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

Graham Summers: Spain’s Fiscal Problems Will Result in Collapse of European Union! Here’s Why

"On the surface, Spain’s debt woes have many things in common with
 those of Greece – bad age demographics and a toxic bank system - but you’ll note that, as we tackle each of these, Spain is in fact in far worse fiscal shape than Greece..."

 at http://www.munknee.com/2012/04/graham-summers-spains-fiscal-problems-will-result-in-collapse-of-european-union-heres-why/

Campbell Asks: Can Italy Be Far Behind Spain?

"About three months ago, shortly before Greece’s sovereign debt was
restructured, I began to warn about Spain as the next Eurozone country to focus on. That has, indeed, turned out to be ‘all the news’ with reports every day on Spain’s deteriorating financial condition. Given the ongoing world economic uncertainty and volatility, however, I suggest you now begin to pay very careful attention to Italy going forward, but doing so without losing sight of what is transpiring in Spain..."

at http://www.munknee.com/2012/04/campbell-asks-can-italy-be-far-behind-spain/

Hopeless Situation in Spain: New Wave of Defaults as Home Prices Crash; Bad Loans Highest Since Oct '94

"Bad news upon bad news keeps piling up in Spain as the government still insists it can meet deficit targets without needing a bailout. Anyone with any common sense knows there is no can left to kick.

Reuters reports Spain banks' bad loans highest since Oct '94

• Non-performing loans rise to 8.2 pct of portfolios
• House prices fall 7.2 pct in Q1
• Defaults to keep rising on back of budget cuts

Spanish banks' bad loans rose to their highest level since Oct. 1994 in February, to 8.2 percent of their credit portfolios, Bank of Spain data showed on Wednesday, as the sector continues to battle sliding house prices and a looming recession..."

at  http://globaleconomicanalysis.blogspot.com/2012/04/hopeless-situation-in-spain-new-wave-of.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29

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

Argentina Default Risk Surges On YPF Nationalization, CDS Approach 1000 bps

"It would appear that the recent renewed excitement down in the Falklands was indeed the writing on the wall for a nation that is now desperate enough to nationalize foreign entities. Argentina, still unable to access capital markets years after its restructuring appears to be hitting an irrational wall again as its CDS has exploded wider recently, and even more so today with the YPF news, to near 1000bps - its widest in 4 months. Simply put this is not rational in any game-theoretic strategy and is frighteningly indicative of a supreme (irrecoverable) defection from friends-with-benefits status of the world - indicative only of massive internal problems in the South American nation. But do not worry, as Lagarde and her friends will just bring a bigger bag around to the next G-20 meeting as we are sure the IMF's members will have enough money to deal with Argentina AND Europe."



at http://www.zerohedge.com/news/argentina-default-risk-surges-ypf-nationalization-cds-approach-1000-bps

Tony Robbins, Ron Paul And Ben Bernanke All Agree: The National Debt Crisis Could Destroy America

"Is there one thing that Tony Robbins, Ron Paul and Ben Bernanke can all agree on? Yes, there actually is. Recently they have all come forward with warnings that the national debt crisis could destroy America if something is not done. Unfortunately, our politicians continue to spend us into oblivion as if there will never be any consequences. When Barack Obama took office, the U.S. national debt was 10.6 trillion dollars. Today, it is 15.6 trillion dollars and it is rising at the rate of about 150 million dollars an hour. During the Obama administration so far, the U.S. government has accumulated more debt than it did from 1776 to 1995. The United States now has a debt to GDP ratio of over 100 percent, and another credit rating agency downgraded U.S. debt earlier this month. Any talk of a positive economic future is utter nonsense as long as we are bleeding red ink as a nation far faster than we ever have before. It is absolutely immoral to wreck the financial future of our children and our grandchildren and to leave them with a bill for the greatest mountain of debt in the history of the world, but that is exactly what we are doing. Unless our current debt-based financial system is thrown out, there are only two ways that this game is going to play out. One would involve absolutely bitter austerity and deflation unlike anything ever seen before, and the other would involve nightmarish hyperinflation. Either path would be hellish beyond what most Americans could possibly imagine..."

at http://theeconomiccollapseblog.com/archives/tony-robbins-ron-paul-and-ben-bernanke-all-agree-the-national-debt-crisis-could-destroy-america

Massive Jump in Bank of Spain Borrowing from ECB: Bank of Spain Balance Sheet Shows Spain Deep in Trouble, LTRO is Essentially Useless

"CDS rates to protect against default by Spain rose to an all-time high today as Investors brace formore pain in Spain.

