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/

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

Sarkozy Comeback Bid Falters as French Economy Hits the Skids; Setup Good for Gold?

"...A Hollande victory will add pressures on the euro vs. the US dollar and also elevate fears of a eurozone breakup. A breakup is likely regardless who wins, in my estimation, however, a Hollande victory could easily escalate the timetable.

If that sentiment catches hold, don't be surprised to see gold rise while the dollar strengthens."

at http://globaleconomicanalysis.blogspot.com/2012/04/sarkozy-comeback-bid-falters-as-french.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29

Roubini : Darker days ahead for The Eurozone as Recession sinks in

"Nouriel Roubini : “The trouble is that the eurozone has an austerity strategy but no growth strategy. And, without that, all it has is a recession strategy that makes austerity and reform self-defeating, because, if output continues to contract, deficit and debt ratios will continue to rise to unsustainable levels. Moreover, the social and political backlash eventually will become overwhelming.
That is why interest-rate spreads in the eurozone periphery are widening again now. The peripheral countries suffer from severe stock and flow imbalances. The stock imbalances include large and rising public and private debt as a share of GDP. The flow imbalances include a deepening recession, massive loss of external competitiveness, and the large external deficits that markets are now unwilling to finance.
Without a much easier monetary policy and a less front-loaded mode of fiscal austerity, the euro will not weaken, external competitiveness will not be restored, and the recession will deepen. And, without resumption of growth – not years down the line, but in 2012 – the stock and flow imbalances will become even more unsustainable. More eurozone countries will be forced to restructure their debts, and eventually some will decide to exit the monetary union.”
Read the entire piece at Project Syndicate >>>>>>>

at http://nourielroubini.blogspot.com/2012/04/roubini-darker-days-ahead-for-eurozone.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+NourielRoubiniBlog+%28Nouriel+Roubini+Blog%29

John Mauldin - Europe is Destroying Their Currency

"With renewed fears of Europe becoming a systemic risk to the global banking system, today King World News interviewed John Mauldin, President of Millennium Wave Securities. Mauldin spoke candidly with KWN about the crisis, how much has been printed and what to expect going forward: “$7 or $8 trillion (in printing) is probably where we are, but whatever the number is, it’s significant. Will Europe have to print a great deal more? The answer is absolutely. What’s that number? We don’t know. We don’t know for two reasons.”

John Mauldin continues:

“We don’t know how truly bad the banking system is. If they clog the banking system up, the wheels really do come off. As a culture we are in the negative, very unpleasant situation of having to bail out a bank that we really don’t like, and we really don’t want to do that. But if we don’t, the wheels come off.

European banks are at least two and a half to three and a half times worse than US banks. Think about the US, as bad as it was in 2008, Europe is still that bad and in many cases worse. When they stop printing money, when they stop doing their version of TARP’s, which are called LTRO’s, it’s a disaster. It looks like Greece..."

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/4/13_John_Mauldin_-_Europe_is_Destroying_Their_Currency.html

Soros On Europe: Iceberg Dead Ahead

"George Soros has been a busy man the last few days. Appearing at the INET Conference a number of times and penning detailed articles for the FT (and here at Project Syndicate) describing the terrible situation in which Europe finds itself - and furthermore offering a potential solution. Critically, he opines, the European crisis is complex since it is a vicious circle of competing crises: sovereign debt, balance of payments, banking, competitiveness, and structurally defective non-optimal currency union. The fact is 'we are very far from equilibrium...of the Maastricht criteria' with his very clear insight that the massive gap, or cognitive dissonance, between the 'official authorities' hope and the outside world who see how abnormal the situation is, is troublesome at best. Analogizing the periphery countries as third-world countries that are heavily indebted in a foreign currency (that they cannot print), his initial conclusion ends with the blunt statement that "the euro has really broken down" and the ensuing discussion of just what this means from both an economic and socially devastating perspective: the destruction of the common market and the European Union and how this will end in acrimonious recriminations with worse conflicts between European states than before..."

at http://www.zerohedge.com/news/soros-europe-iceberg-dead-ahead

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

THREE CATALYSTS FOR THE RETURN OF EUROPE’S CRISIS….

