Leeb - We Will Now See a Gold Standard Imposed in Europe

"With stocks trading lower, along with gold and silver, today King World News interviewed acclaimed money manager Stephen Leeb, Chairman & Chief Investment Officer of Leeb Capital Management.  Leeb told KWN we will see a gold standard imposed on Europe.  Leeb also said the Chinese will move to back the yuan with gold.  Here is what Leeb had to say about the situation:  “Gold is reacting to what’s going on in Europe.  It’s the last resort of liquidity for a lot of people.  It’s been the best performing major asset over the last 12 years.  You have a lot of chaos in Europe an no one knows what’s happening, so there has been a lot of reflex selling of gold.”

Stephen Leeb continues:

“Gold has been a bit stronger than I thought it would be considering the danger of a euro breakup is accelerating.  I don’t think there’s any chance the euro holds together under its current form.  Unemployment among the young in Greece is about 50%.  That can’t stand, it just can’t.

These politicians can’t do this forever.  People are not going to tolerate starvation.  Sooner or later the politicians are going to have to respond.  This means less austerity and more growth, and the end of German hegemony in Europe.

This looks similar to the end of World War I.  Once the euro goes, it will be very much like the end of the war.... 

“You are going to have a lot of currency devaluation.  You are also going to see massive inflation.  Everybody knows what that means for gold.

So you are in the last hours of turbulence for the gold market (to the downside).  Once this correction ends, you are going to have a barnburner to the upside.  Gold will just vault.  I don’t think investors will even remember these frustrating days.  I had been warning we could see this drop in gold because of the problems in Europe, but investors should take advantage of it.

Look at what China is doing.  China is buying gold hand over fist right now.  They are going to move the yuan forward as the world’s reserve currency and it’s going to be partially backed by gold.  The world can also expect to see a gold standard imposed on Europe in the next 12 to 18 months..."

at   http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/5/9_Leeb_-_We_Will_Now_See_a_Gold_Standard_Imposed_in_Europe.html

Latest Posts: I Am Not Alone! Here are Quotes From 17 Others on Coming Global Financial Collapse John Hathaway: Financial Repression to Continue Even Under the Most Optimistic Scenarios Save 1+ Hours! Read Campbell's Synopsis of, and Comments on, the IMF's 2012 World Economic Outlook Wednesday, April 25th, 2012 | Posted by Editor I Am Not Alone! Here are Quotes From 17 Others on Coming Global Financial Collapse

"Here is a list from Economic Collapse that shows how the stage is becoming crowded with others holding similar outlooks:

#1. Credit Suisse’s Fixed Income Research unit: “We seem to have entered the last days of the euro as we currently know it. That doesn’t make a break-up very likely, but it does mean some extraordinary things will almost certainly need to happen…to prevent the progressive closure of all the euro zone sovereign bond markets, potentially accompanied by escalating runs on even the strongest banks.”

#2. Willem Buiter, chief economist at Citigroup: “Time is running out fast. I think we have maybe a few months — it could be weeks, it could be days — before there is a material risk of a fundamentally unnecessary default by a country like Spain or Italy which would be a financial catastrophe dragging the European banking system and North America with it.”

#3. Jim Reid of Deutsche Bank: “If you don’t think Merkel’s tone will change then our investment advice is to dig a hole in the ground and hide.”

#4. David Rosenberg, a senior economist at Gluskin Sheff in Toronto: “Lenders are finding it difficult to finance their day-to-day operations with short-term funding. This is a lot like 2008 but with more twists.”

#5. Christian Stracke, the head of credit research for Pimco: “This is just a repeat of what we saw in 2008, when everyone wanted to see toxic assets off the banks’ balance sheets”

#6. Paul Krugman of the New York Times: “At this point I’d guess soaring rates on Italian debt leading to a gigantic bank run, both because of solvency fears about Italian banks given a default and because of fear that Italy will end up leaving the euro. This then leads to emergency bank closing, and once that happens, a decision to drop the euro and install the new lira. Next stop, France.”

