is not to rescue Europe, but to rescue China itself. The deeper in debt  countries get with China, the more products they have to buy from that country and the lesser finished goods they will produce. China’s investments will yield not only access to markets with less regulations for its cheaply made toxic products, but also and most importantly, dependence.

China is on the way to becoming the landowner, the producer and the seller who no one will be able to contest.

Western Democracy: A Farce And A Sham

Paul Craig Roberts
Infowars.com
November 3, 2011

Every day that passes adds to the fraudulent image of what is called Western democracy.

Consider that the entire Western world is outraged that the Greek prime minister announced that he is going to permit the Greek people to decide their own fate instead of having it decided for them by a handful of banksters, politicians, and bureaucrats living it up at taxpayer expense at “talks” in the French resort of Cannes on the Mediterranean.

The Greek economy is facing its fourth year of decline and lacks the revenues to service its national debt held by private European banks. The banks don’t want to lose any money, so a handful of power brokers reached an agreement with representatives of the Greek government to write off some of the debt in exchange for EU capital subsidies to be financed by inflicting severe austerity on the Greek population. Wages, salaries, pensions and medical care are being cut while the rate of unemployment rises to depression levels. Government employees are laid off. Valuable public properties are to be sold to private parties for pennies on the dollar. In short, Greece is to be looted.

Large numbers of Greeks have been in the streets protesting the austerity policy and have reached the point of anger of throwing Molotov cocktails at the police. Greece is disintegrating politically. The Greek people sense that the EU “bailout” is not bailing out Greece. It is bailing out the French, Dutch, and German banks at the expense of the Greek people.

The Greek prime minister, watching his party’s support and power crumble, announced that he would let the people decide in a referendum. After all, allegedly that’s what democracies do. But it turns out that “we have freedom and democracy” is not supposed to be taken literally. It is merely a propagandistic slogan behind which people are ruled through back-room deals decided by powerful private interests.

The Greek prime minister’s announcement that he would put the back-room bailout deal to a referendum shocked the EU hierarchy, Washington, and investors. Who does this Greek guy think he is permitting the people, who bear the cost of the deal, to have a say in it? Who let this Greek guy out of his cage? This is not the way democracies are ruled.

The EU power brokers are outraged over the Greek prime minister’s departure from normal procedure. But the Greek PM is relying on the Greek people to approve the deal, and not without reason.

The Greek people have been brainwashed for decades as to the importance of “being part of Europe.” That means being a member of the European Union. When the Greeks realize that voting down the bailout of the banksters means being thrown out of the European Union, which is what they will learn between now and the referendum, they will vote for the back room deal.

Polls already indicate this. A poll for a Greek newspaper indicates that whereas 46% oppose the bailout, 70% favor staying in the EU, which the Greeks see as a life or death issue.

If this poll is a reliable indicator, the Greek PM has made a brilliant political decision. The Greek people will vote in favor of what they have been protesting violently in the streets. As the Greek people will do themselves in, the politicians are off the hook. This is the bet that the Greek PM has placed.

Whatever the outcome, keep in mind that the entire Western political and investor world was shocked that a politician, instead of simply imposing a back room deal, said he would let the people decide. Letting the people decide is a no-no in Western democracies.

If you need more evidence of this mythical creature called “Western democracy,” consider that Western governments are no longer accountable to law. Contrast, for example, the sexual harassment charges that are plaguing US presidential candidate Herman Cain’s campaign with the pass given to high government officials who clearly violated statutory law.

What follows is not a defense of Cain. I take no position on the charges. The real point is different. In America the only thing that can ruin a politician is his interest in sex. A politician, for example, George W. Bush, Dick Cheney, B. Omama, cannot be ruined by violating United States and international law or by treating the US Constitution as a “mere scrap of paper.” Bush and Cheney can take America to wars based entirely on lies and orchestrated deceptions. They can commit war crimes, murdering large numbers of civilians in the cause of “the war on terror,” itself a hoax. They can violate US and international laws against torture simply “because the president said so.” They can throw away habeas corpus, the constitutional requirement that a person cannot be imprisoned without evidence presented to a court. They can deny the right to an attorney. They can violate the law and spy on Americans without obtaining warrants. They can send due process to hell. In fact, they can do whatever they want just like Hitler’s Gestapo and Stalin’s secret police. But if they show undue interest in a woman or proposition a woman, they are dead meat.