Spain was firmly back in the spotlight on Friday, after news of a sharp rise in borrowing by the region’s banks from the European Central Bank triggered losses across European stocks, but especially for the IBEX 35 index XX:IBEX -3.58% , which fell more than 3% to a three-year low.

The yield on the 10-year government bond in Spain ES:10YR_ESP +0.0004% , which had appeared to get some relief in the latter half of the week, resumed a climb upward, rising 15 basis points to around 5.93%..."

at  http://globaleconomicanalysis.blogspot.com/2012/04/massive-jump-in-bank-of-spain-borrowing.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29

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

Caesar Bryan - Suspicious $1.5 Billion Gold Dump & Bank Runs

"With continued volatility in gold and silver, today King World News interviewed 25 year veteran Caesar Bryan. Gabelli & Company has over $31 billion under management and Caesar Bryan has managed the gold fund since its inception in 1994. Caesar told KWN the European banking system is stil on fire, and we are now seeing bank runs in both Spain and Italy. He also stated that today’s trading at the end of the day in gold was very “odd.” Here is what Caesar had to say about the situation: “We had been having a recovery in the price of gold recently, but then gold was taken down around 1:15 pm today. There was quite significant volume in the last 15 minutes, before the COMEX closed.”

Caesar Bryan continues:

“There were 10,000 contracts traded, which is something like $1.5 billion, and gold fell precipitously, from about $1,665 to about $1,650. This is very odd trading on a Friday afternoon when there was no other discernible movement in other markets.

This made for a disappointing end to the week, but the backdrop for gold is still very solid. However, for investors, it’s hard to ignore the day-to-day movements.

As you know, we have been talking about what is going on in Europe. The latest news is that tension remains high in places like Spain..."

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/4/13_Caesar_Bryan_-_Suspicious_$1.5_Billion_Gold_Dump_%26_Bank_Runs.html

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

Inconsistencies in Spain's Budget Suggest Deficit will be 7% not 5.3%; Andalucia Regional Government Will Not Agree to Deficit Targets; Only 26% Trust Prime Minister to Overcome Crisis

"Courtesy of Google translate, please consider The inconsistencies of the State Budget for 2012

Much is written these days about the budget submitted by the Government for 2012, which proposes that the deficit be lowered to 5.3% of GDP. In this article we focus not on a comprehensive analysis of these items but in both revenue and expenditure forecasts which seem less realistic.

The first of these items is to transfer the SPEE (State Employment Service, former INEM). The government budgeted a reduction of 15.6% (2,464,000), arguing that many are unemployed benefits are ending.

Since the Government is assuming that unemployment will increase this year over 600,000 people, there is no reason for us to see a turnaround, quite the contrary. In view of the numbers a reasonable assumption would be a 10% increase in unemployment benefits starting in 2012. This means a delay of nearly 4,500 million from the budget, ie 0.4% of GDP..."

at  http://globaleconomicanalysis.blogspot.com/2012/04/inconsistencies-in-spains-budget.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29

"Spain Is Not X"... And Why That Is Actually A Bad Thing

"The place that worries Michael Cembalest, of JPMorgan, the most is Spain. Historically, the kind of dismal position it finds itself in currently has not ended well with 13 defaults since 1500 A.D. and he suspects its going to take a lot of bilateral aid and ECB financing to prevent another one."



Source: JPMorgan

at http://www.zerohedge.com/news/spain-not-x-and-why-actually-bad-thing

Tedbits: 2012 Outlook, Part 2 - Bombs, er...Bonds; Currencies and Gold

"The UNFOLDING destruction of the developed world’s economies and financial/currency systems continues apace. Public servants are trying to defy Mother Nature with the stroke of a pen; she will not yield to this. Radical Marxist POLITICAL solutions to practical problems are at the end of their collective ropes (double entendre intended). You CANNOT store wealth in paper, PERIOD. Those who do will get what they deserve: NOTHING. It has been and will be printed endlessly from this point forward as Socialist government policies have destroyed wealth creation and substituted Ponzi asset-backed economies in their place. Now those economic models have reached their COLLECTIVE endpoints.
Economies based on models of consuming wealth rather than producing wealth are DOOMED, and this is the definition of the developed world. Switching back to the wealth-production model used prior to 1971 in the developed world will be painful as our leaders have FORGOTTEN what wealth-creating policies to implement and how to do so.

