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Deepening Global Financial Trouble
by Stephen Lendman
Email: lendmanstephen (nospam) sbcglobal.net
23 Dec 2011
Deepening Global Financial Trouble - by Stephen Lendman
Desperate times call for desperate measures, especially for troubled Eurozone economies.
Trapped under euro straightjacket rules, everything tried so far failed, despite hooplas announcing each new plan.
On December 21, the big overnight news highlighted demand for long-dated European Central Banks (ECB) loans drawing 489 billion euros, more than expected. A total of 523 banks borrowed money. In response, Capital Economics' chief European economist Jonathan Loynes said:
"While this might help to address recent signs of renewed tensions in credit markets and support bank lending, we remain skeptical of the idea that the operation will ease the sovereign debt crisis as banks use the funds to purchase large volumes of peripheral government bonds."
“Does it solve problems? Clearly not. Italy and Spain have serious deficits,” said Rathbone Brothers fund manager David Coombs.
FXPro Group's chief economist Simon Smith said "(m)ore important than the size of the (injection) is what banks do with this cash." Don't expect added lending to follow or other actions to ease crisis conditions.
According to Royal Bank of Scotland's chief economist Jazques Cailloux, "it's not going to bring about a turning point in this crisis." Societe Generale's Sebastien Galy agreed in a statement highlighting Europe's unresolved "deep-seated" problems.
In fact, overnight ECB loans show tight interbank lending problems. They also reveal how banks are pressured to buy sovereign government bonds in an attempt to lower rates at a time their own solvency is shaky.
Injecting more liquidity instead of addressing problems responsibly does little more than provide a short-lived holiday season sugar rush. It won't last as major problems are unresolved and worsening.
Most of all, European banking is in crisis at a time six or more troubled Eurozone countries teeter on collapse.
So far, yields in Italy and Spain are up, not down. Moreover, banks are deleveraging to reduce, not expand, their balance sheets. Given how much remains unresolved, another EU summit is planned for January 30, despite 19 previous failed plans.
In these troubled times, S&P rates only 17 countries AAA out of 127 they cover. Of these, six are on negative credit watch so only 11, in fact, are AAA. It's the lowest read since 1994.
Moreover, since the mid-1970s, never have so many AAA countries been viewed negatively. It suggests others joining them in 2012 given the fragility of global economies.
Thinking outside the box, Progressive Radio News Hour regular/longtime market insider Bob Chapman stays way ahead of key economic and financial breaking news. He also reports major market insights media scoundrels and politicians never discuss.
For years, he warned of impending trouble. It's unfolding unresolved in real time. "Behind the scenes," he says, "elitists are plotting and planning on how to extricate themselves from (today's) morass...."
Six troubled Eurozone countries need help, but "from whom?" In addition, France faces "a possible two level" debt rating lowering, and Germany's not as healthy as thought. "Could it be that (both countries can't) repay their debts?"
Eurozone policies have been wrongheaded for years. Bailing out six sovereigns can't be done. Their only option is defaulting, exiting Eurozone rules, and regaining their ability to conduct monetary and fiscal policy independently.
Market manipulation alone kept world markets from cratering. It can only continue so long. Throwing good money after bad corrupts it all. Much of world faces recession and depression.
Eurozone countries are deep into worsening recessions. "What we have is a European standoff and the possibility that Germany may go its own way." Daily, it grows more likely.
"Germany is sick and tired of getting" short-changed, and around two-thirds of Germans "want out, and that may very well happen though few see that possibility."
At the same time, rules are being circumvented for a new IMF bailout program, outside its mandate. At issue, saving a continent, not individual nations.
The main question is who'll bail out America? No one once debt levels exceed reckless Fed money creating tolerance or Congress intervenes directly or indirectly to stop it.
It's why Chapman sees nations agreeing to "revalue and devalue all currencies against one another and have a multinational default and debt settlement. That means everyone" gets a haircut except gold and silver investors.