Very few commentators have said a word about this. The House of Representatives did not impeach President Bill Clinton for his war crimes against Serbia. They impeached him for lying about a sexual affair with a White House intern. The US Senate, which had too many sexual affairs of its own to defend, didn’t bother to try to convict.

This is Amerika today. A president without any authority whatsoever, not in law and certainly not in the Constitution, can assassinate US citizens based on nothing except an assertion that they are a “threat.” No evidence is required. No conviction. No presentation of evidence in any court. Just a murder. That is now permissible to the Amerikan president. But let him try to get a woman who is not his wife into bed, and he is a cooked goose.

In Amerika there is no such thing any longer as torture; there is only “enhanced interrogation.” A mere word change has eliminated the crime. So torture is permissible.

In Amerika today, or in the UK and the EU, anyone who tells the truth is a “threat.” Julian Assange of Wikileaks, who made public information leaked to him by US government sources horrified by the criminal actions of the United States government, is now, as a result of Amerikan pressure on UK courts, being turned over to Sweden, which, for favors from the “world’s only superpower,” will turn him over to the US regardless of law to be prosecuted on trumped-up charges.

Western “civilization” is totally corrupted by American money. There is no integrity anywhere. For a decade Washington has been murdering women, children, village elders, and journalists in the name of the hoax “war on terror.”

What terror does the world actually see? The world sees the terror that Israel, protected by Washington, inflicts on the Palestinians. The world sees the terror that the US inflicts on Serbia, Iraq, Afghanistan, Pakistan, Yemen, Somalia, Libya, Latin America and now Africa, with Syria, Lebanon, and Iran waiting in the wings. The “war on terror” is nothing but an orchestrated invented excuse for Amerika-Israel to achieve hegemony while enriching their armaments industries.

In Greece, at least the PM committed to giving the people a say in their fate. In America the people have no voice whatsoever. The sheeple are content to be protected by “security,” porno-scanners, warrantless wiretapping, indefinite detention, and sexual groping. To carry on the hoax “war on terror,” the US government has elevated itself above the law.

The American effort to achieve accountability to law, the Occupy Wall Street (OWS) movement, if not shut down by cold weather, ice, and snow, is likely to be shut down by police violence. One riot begun by provocateurs is all it takes to transform protesters into “domestic extremists,” the number one concern of Homeland Security. The presstitute media will make the case against the rioters, and the sheeple will buy it.

The police have been militarized by Washington. Community police forces no longer represent the local public that pays their salaries. Local police represent Washington’s war against America.

American citizens are all suspects. Anyone who goes through airport security knows this. The only law that the US government obeys is not even a law. It is a bureaucratic regulation that prevents, even in dire wartime, any profiling of suspects by ethnicity or country of origin.

Consequently, all native born, flag-waving, American super-patriots are suspects when they board commercial airliners. Americans who have a life time of security clearances are subject to being porno-scanned or sexually groped. Airport Security cannot tell a “terrorist” from a CIA analyst, a Marine general or a US Senator.

Well-connected members of the ruling elite, such as Michael Chertoff, can become rich from selling the porto-scanners to taxpayers in order “to protect the public from terrorists.”

The only terrorists Americans will ever experience are those funded by their own tax dollars within their “own” government. A people incapable of perceiving its real peril has no chance of surviving. America might be a military superpower, but it no longer exists as a free country with accountable government and a rule of law.

Dr. Paul Craig Roberts is the father of Reaganomics and the former head of policy at the Department of Treasury. He is a columnist and was previously an editor for the Wall Street Journal. His latest book, “How the Economy Was Lost: The War of the Worlds,” details why America is disintegrating.

The Next Stage of the European Debt Crisis; Towards Global Financial Collapse?

Bob Chapman
International Forecaster
November 3, 2011

Those who believe the European crisis is over are mistaken. The dislocation will continue as their economies slow and political, social and economic events converge into further crisis. The most glaring problem is the banks only taking a 50% loss on Greek bonds. The loss should have been 75% or even 80%. There is absolutely no way Greece can overcome that burden in a slowing European economy and an enraged population. They are still striking and demonstrating and they will continue even under a new government.

