Monday, July 11, 2011

Red Alert Monday- The EU in Meltdown Mode as Euro's Days Are Now Officially Numbered; Greece Completely Misses All Targets as Budget Gap Widens; PIIGS CDS Spreads Explode With Yields; China's U.S. Listed Stocks Are a Mess; Last Week's Rally Largest Since 1644 - Shortly Before Collapse; Gold and Silver Shines as Always; $2 For Every $10 in American's Wallets is Gov't Subsidy; Tiny Tim Says Put Your Crash Helmets On; Worst Chart Ever; Fukushima Screws The World; Much More

Update 1: Whoa nelly! Economists finally catching on to EU insolvency. Chief European Economist at RBS, Jacques Cailloux just said, "we believe the European sovereign crisis might be entering a new phase with contagion reaching the larger economies." Translation: "Buckle up! It's gonna be a bummmmmmpy ride!"
Main Article
Things are certainly heating up and accelerating much faster than we had anticipated. Although as of last week, we have entered Level 5 on the GEES, this is the point of no return for the global economy and we expect the developments to now occur very rapidly as the world sails through levels 5-7 in quick succession. Put your helmets on and strap in. This is going to be a bumpy ride.

Indeed, we have been warning, since this blog's inception, that the disintegration of the EU is imminent and the Euro currency has but a very, very short time remaining. As we said three months ago, the Euro has "months, if not weeks" remaining. With the most recent developments over the weekend pushing the Euro closer to the edge, we now conclude the Euro may only have "weeks if not days" remaining. Given the extreme stresses now placed on the core EU members, namely Germany and France, due to Italy and Spain, we wouldn't be surprised to see the Euro implode or enter a full crisis mode as soon as Wednesday.

Greece, as we have warned about a million times, is insolvent. Act surprised - Greek budget gap widens, misses all targets. As they are now caught in a death spiral with no way out, each counter move made by the gov't to meat meet EU bailout requirements results in further deterioration of the economy, which in turn then requires more reliance on bailouts to continue. Why they don't understand this is beyond us. Then again, maybe they do understand but would rather ignore reality.

Judging by the bond yields and CDS swaps today, we think investors are just starting to pick up on the fact that the PIIGS are insolvent and will default no matter how many times EU officials try to extend and pretend. The can can't be kicked any longer. The Greek 2yr bond is now yielding a astronomical 31.22% and is up almost 3% on the day. The Irish 2yr is yielding 17.32% and is up 5.4% on the day. However, the real excitement doesn't begin until you see the Portuguese, Spanish and Italian 2yr bonds. How does 18.31%, 4.17% and 3.99% respectively sound to you? In other words, Spanish and Italian bond yields  are up 10.1% and 13.1% respectively(!) and let's throw in another (!) for emphasis. Which is why the EU called an emergency meeting over the weekend as pieces of dung started to hit the fan early. Don't worry though - China said they are going to save the whole EU - right after they clean up this mess.

Yet somehow, we think the EU will come up with a last minute "heroic" move to save the banksters and prevent "default" - at least the definition of default we are familiar with (as the PIIGS are already insolvent). Nevertheless, we expect this will be yet another postponement of the inevitable and very soon the tensions will be too great for them to bare. Notice that each successive postponement is shorter and shorter in length as the inevitable draws near. Some investors though, are still a little slow in the brain to realize that EU banks are dangerous places to be.

Speaking of default, Charles Hugh Smith has written an excellent article about last weeks suspicious fake and manipulated "stock market rally" - which also happens to be the sharpest "rally" of fiat toilet paper since 1644 - shortly before the collapse of the Ming Dynasty and the epic plague of Europe. As we have been warning since, well - forever - the "stock market" indices mean nothing. Zilch. Zero. Nada. The "stock market" indicates nothing about the true health of economy. In fact, according to all of the available evidence, the larger the "rallies," the closer the world moves to the grand finale as the global house of cards implodes and the smoke screens evaporate. It is that simple - and as we are watching very closely, the banksters are now cannibalizing off one another as retail has left the building.

Moving on to gold and silver, we continue to observe central bank's appetite of gold and silver as voracious and yet they don't want you to own the shiny stuff. Which is all the more interesting, as we observe the last group of retail suckers investors who still think that gold/silver certs are as "good as gold." What they don't realize is, the global economy is now a deadly game of musical chairs. Once the music stops, everyone will want to exchange their paper certs for the physical - and realize at that time there is not enough gold/silver to satisfy all of the paper that is out there. How many times have we reported that the Comex is dry? Oops.

Here's one of those little tidbits of information that make your head spin - close to $2 for every $10 that went into American wallets last year were in payments of jobless benefits, food stamps, Social Security, disability, etc, according to Moody’s. Since last year's data was the last available, we are 100% Bernanke certain that amount is now closer to $3 for every $10. Oh, and that same article goes on to show that come this fall, those benefits will run out, leaving millions of angry Americans roaming the streets looking for food. And banksters.

Which could be why Tiny Tim is resigning said last night "hard [economic] times will continue for many for a very long time." duh! #winning! Did you notice the rats are fleeing the boat faster than ever? Oops goes the weasel. Don't miss Obama's 11 o'clock announcement today right before lunch. Just make sure you eat first. Wait. Before you do, look at this chart and then ask yourself, "what exactly is a jobless recovery?"

In other radioactive news, Fukushima continues to pollute the earth. Courtesy of Energy News, we learn that Fukushima is worse than a "meltdown" or a "melt through" - it is a "melt out" as radioactive materials reach the groundwater. We have unquestionably reached a point of critical mass with the ongoing catastrophes in Japan. Many Japanese are discouraged after finding that their gov't has been lying to them about everything, leading one elderly woman to commit suicide. She chose to "evacuate to the grave" instead on continuing to live in a land filled with filthy liars radiation. This is just the tip of the iceberg as more and more people discover the truth about Fukushima.

Forbes has an excellent article on the dangers of radiation being a matter of perspective. We know radiation is cumulative and dangerous on all levels yet, officials around the world claim even the high amounts of radiation that exceeded the safety limits are suddenly ok for you. You do the math. They are not about to tell the public not to drink radioactive milk or not to eat radioactive meat - there is simply too much money involved, especially now that the economy is in the trenches. Then again, soon money won't mean a thing.


  1. Yellow Alert:

  2. OOOOOOH SHIT! should I be bringing my tomato plants in??

  3. @Mr. Kowalski- Thank you. Good link.

    @Anon- Leave the plants outside. Stock up on canned goods.