#7. Paul Hickey of Bespoke Investment Group: “More and more, we are hearing anecdotal comments from individual and professionals that this is the most difficult environment they have ever experienced as the market is like a fish flopping around after being taken out of the water.”

at http://www.munknee.com/2012/04/i-am-not-alone-here-are-quotes-from-17-others-on-coming-global-financial-collapse/

NETHERLANDS – JUST THE FIRST DOMINO?

"If you’re still trying to piece together the events of the last 48 hours this note from Nomura might help.  They describe how the collapse of the government in the Netherlands could put increasing pressure on Germany to abandon support for the periphery.  A negative trend here is not far fetched at all.  If Sarkozy loses his re-election campaign the core will likely see increasing support for those who don’t want to continue bailing out the periphery countries.  I still think Germany will hold the line no matter what the costs, but the risks can’t be ignored as they grow.  Anyhow, here’s the Nomura commentary:

“As we reflected in our 13 April report EU: Now is the second summer of our discontent – Act 2, the PvdA has also signalled that it does not support the eurozone’s fiscal compact, Dutch ratification of which is now, we believe, seriously in jeopardy. Although failure by the Netherlands alone to ratify would not in theory spell the compact’s demise – only 12 out of 17 eurozone members need to ratify for it to come into force – it would at best significantly damage the compact’s credibility and at worst encourage other members to follow suit.

at  http://pragcap.com/netherlands-just-the-first-domino

AS THE PERIPHERY SINKS, THE CORE FOLLOWS….

"Now this is starting to get really interesting.   Today’s flash PMI in Europe was a disaster.  Not only are the periphery countries predictably weak, but we’re seeing the weakness seep into the core.  The following from the Markit report summarizes the situation:

“The Markit Eurozone PMI Composite Output Index fell to a five-month low in April, according to the preliminary ‘flash’ reading which is based on around 85% of usual monthly replies. The index fell
for the third month in a row to 47.4, down from 49.1 in March, to signal a faster rate of decline of private sector economic activity. Output has fallen seven times in the past eight months.

Output fell at the fastest rates for five months in both manufacturing and services, with the former
seeing the steeper rate of decline.

By country, growth slowed to only a very modest pace in Germany, showing the weakest expansion
in the current five-month sequence as weak service sector growth was offset by a sharp decline in manufacturing output. France meanwhile saw output fall for the second month in a row, with the
rate of decline accelerating to the fastest since October. Falling manufacturing output was
accompanied by a steep deterioration in service sector activity.

at  http://pragcap.com/as-the-periphery-sinks-the-core-follows

Because Currency Wars Are So 2010

"There are those who think that Currency Wars are a brand new thing. They are not. More importantly, we now have finally moved on to the real deal:

• EU SAID TO PLAN WTO COMPLAINT AGAINST ARGENTINE IMPORT CURBS - BBG

This perfectly objective and otherwise impartial decision has nothing to do with recent collectivist decisions of what is for the greater good... At least one's greater good that is, which just happens to be the biggest problem with central planning at the global level.

Some more from Bloomberg:

EU will probably file challenge at WTO in coming weeks, spurred by separate dispute over YPF nationalization, person with knowledge of plan says.

• Other WTO members may join action, person says
• NOTE: Argentina has subjected growing number of imports to licensing regulations since 2008, drawing objections from EU, U.S., Japan, other WTO members"

at http://www.zerohedge.com/news/because-currency-wars-are-so-2010

IS SPAIN GOES, WE ALL GO….

"Spain is once again rattling the markets…Just click here to see how often it happens. And the market is right to be concerned. If anything the market is not concerned enough because we think Spain‘s situation is far worse than they’re letting on. The numbers do not add up and analysts are starting to realise it...
And no Spain is not Greece, Spain is too big to fail. The IBEX is in full crash mode, and yet once again, Europe is shooting itself in the foot. We had respite after rumours came around that the ECB would renew its bond buying program but then of course….“ECB’s Knot Says ‘Very Far’ From Resuming Govt Bonds Buying”
The result is that THERE IS NO MORE CORE EUROPE, IT IS ZE GERMANS AND THE OTHERS…The chart below shows how in this latest episode of stress, the market is treating French, Italian and Spanish bond spreads equally….The Italians being the outperformer and we think it is right..."