Some of the best economists in the world have been saying for almost as long as we have been saying that the weaker and smaller countries have to leave the euro at least temporarily. In our eyes that really means permanently. If Italy falls out it will take France with it and the euro edifice will fall. Very quickly it will be found that Greece cannot and will not recover. It is one thing to set recovery in motion in good times, but it is another to attempt to do so under austerity. These politicians in Europe have been self-serving. They are quickly going to find what they have done is not going to work. Greece should have never been saved, as we said from the beginning. They will need more and more money just to exist and you cannot have perpetual funding. Then you have the overriding social factor. It is simply impossible and once Greece goes, the other 5 will have to cut loose as well. Again, it will be called temporary, but their exists will be permanent. It simply cannot be any other way. Political hot air is not going to change anything. We have no details and bankers who refuse to face the music, and what is attempted to be achieved is impossible.

The concept of a tighter union with a new constitution won’t work either. We can go back to 1991 when these issues came forth and we stated the Europeans are doing this backwards. You need a strong constitution first, only nations involved that can meet the criteria of public debt of 3% GDP. Smaller nations cannot be allowed to falsify their balance sheets and above all you cannot use one interest rate for all. Just about everything that has been done has been done incorrectly. Unfortunately, the US and world economy hang in the balance as well. This euro, European and UK problem is not going to go away. By February it will again be front page news. There is an 80% chance that Greece will leave the euro in the next six months.

If Ireland and Portugal do not receive equal treatment, followed by Belgium, Spain and Italy, then they will all be forced to leave the euro. If you think for one minute that these nations can stand more than a year or two of austerity you are mistaken. The whole approach is wrong. They should all be allowed to leave the euro. The only reason Greece has been temporarily saved is to keep Greece in the euro. These one-worlders cannot bear to see their dream of world government fail. It has already failed. Do you really think Germans are going to give up their sovereignty? Wait for the next German election. You are going to see a house cleaning in the Bundestag that will be staggering. The German people are outraged at what these politicians have done to them. If anything the move in the EU’s strongest economy will be away from further consolidation, not toward it.

The magic number to keep the euro from collapsing over the next two years is $6 trillion that solvent European countries do not have, and using derivatives in place of cash is a prescription for disaster. Debt may be addressed, but the core economic and financial problems that were responsible for these problems are still not being addressed. That is a glaring lack of economic progress. Where is the capital needed for growth? Countries in the EU are going to have to increase money and credit and suffer the incumbent inflation; that is if they can even raise those funds and rollover old debt. Either that or China will lend $3 to $500 billion and we don’t think they are willing to do that. If China prints the money to lend, the value of the yuan will fall, the Chinese will take more market share and there will be more inflation. Their goods sold to Europe, the US and elsewhere will rise in cost as well. The Chinese will have to use cash euros or sell euro bonds. Such moves could be really upsetting to China. If aid comes it will be in much smaller amounts.

This past week the swaps association said the failure on 50% of Greek debt does not constitute failure, because it was voluntary, so the NYC legacy banks do not have to pay up on their derivative bet. That could all change, because Fitch says it does constitute default. We will now have to await the decisions of S&P and Moody’s.

What Europe has done is pull a page from US bailouts, which reduce debt starting in a few years, which would extend over 10 or 20 years. It reminds us of the two sets of books banks are currently keeping. They intend to write off bad debt over 50 years, like it really didn’t exist. This plan allows further current increases in debt over the short term. That is no solution at all. Again, it only throws the debt and service into a future that could include deflationary depression. Recovery is not a given.

Fitch has really opened a large can of worms in calling a 50% debt default a payable derivative event. We are talking about hundreds of billions of CD’s, credit default swaps OTC derivatives, which just happens to be an unregulated market. Our view is Fitch is correct and the ISDA, the derivatives information agency is wrong. What isn’t made an issue of is that banks have been asked to raise $150 billion they are offside on this issue. We projected this number long ago. The official number is $3.7 billion, which is laughable. About a month ago the players admitted to $75 billion, so we are making progress toward truth and reality. We wonder what the French bankers are saying, who bought the insurance? If NYC banks do not pay off the ECB will have to create the $150 billion and lend it to the banks in France, so they can survive. Could this be a renege? We think so, and that would ultimately allow citizens of the EU to pay the debt. These bankers are crafty buggers they are.

We also question why banks are writing off 50% of their debt and the sovereigns are not. Isn’t this strange? Why are they not writing off 50%? Could it be that if they did they would be insolvent? Could it be to deceive their taxpaying citizens and pop the question several years from now? Could this be they are just trying to extend the timeline into the future? Time has a way of revealing everything. Incidentally, none of that Greek debt will probably ever be paid off. It should also be noted that of the $140 billion lent by the IMF, US taxpayers are on the hook for about 30%, or $42 billion. We are sure that will make Americans very happy.