The financial systems of the world sit on TOXIC paper (government bonds and currencies) and they call them assets and reserves – they are NOT, THEY ARE LIABILITIES! To see the enormity of government debt in the biggest economies in the world look at this graphic from www.demonocracy.info :"
 

at http://www.zerohedge.com/contributed/2012-14-08/tedbits-2012-outlook-part-2-bombs-erbonds-currencies-and-gold

Eveillard - Mass of Government Debt Underpinning Gold Market

"He figures and I think he’s probably right, that government debt is gigantic today because in order to fight off the deleveraging of the private sector, most governments have gone into debt in a major way

I mean not just the US, but the UK, Continental Europe, Japan, of course, even more than the others. That’s where Spain comes in. Some government debt is already suspect. Greek debt, of course, they just, in essence, defaulted.

Spain and Italy have become suspect too. I think at some point the American government debt, along with British German, French and Japanese government debt, will all become suspect. At that point the crisis will be such that the public will want something different.

I think when the public begins to accept that the governments have their backs against the wall, that government debt has become worse than suspect, that’s when the time will come to sell gold. But we are not there by any stretch of the imagination. 

The money printing is prevalent practically everywhere. That’s why I think the price of gold is simply in a correction.”

at http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2012/4/6_Eveillard_-_Mass_of_Government_Debt_Underpinning_Gold_Market.html

READ MORE

Greece Set To Default On Foreign-Law Bonds On May 15

"Back in January, when we wrote "Subordination 101: A Walk Thru For Sovereign Bond Markets In A Post-Greek Default World", we said that "because while the bulk of the bonds, or what is now becoming obvious is the junior class, can be impaired with impunity (pardon the pun), it is the UK-law, or the non-domestic indenture, bonds, which are the de facto fulcrum security. And since the notional outstanding here is tiny, it is quite easy to build up a blocking stake in the bonds and to obtain full control of the process, especially since the ECB appears to have been building up its own stake in local-law bonds....As anyone who has ever overseen or participated in a bankruptcy process, the biggest trump card one can attain is to build up a blocking stake in a fulcrum security (just ask Carl Icahn) . Because it does not matter who has a majority. What matters is who has 33% + 1 of the vote to block any consensual deal." In other words, from the very beginning the ball game was all about the non-Greek law bonds, whose indentures make it impossible for a non-make whole take out settlement.

Alas, we underestimated the stupidity of the European authorities who in their pursuit of a prompt if messy conclusion to the Greek restructuring, which ended up with a CDS trigger, were left with a tranching of the Greek balance sheet into a ridiculous seven classes, which crammed down the Greek law bonds into yet another separate class, an outcome which will shortly bite the European pre-petition sovereign market (i.e., Portugal, Spain and Italy) in the ass. What we did not however underestimate at all, is the critical value of strong indenture provisions, or, in other words, the willingness of UK-law bondholders to not comply with terms forced down their throat. As reported earlier today by the Greek Ministry of Finance, a whopping 20 of 36 classes of non-Greek law bonds have rejected the nation's attempts to restructure, and now appear set for an epic legal showdown, whose outcome will determine whether or not the UK non-UK law spread will explode, or if the entire European bond market will shoot itself in the foot itself, after all strong indentures appear to be merely a bond prosectus placeholder which will never be honored. Most importantly, we are delighted that UK-law bonds have understood one thing - by being the fulcrum security as we said, they have all the leverage. If Greece thinks it can take them in court and not pay them anything, well that may well be the ballgame for the European bond market..."

at http://www.zerohedge.com/news/greece-set-default-foreign-law-bonds-may-15

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

Everyone Is Wondering When Spain Will Become The New Greece

"This post originally appeared at The Automatic Earth.