at http://pragcap.com/is-spain-goes-we-all-go

EXPECT MORE BAILOUTS & SELF IMPOSED DEPRESSION AS THE EURO CRISIS CONTINUES…

"You’ve probably seen the math by now….There is just no way Italy is going to grow their way out of what some are (incorrectly) calling a debt crisis. And the other peripheral countries are in similar positions. These two headlines from Reuters pretty much sum up the situation in Italy:

“Italy to raise 2012 debt/GDP target to 123.4pct from 119.5pct, hikes 2013 to 121.6pct from 116.1 pct
Italy CUTS 2012 GDP forecast to -1.2pct from -0.4pct, raises 2013 to +0.5pct from +0.3pct”

And we should expect that 2013 forecast to get slashed when they try to balance the budget and growth continues to sink just like we’ve seen in Greece.
So the story has become simple. As long as the ECB is willing to write the check then they can hold the line. The big risk now are civil unrest leading to political upheaval and potential defections/defaults. How long can these countries impose depression on their citizens before they finally realize that this currency system is simply not working? The core must either move more quickly towards unification and a true resolution of the currency crisis or risk increasing turmoil and eventual combustion…"

at http://pragcap.com/expect-more-bailouts-self-imposed-depression-as-the-euro-crisis-continues

SOROS: “THE EURO HAS BROKEN DOWN”

"George Soros presented at the INET conference this weekend and offered some very good comments on Europe. Among the important points he makes:

• The Euro is a broken currency system in its current construct.
• The peripheral nations have been rendered to 3rd world status.
• The Euro users are essentially indebted in a foreign currency.
• The political dynamic is going to destroy the Euro
• The European union is at risk of dissolution.
• The Euro doesn’t have to collapse.
• Europe needs to come together and take extraordinary actions to resolve the crisis..."

at  http://pragcap.com/soros-the-euro-has-broken-down

Santelli On The Chain Of Insolvency

"While it is not unusual for everyone's favorite truth-seeker in Chicago to cut to the chase and simplify the over-complex world of data and nuance that is thrust upon us day after day, CNBC's Rick Santelli outdoes himself today. Initially addressing the retail sales and housing data dichotomy, Rick jumps above the noise of day-to-day data and focuses on what is critical - in his view - the weather and the debt. If only he had used the term "It's the debt stupid" as it would have made for better headlines but the clip below should help anyone and everyone decide on whether this dip is for buying or fading/waiting. In the end, Santelli notes, "It is simple. There are questions about weather and questions about debt. First one we'll know more about in the next two or three months. [For the] latter, we'll have to look toward our neighbors in Europe to see how it ultimately turns out and see if our political class is going to do a better job than the European bureaucracies."

at http://www.zerohedge.com/news/santelli-chain-insolvency

IS EUROPE’S RECESSION SPREADING BEYOND THE EUROZONE?

"When Sweden’s Q4 GDP fell 1.1% from the previous quarter, most analysts thought of it as a temporary blip. After all the Q4 GDP was still positive on a year-over-year basis.

Sweden GDP YOY (Bloomberg)

But the “temporary blip” out of Sweden has turned into something more ominous when the February industrial production numbers came out this morning. Here we are no longer talking about Q4 which was challenging for most major economies.

Reuters: Swedish industrial production suffered its sharpest fall since 2009 in February, jarring a reassuringly rosy outlook painted by other recent economic indicators and calling into question expectations the central bank will not take rates any lower.

Sweden Industrial Production YOY (Bloomberg)

Industrial orders have also turned sharply negative.

Sweden Industrial Orders YOY (Bloomberg)

Of all the European economies, Sweden was supposed to be fairly insulated from the Eurozone problems, particularly given its decent debt to GDP ratio of 37% and export oriented economy..."

at http://pragcap.com/is-europes-recession-spreading-beyond-the-eurozone

IT’S THE EUROZONE THAT’S TURNING JAPANESE…OR MAYBE WE ALL ARE

"Earlier today the headline *GERMAN TWO-YEAR NOTE YIELD DROPS BELOW JAPAN’S FOR FIRST TIME* hit the wires and, yes currently sitting at below 0.1%, it is indeed very close to turing negative. As illustrated below it took 20 years for the German Bund to go Japanese so forgive me for trying to make a comparison.