"Europe is partying like the good old days. And why not? It looks like the crisis is in the rear-view mirror. But I don’t think that’s necessarily the case. The reason is simple – the cause of the problem has not been fixed. The fact is, Europe is an unworkable currency system. There are no floating exchange rates between the economies and there is no fiscal entity willing to rebalance the imbalances that result from the trade issue (which is largely the result of the lack of floating exchange rates). So what’s happened is that the periphery nations have borrowed from the core nations in order to finance their spending binges, but because they don’t create their own currency they have a real solvency risk. So now we’re in a position where the governments are forced to cut spending in the midst of a balance sheet recession and the austerity is hurting growth without bringing the debt to sustainable levels.
The only reason we’ve seen a reprieve in the crisis is because the ECB has stepped up and implemented what is essentially a sort of ponzi by allowing the private banks to borrow at cheap rates and purchase government debts thereby reaping a profit. The ECB thinks they’ve resolved the solvency crisis without allowing the periphery countries to print money. But the reality is that the math just doesn’t work for most of these countries and while this sort of lending operation can alleviate pressures it does nothing to actually fix the problem in Europe which is at the highest level of the monetary system’s construction. And when the core government’s realize that perpetual bailouts are the name of the game and the economies remain very weak we are going to see someone come to their senses – it will either be the citizens through revolt or the core governments through disgust. But I have a very hard time seeing how this problem doesn’t continue to pop up time and time again in the coming years if not dealt with at the highest levels.
So how might it play out? An excellent post from a European blog has the potential catalysts for the next leg of the crisis:

“The second Portuguese bail-out, although likely, is not certain. The Greek election is not legally due until 2013, despite the lack of democratic legitimacy of the present technocratic government. May be Hollande and Merkel will put their differences aside. Unfortunately, I doubt it…"

at  http://pragcap.com/three-catalysts-for-the-return-of-europes-crisis

Is Spain Next?

"The data illustrate quite clearly how the PIGS' problems could become a broader European (if not global) financial crisis (emphasis added):
As of 31 December 2009, banks headquartered in the euro zone accounted for almost two thirds (62%) of all internationally active banks’ exposures to the residents of the euro area countries facing market pressures (Greece, Ireland, Portugal and Spain). Together, they had $727 billion of exposures to Spain, $402 billion to Ireland, $244 billion to Portugal and $206 billion to Greece (Graph 3).
French and German banks were particularly exposed to the residents of Greece, Ireland, Portugal and Spain. At the end of 2009, they had $958 billion of combined exposures ($493 billion and $465 billion, respectively) to the residents of these countries. This amounted to 61% of all reported euro area banks' exposures to those economies. French and German banks were most exposed to residents of Spain ($248 billion and $202 billion, respectively), although the sectoral compositions of their claims differed substantially. French banks were particularly exposed to the Spanish non-bank private sector ($97 billion), while more than half of German banks’ foreign claims on the country were on Spanish banks ($109 billion). German banks also had large exposures to residents of Ireland ($177 billion), more than two thirds ($126 billion) of which were to the non-bank private sector.
French and German banks were not the only ones with large exposures to residents of euro area countries facing market pressures. Banks headquartered in the United Kingdom had larger exposures to Ireland ($230 billion) than did banks based in any other country. More than half of those ($128 billion) were to the non-bank private sector. UK banks also had sizeable exposures to residents of Spain ($140 billion), mostly to the non-bank private sector ($79 billion). Meanwhile, Spanish banks were the ones with the highest level of exposure to residents of Portugal ($110 billion). Almost two thirds of that exposure ($70 billion) was to the non-bank private sector. "

at http://www.econbrowser.com/archives/2010/06/is_spain_next.html

Euro Up but Spain Under Pressure

"For the fifth day, the euro is recording higher highs and higher lows. It has advanced by roughly 3.25% since last Monday’s lows. While we recognize an improved news stream, the main circumstances of the European debt crisis have not gone away. Spain’s challenges are overshadowing Portugal and Greece.
Last week Spain offered bonds for the first time since the Fitch downgrade. The bonds were well received, but at the price of a roughly 50% increase in yields. Spain will be issuing 10- and 20-year bonds on Thursday. The timing could be problematic given two developments today. First, the chairman of BBVA said in a speech today that most Spanish companies and banks have been closed out of the international credit markets. Second, the ECB reported today that Spanish banks borrowed a record 85.6 bln euros from it in May. The second point would lend even more credence to the first point."

at  http://www.creditwritedowns.com/2010/06/euro-up-but-spain-under-pressure.html#ixzz0qrCQALgn

Soros Says "Crisis Far From Over, We Have Just Entered Act 2"

"Billionaire investor George Soros said “we have just entered Act II” of the crisis as Europe’s fiscal woes worsen.


“The collapse of the financial system as we know it is real, and the crisis is far from over,” Soros said today at a conference in Vienna. “Indeed, we have just entered Act II of the drama.”
Concern that Europe’s sovereign-debt crisis may spread sent the euro to a four-year low against the dollar on June 7 and has wiped out more than $4 trillion from global stock markets this year. Europe’s debt-ridden nations have to raise almost 2 trillion euros ($2.4 trillion) within the next three years to refinance maturing bonds and fund deficits, according to Bank of America Corp.
“When the financial markets started losing confidence in the credibility of sovereign debt, Greece and the euro have taken center stage, but the effects are liable to be felt worldwide,” Soros said.
 
at http://www.zerohedge.com/article/soros-says-crisis-far-over-we-have-just-entered-act-2?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