The difference between $516 billion allocated by EU members, half of which comes from Germany, and $1.4 trillion will come from the sale of bonds by the EFSF, the European Financial Stabilization Fund. The question is who is going to buy this tranche of some $900 billion in bonds? Nations will receive greater taxes from a phantom recovery and buy the bonds. How can this be when those economies barely have even GDP growth? All this in the midst of austerity. We do not get it. We must be missing something. Does Italy really believe that raising the retirement age from 65 to 67 is going to bring any real immediate relief? As you can see the case is terminal.

The whole plan is absurd, stupid and unworkable. These problems are going to last for years as Europe, the UK and US wallow in negative growth and eventually in deflationary depression. Greece will collapse; it is only a question of when. The ECB will continue to create money and credit, just as the US and UK are doing. It won’t take long for investors to figure out they have been bamboozled again. They will flee stock markets probably just after the Fed’s latest QE 3 is announced. Some will buy US Treasuries and lose about 10% of their purchasing power annually. Some will flee to commodities and many will use the flight to quality to purchase gold and silver coins, bullion and shares. Modes of investments are going to change dramatically, so you had best participate, or you may end up losing most of your wealth.

What you are witnessing is financial chicanery at its best. Wait until the citizens of Europe discover they are going to have to pay all these bills, just so they can be enslaved in a one-world government. They are not going to be happy.

We always tend to be ahead of the curve and the crowd. This time the time frame for discovery may be very short, because once investors understand what we have written here they will want to get out. Gold, silver and commodities will rise for different reasons, along with the flight to quality. Incidentally, this time the gold and silver mining shares will soar.

Reflecting back on our comments the second Greek bailout does not solve the EMU’s fundamental problem, which is the 30% competitiveness gap between the northern and southern countries and Germany’s giant-EMU trade surplus at the expense of the south. Unless a way can be found to rectify that there cannot be a recovery. The south has been forced into austerity, which limits their chances of being competitive. As we pointed out over and over again the end product will be a deflationary spiral and eventually deflationary depression. What the IMF and EU members are imposing on the six countries is very destructive.

A fiscal union would perhaps work, but that means the end of individual country sovereignty, which would eventually lead to authoritarianism, which would not like to see. The entire union is unnatural and should be ended. It has been a failure and just leave it at that.

All this program is going to do is buy time. It is not a long-term solution. Current debt holders are going to be incensed, as they will be forced in before sovereigns, but will banks really take a 50% haircut? We don’t really know. Is this really a fig leaf, a wholly inadequate alternative to the ECB, which cannot provide endless liquidity?

This rescue effort is really too dependent on high-risk deals, such as what caused this crisis. Four times leverage is outrageous. In the end the European public could get caught holding the bag.
At the same time we are seeing monetary contraction in Portugal, which mirrors that of Greece as it spiraled out of control. Bank deposits are off 21% over the past six months and that could well be a precursor of a weak economy and monetary trouble.

Another question that arises is due to the treatment accorded to NYC legacy, money center banks. Will those using credit default swaps continue to do so. There is a default and because it was voluntary the derivative writers do not have to pay off. Give us a break. It looks like contract law no longer exists.
In very late breaking news we find something we warned about is happening. The German High Court, the Bundesgerichtshof, has issued an express order that the nine-member committee dealing with dispersing the rescue funds is not allowed to do so. The plug has been pulled on the EU and German politicians on money releases. If the Germans and the EU are lucky they’ll have a constitutional decision by Christmas. We predicted this would happen.

Uncertainty revolves around the deal reached with Greek bondholders to face a 50% haircut on the face value of their bonds. This has not been negotiated as yet.

At the same time France needs to raise $11.2 billion to keep its AAA rating. Sarkozy says 2012 GDP growth will be about 1%, about the same as Germany, but no one mentions it would be -2% with inflation.

Switzerland’s State Secretariat for International Financial Matters said the Swiss were interested in investing in a special investment vehicle proposed by the euro zone bailout fund, but we see a real fight brewing. The Swiss People’s Party, which was against franc devaluation and the sale of Swiss gold, will be after this move by the Swiss government. They do not want closer ties to the EU.