German 2 year yield drops below Japan’s for the first time

Much has been written about the US Economy going Japanese and there are indeed some worrying signs. And for all the Bernanke bashing, that is one thing he really understands and will fight aggressively.
Unfortunately, Euro zone policymakers and the German’s inflation phobias are making all they can for Europe to get into an entrenched deflationary spiral..."

at http://pragcap.com/its-the-eurozone-thats-turning-japanese-or-maybe-we-all-are

Deja Vue All Over Again; ECB Says Bond Buying Program Available; Sweet Talkin' Guys

"ECB Says Bond-Buying Program Available

The ECB went from loading up on sovereign debt and making a huge mess of it when Greece defaulted, to the LTRO program which has not made a big mess yet but will. Things are about to go full-circle as the ECB threatens once again to make another mess of things with sovereign bond purchases.

The Bundesbank, Germany's central bank protested bond purchases the last time (correctly), and will do so again, likely to no avail, and with the same predictable results.

CNBC reports ECB Official Says Bond-Buying Program Available

ECB Executive Board member Benoit Coeure, the ECB board member in charge of market operations, said the central bank still had the Securities Market program (SMP) in place allowing it to purchase debt of euro zone nations, should the need arise.

"We are seeing today growing signs of normalization on a whole group of market segments ... but the situation in recent days shows that this normalization remains fragile," Coeure told a conference in Paris.

Referring to Spain, where sovereign debt yields have spiked amid concerns over the government's ability to cut its deficit, Coeure said: "The political will is there, which makes me think that what is happening at the moment in the market does not reflect the fundamentals."

at  http://globaleconomicanalysis.blogspot.com/2012/04/deja-vue-all-over-again-ecb-says-bond.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29

Global Systemic Risk Is Rising Rapidly Again

"The risk of the 30 most systemically important financial institutions (SIFI) in the world has risen over 30% in the last three weeks as the effects of LTRO fade and encumbrance becomes the new reality. This less-manipulated, government-bank-reacharound-driven bond-market sense of reality has retraced almost 40% of its improvement from its peak last November at 311bps to its best level mid-March at 171bps. The current 226bps level is extremely elevated and as one would expect is dominated by European and US banks (with US banks on average trading wider than Europeans - which may surprise many but Europeans dominate the worst names - most specifically the Spanish banks)."







Source: Capital Context

at http://www.zerohedge.com/news/global-systemic-risk-rising-rapidly-again?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+zerohedge%2Ffeed+%28zero+hedge+-+on+a+long+enough+timeline%2C+the+survival+rate+for+everyone+drops+to+zero%29

Spain: The Ultimate Doomsday Presentation

"In summary, here are Carmel's five reasons why Spain's problems are worse than the market anticipates:

1. Spain’s national debt is 50% greater than the headline numbers

Spain’s debt-to-GDP balloons from 60% to 90% of GDP with regional and other debts

2. Spain’s housing prices will fall by an additional 35%

Spain built one house for every additional person added to the population during the past two decades; the fall will decrease GDP by ~2% each of the next two years

3. Spain has “zombie” banks with massive loans to developers and to homeowners

Banks have not begun to realize losses and are vastly undercapitalized

4. Spain’s economy has not stabilized and will continue to deteriorate

Spain has the highest unemployment in the developed world, one of the highest overall debt loads, and the most uncompetitive labor market in Europe

5. The EU will not have the firepower or political will to bail out Spain

Rescue fund headline numbers are misleading and count capital that is not yet committed

And here are the problems that will manifest themselves over the next 12 months:

• Spain’s true debt burden will pass the 90% “tipping point” identified by Rogoff and Reinhart
• Housing prices will fall further and faster than anticipated (consensus is 15%; CAM estimate is 35%)
• Banks underestimate the residential real estate loan defaults (consensus estimate is 2.8% vs. CAM estimate of 11%)
• Expected housing price depreciation and loan defaults will deepen Spain’s recession (additional 2% contraction in 2012 and 2013)
• Spain will need to refinance €186.1 Billion in 2012 alone..."

at http://www.zerohedge.com/news/spain-ultimate-doomsday-presentation

READ MORE

Europe on brink of another financial crisis, Darling warns

"Europe is in the eye of an economic cyclone, with a fresh storm about to hit vulnerable countries, the former chancellor Alistair Darling has warned.