Another week, another bout of social unrest in a Euro peripheral nation, if the fourth largest economy in the area (Spain) can even be called that. Yesterday's action saw more than a million people take to the streets in protest, while several million actually participated in the 24-hour general strike (about 77% of union workers), resulting in 176 arrests and a 104 injuries. It is estimated that 91% of all large business employees took part in the strike and/or occupied the streets. The Spanish politicians, of course, tried to downplay the rate of participation and claimed victory because the strike wasn't as bad as the last big one in 2010, but those claims merely reveal how their desperation is taking on a ridiculously childish quality at this point.
All of this was in response to newly proposed budget cuts of €27bn that are the harshest in Spain's history (along with a 7% rise in electricity/gas bills), but are STILL estimated to fall well short of what's needed to meet the deficit targets required by the Troika gang. In fact, as TAE readers (and Greeks) should know by now, this severe austerity virtually ensures that deficits and sovereign rates will spiral out of control, necessitating calls for bailouts with capital that simply doesn't exist. With a general unemployment rate of about 23% and youth unemployment at stunning levels of 50%, it is rather surprising that the pain in Spain isn't projecting itself into the streets with even greater force. One thing is for sure - Rajoy and his administration is extremely flustered, and the Eurocrats must be soiling their undergarments right now..."

at http://www.businessinsider.com/everyone-is-wondering-when-spain-will-become-the-new-greece-2012-3

Another Failed Grand Plan In Europe

"European Sovereign Yields have been under pressure for most of the last month...seems the market doesn't buy the firewall idea...



The EFSF has committed €200 billion. Depending on how you viewed EFSF, the maximum was €440 billion of funding at the AAA level (which it still has from Moody’s and Fitch). It could have been as much as €500 billion if it wasn’t focused on that maximum rating.

So how did we get a headline of €800 billion?

€200 billion of EFSF money that has already been committed got counted. They can’t commit it again. Yes this is money Europe has committed (more on how they fund it, later) which helped, but it cannot be committed again.

They also included €49 billion and €53 billion of loans already made to Greece under other EU programs as part of the firewall. Again, that €100 billion has already been spent, so it doesn’t really add anything.

Prior to today, the EU had €300 billion of remaining capacity and had spent or committed €300 billion. Now they have €500 billion of free capacity.

Let’s take a deeper look:

Last fall, Greece, Ireland, and Portugal had just over €600 billion of admitted debt (not the guaranteed hidden kind). So far, they have received €300 of EU commitments. Can we assume that a “bailout” is about 50% of a countries debt? Probably not, but it seems that the first round is less than 50%, but as it goes on, the amount grows beyond 50%, but it is eye opening, that 3 countries, with a total of €600 billion of debt, have needed €300 billion of support already – and look likely to need more. Ireland is getting a new extended payment plan. Portugal seems likely to need more. Greece may need more already to deal with the English law bonds, but in any case will likely draw down more.

So this €500 billion that is remaining, has to not only continue to support the existing countries, but in theory needs to deal with Spain and Italy. With €700 billion and €1.6 trillion, that seems dubious, especially once the mechanics are understood, but before we get to that, let’s look at what the EFSF has already done..."

at http://www.zerohedge.com/news/another-failed-grand-plan-europe

MACQUARIE: BUY GOLD NOW: It's About To Rocket To $2250

"BUY THE DIP.
That's the advice of Macquarie Private Wealth in respect to gold.
Gold has certainly come off quite a bit, form a high of around $1900/oz. late last summer, to around $1650/oz. now. And the improving economy and the rise in real interest rates has made a lot of people turn negative on the metal.
Macquarie advises getting in now for 5 reasons:

• Sentiment towards gold has no reached "extreme pessimism" levels.
• March is seasonally the weakest month for gold.
• Excess slack in the US economy will prompt the Fed to say on hold until 2014, as indicated, keeping short rates low.
• The extent of the long-term rate rise is over. The Fed will ease some more.
• Sovereign risk is not over.

Ultimately, they see it going to $2250/oz.
These two charts underpin their argument."

Macquarie

Macquarie

at http://www.businessinsider.com/macquarie-this-is-a-good-opportunity-to-buy-gold-2012-3#ixzz1qDD0pf3U