Elitists know they can only monetize debt so long before risking hyperinflation. That's why "there will be an end game." Unlimited money and credit expansion assures collapse. Purging today's excesses is crucial. Money manipulators won't do it. Controlling it empowers them.
At the same time, dangerously high debt levels threaten economies with collapse. Troubled Greece may go first. Other Eurozone countries may follow. Nearly $1 trillion of unsecured bank debt must be rolled over next year. As a result, hoarding cash will be a priority for it.
France, Germany, Ireland, Spain and Italy have one-third to one-half of their debt to refinance.
Enormous amounts are involved. On average, eight major European countries have 19% of their debt to roll over. Unfunded liabilities are excluded. These countries "cannot raise this kind of money so we expect to see perhaps as many as six leave the euro."
If so, the currency may be history. "In fact, in chain reaction all Europe could financially collapse...." If so, America, China, Japan, and others will follow.
Festering debt isn't being relieved. European interest rates are rising. With them come new problems, including public anger getting more intense.
Government crackdowns and internment camps await dissenters challenging the system. Blackwater and other paramilitaries may patrol city streets. Grim holiday season tidings may precede far greater trouble ahead.
Gerald Celente predicts it.
Celente's Top 12 Trends in 2012
With deep trouble festering, Celente warns of worse next year, including his top megatrend prediction:
(1) Major central banks and world governments have economic martial law plans drawn. Military martial law may follow.
(2) By authorizing indefinite military detentions of US citizens and giving presidents power to be judge, jury and executioner, Congress enacted "Battlefield America."
(3) In his Trends 2000 book, Celente predicted Wall Street protests would erupt and spread nationwide early in the new millennium. "The 'Occtupy' is now upon us, and it is like nothing history has ever witnessed."
(4) Festering socio-economic/financial/geopolitical trends will climax next year. "Some will arrive with a big bang and others less dramatically....but no less consequentially."
(5) "Democracy is dead." Technocrats are taking over. Bankers are replacing elected officials. Media scoundrels won't explain this "merger of state and corporate powers" or call it by its proper name: "Fascism."
(6) Financial scoundrels allied with corrupt politicians established globalization rules. Committed citizens must "un-sell" it. " 'Repatriate! Repatriate!' will pit the creative instincts of (ordinary people) against the repressive monopoly of the multinationals."
(7) "Winds of political change" provide previously unimaginable political options globally, including: "radical decentralization, Internet-based direct democracy, secession," nonviolent balkanizations, and possible "new world 'disorder.' "
(8) In times of socio-economic collapse, "New Millennium survivalists are, or will be, thinking about" ways to escape what's coming. Celente highlights his "3 G's: Gold, Guns and a Getaway plan."
(9) In 2012, Internet freedom will erode. Governments will propose " 'authentication technology,' requiring Internet users to present the equivalent of a driver's license and/or bill of health to navigate cyberspace." Government control will end another freedom en route to shutting them all down.
(10) People everywhere are "disgusted with 'politics as usual.' " They want workable alternative change. Representative democracy never worked. Politicians serve monied, not popular interests. Instituting direct democracy is vital. It's the "only viable" way to replace back room deal making with popular referenda people power.
Victor Hugo said, "There is one thing stronger than all the armies in the world, and that is an idea whose time has come."
The time is now. The name of the game is changing what never worked and won't now. Saving humanity depends on it.
(11) Dozens of projects are underway, exploring safer, cleaner alternative energy sources, including "competitively priced liquid fuels distilled from natural sources. Plan to start saying goodbye to conventional liquid fuels."
(12) " 'Affordable sophistication'....old time quality....will inspire products, fashion, music, the fine arts and entertainment at all levels."
In 2012, expect China's "May you live in interesting times" curse to replace earlier Goldilocks days. Forewarned is forearmed.
Stephen Lendman lives in Chicago and can be reached at lendmanstephen (at) sbcglobal.net.
Also visit his blog site at sjlendman.blogspot.com and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.
This work is in the public domain