Mr Darling, who accurately predicted in 2008 that Britain was on the brink of the worst economic downturn for 60 years, said European Union leaders should not be lulled into thinking that the worst of the eurozone crisis is over.
In a lecture to students at Queen Mary, University of London last week, the Labour MP said the situation in Spain, where the centre-right government is imposing severe budget cuts and a general strike wreaked havoc on Thursday, should trigger alarm bells across the EU.
The French President, Nicolas Sarkozy, claimed last month that following agreement on a fresh EU bailout of Greece, the eurozone was out of the woods. And David Cameron and George Osborne have insisted that Britain's strategy to push on with austerity measures has helped stabilise European economies. By contrast, Angela Merkel, the German Chancellor, has warned that Europe remains in a "fragile situation" and that the crisis is far from over.
Mr Darling told the university's New Labour in Government class: "Part of the problem with Europe is that a lot of them took the view that that this crisis is now behind us, therefore this is a time to visit austerity, whereas the countries who are going to be most hit by austerity [like Spain] are not out of the crisis at all."

at http://www.independent.co.uk/news/uk/politics/europe-on-brink-of-another-financial-crisis-darling-warns-7606256.html

READ MORE

The True French Debt To GDP: 146%

"In my continuing attempt to debunk what the European Union presents as facts; I turn my attention to France. I have already given you the correct debt to GDP ratios for Spain, Italy, Portugal and Germany which follows the exact principles of what any corporation in America or Europe would be mandated to report or suffer the slings and arrows of being held accountable for Fraud. I include contingent liabilities, derivatives, promises to pay, various guarantees and all of the normal accounting practices to be considered on any balance sheet except the sovereign nations of Europe. In the end, of course, it is your decision but at least we can begin any consideration based upon the facts and not based upon a fictitious account. Again, I divide up the liabilities into two categories, their national obligations and their European obligations; the European Union, the European Central Bank and finally for the other European institutions for which they bear some burden. Then I add it all up, divide by their GDP and we arrive at a factual accounting. Nothing complicated here except sleuthing about to get the data which is no easy task as it is hidden in various nooks and crannies.

How many Europeans does it take to screw in a light bulb?

One to hold the bulb and the rest to provide enough mis-information to make the economic world spin.

France

The Official French GDP $2.774 trillion

FRANCE’S NATIONAL DEBT

Admitted Sovereign Debt $2.261 trillion

Loans to the Nation $214.9 billion

Admitted Bank Guaranteed Debt $479 billion

Dexia Guarantee $55.48 billion

Total National Debt $3.010 trillion

FRANCE’S EUROPEAN DEBT

France’s Liabilities at the ECB $569 billion

France’s cost for the EU Budget $23.2 billion

France’s Liabilities for the Stabilization Funds $110 billion

France’s Liabilities for the Macro Fin Ass. Fund $203 billion

France’s Guarantee of the EIB Debt $137.6 billion

France’s Total European Debt $1.043 trillion

France’s National and European Debt $4.053 trillion

France’s Official Debt to GDP Ratio 86.1%

France’s ACTUAL Debt to GDP Ratio 146%


“It is dangerous to be right in matters on which the established authorities are wrong.”

-Voltaire

at http://www.zerohedge.com/news/true-french-debt-gdp-146


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Spiegel Says "Even a 1-Trillion Euro Firewall Wouldn't Be Enough"; Mish Says "The Bigger the Bazooka, the More Money Will be Lost"

"Eurozone bureaucrats keep upping the ante as to how big a "firewall" is needed. And at every critical juncture, German Chancellor Angela Merkel has proven she is nothing but a liar. With every demand for additional firepower, comes an inevitable cave-in from Merkel supporting the move, no matter what she says in advance.

Meanwhile, the entire idea that firewalls can accomplish anything is ludicrous, given the key point that no currency unions in the absence of fiscal unions cannot and will not work.

I suspect Merkel understands this, merely wanting to get Germany so deep into bailouts step by step, that it will be reluctant to leave the Eurozone.