This past summer we warned that European banks would have to increase their reserve position to 9%, because both the BIS and IMF said it was absolutely necessary. You might call the EU’s laxity of not forcing Greece to implement its austerity agreement as part of a socialist mindset. There was no way to move Greece into line. For not living up to their commitment they could have cut Greece off, because then they would default and leave the euro. Thus, they continued to fund Greece. The truth is they have to do so irrespective of what Greece does or doesn’t do.

The heart of the problem was banking incompetence followed by sovereign stupidity. Banks and solvent sovereigns never should have made the loans in the first place. All the greedy bankers, politicians and bureaucrats could think of was the euro zone and the euro being the template for one-world government. The interconnectivity of banks within nations with banks of other nations is the lynchpin that will eventually take all of them down. It’s caused by central control such as that embodied in the European Central Bank. The bottom line is if a state like Greece, partially defaults, then the banks within Greece default as well because these banks are holding large amounts of federal bonds and loans. Thus, the edifice collapses. This relationship exists all over Europe and as we are seeing six countries are in trouble and if the European economy continues to slip into recession or depression other countries will join the six. In addition in many countries supervision is all but non-existent. A perfect example of such a relationship was with France, Belgium, and the Dexia bank, which they created. As a result the taxpayers of Belgium and France have acquired all the bad assets of Dexia.

Adding to such problems is that usually half of the debt of any country is held by foreign banks and sovereigns, which means failure becomes contagion. France’s holding of 8.5% of GDP of debt from these six countries will eventually cause France to lose its AAA rating. If that is the case we venture to ask how can France be party to a commitment to bail out Greece or anyone else? They simply cannot and they are the number 2 player. You would think French citizens would elect someone who was not involved in such stupidities, such as Marine LePen of the National Party. The banks and business interests, such as the Rothschilds, couldn’t have that – could they? If France financially fails we could see 1789 all over again. This sovereign debt is widely held by other nations including the US, UK and Japan. European banks have controlled European society for a long, long time and they are the catalyst for the new world order.

We hear over and over again there will be recovery, we will grow our way out of it. That won’t be possible for Europe, the UK and the US. The number of young people who do the largest part of consumer spending in their 20s and 30s today have a hard time making ends meet, never mind spending. On top of that many are unemployed and may be for some time to come. If you have noticed unemployment has risen or stayed the same in the regions we have spoken of. Accumulation has only occurred among the upper-middle class and the wealthy. This also means borrowing has fallen and the ability to access loans and capital are limited, because so many prime age borrowers do not qualify.

One of the reasons Germany does as well as it does is because they have an abundancy of inexpensive capital available for loans and credit, which allows expansion, creates jobs and brings profits. The cost of labor is low or in the form of growing productivity and people pay their bills.

One interest rate fits all became a disaster. The weak participants borrowed at 4% instead of 8% and the result was an orgy of spending that ended up in today’s insolvencies. We said 12 years ago this would destroy the euro zone and it has. These low rates also allowed a massive influx of imports into the six problem countries, which caused major balance of trade deficits. This also brought about borrowing in foreign currencies, which turned into a nightmare, particularly in Eastern Europe.

European banking and politics are very closely intertwined. In other words the banks overtly run these countries. The same is true in the UK, but in the US it has been subtler due to ignorance of how the banking system works and that has been deliberate. In Europe the stress test used 5% as a guideline, instead of the normal 10%. This shows you the power and control banking has over EU government making the margin for error extremely thin. Considering the exposure cash reserves were increased to 9%. This means capital has to be raised and that is not easy in today’s recessionary environment. Two-thirds of European banks are currently under 9%. The worst exposed are RBS, Deutsche Bank, Unicredit, Bank Paribas, Barclays and Societ General. Hundreds of billions of euros are needed and the question is where will they come from? In addition how many banks are shuffling assets between trading, deposit, and banking sectors, such as Dexia had been doing until they had to be taken over by the French and Belgium governments? The banks need $270 billion that is readily available. If funds are not available then that means governments will have to supply the capital from out of thin air, which is very inflationary.

The EFSF, the European Financial Stability Facility, which was set up to aid Greece, Ireland and Portugal, now aids banks and European governments, such as the Fed does. An EFSF if allowed to dispense $1.4 trillion based on a $900 billion derivative structure would take months to move into action. Then there is the question will the German High court allow leveraging. We do not think so. The Court had already told the Bundestage you cannot do that, but they did it anyway.

As we can say is stay tuned for the next episode in this saga. It could end up taking down the entire world’s financial system.