It is high time the German Supreme court step in and stop this nonsense.

However, nothing can stop Greece, Portugal, and Spain from leaving, and eventually they will. In the meantime, rest assured that every increase in firepower will be additional money of German citizens' pockets. The end-game will be a currency or banking crisis at the worst possible time.

For now, please consider 'Even a 1-Trillion Euro Firewall Wouldn't Be Enough'

European finance ministers meeting in Copenhagen on Friday agreed to boost the euro-zone firewall to over 800 billion euros. The move marks another U-turn on the part of the Merkel administration, which recently dropped its opposition to increasing the fund. German commentators warn that even the new firewall may still be too small..."

at  http://globaleconomicanalysis.blogspot.com/2012/03/spiegel-says-even-1-trillion-euro.html

READ MORE

Greek PM says third bailout may be needed

"The Greek prime minister Lucas Papademos has conceded that the crisis-plagued country could require a third bailout only weeks after it secured a second package of rescue funds following months of hand-wringing in Brussels.
Athens may have received the biggest bailout in history but another lifeline could not be ruled out, the technocratic leader said in an interview. So far, the EU and International Monetary Fund have committed a total €240bn (£200bn) to the near-bankrupt nation.
"Some form of financial assistance might be necessary but we have to work intensely to avoid such an event," Papademos told the Italian business daily Il Sole 24 Ore..."

at http://www.guardian.co.uk/business/2012/mar/30/greek-pm-papademos-third-bailout

Read more

Goldman On Europe: "Risk Of 'Financial Fires' Is Spreading"

"Germany's recent 'agreement' to expand Europe's fire department (as Goldman euphemestically describes the EFSF/ESM firewall) seems to confirm the prevailing policy view that bigger 'firewalls' would encourage investors to buy European sovereign debt - since the funding backstop will prevent credit shocks spreading contagiously. However, as Francesco Garzarelli notes today, given the Euro-area's closed nature (more than 85% of EU sovereign debt is held by its residents) and the increased 'interconnectedness' of sovereigns and financials (most debt is now held by the MFIs), the risk of 'financial fires' spreading remains high. Due to size limitations (EFSF/ESM totals would not be suggicient to cover the larger markets of Italy and Spain let alone any others), Seniority constraints (as with Greece, the EFSF/ESM will hugely subordinate existing bondholders should action be required, exacerbating rather than mitigating the crisis), and Governance limitations (the existing infrastructure cannot act pre-emptively and so timing - and admission of crisis - could become a limiting factor), it is unlikely that a more sustained realignment of rate differentials (with their macro underpinnings) can occur (especially at the longer-end of the curve). The re-appearance of the Redemption Fund idea (akin to Euro-bonds but without the paperwork) is likely the next step in countering reality..."

Section 4 below is the most critical to understanding the pitfalls of the consensus thinking...



at http://www.zerohedge.com/news/goldman-europe-risk-financial-fires-spreading

On Spain’s coming under the watchful eye of the Troika in 2012

"This is a thematic post, I am also putting outside the paywall because there is a lot of chatter today about Spain needing to tap EU bailout funds this year. The messaging in the analyst community follows the thematic prediction I made in October 2010 about periphery countries missing targets and this creating a renewed crisis in the euro zone. Just to quote briefly to fix on how this will proceed, I wrote On the Troika’s Coming Occupation of the Periphery:

Translation: continue fiscal austerity until you reduce your deficits significantly. If the depression this creates causes you to miss your fiscal targets, redouble your efforts under the watchful eye of the Troika.
Portugal is out making additional cuts and increasing taxes (link in Spanish). Nevertheless, Olli Rehn has already indicated that Portugal runs the risk of not making its 2011 fiscal targets (link in Portuguese). Even Spain, not under an IMF program, will miss fiscal targets.
So, it is only a matter of time before what is happening in Greece happens at a minimum in Portugal and probably in Ireland as well.

While Ireland and Portugal are already in IMF programs, the worry now is that Spain will follow. Let me break down the different threads briefly. Here are the principal stories I am hearing..."

at http://www.creditwritedowns.com/2012/03/spain-bailout-2012.html