As the EU debt crisis continues, we are discovering with eacah passing day that their banks are in deep trouble. A major systemic crisis looms just over the Horizon and will effect the European and eventually the US banking system. Indeed, the Chinese, according to media reports have ceased much of their trading with SoGen, Credit Agricole and BNP Paribas. The ECB chief has urged banks to strengthen their balance sheets. Meanwhile, French and German banks 'credit insurance' spreads are soaring in price, meaning a major risk is seen and probable 'credit event' is on the horizon. A good interactive graphic can be found here at Reuters. When a major economic power starts to suspend trading with major banks, there is something very big going on behind the scenes. It also appears that China and Japan are telling the Europeans they need to fix their own problems and they appear to be much more severe than anyone in the East or West is letting on, so any 'economic life raft' they throw out is going to be a small one. Now I do not want to minimize the possibility that some of this trading suspension may be at least partly due to a political angle, to get concessions from the EU in any aid package, but this is a drastic step and would hardly be taken unless there were something really ugly hiding in the balance sheets of these banks.
Yesterday the markets dropped
significantly and barring yet another covert bailout of the
market indexes (something done regularly by the US government) the
markets are likely to fall further. The FED and the Treasury are not
in a position to do a prolonged market bailout. The Fed is already
stretched to the limit and our Federal balance sheet increasingly
looks perilous. The problem here is that the MSM has been dead silent
and are not telling Americans that we may be facing another
Government shutdown in just a few weeks (perhaps days) as we slowly
run out of money. If they mention it, it will only be because of a
prearranged agreement with both political parties to spin the trouble
into a political one (like paying Disaster aid), rather than a stark
While many in Europe are calling for swift action to recapitalize mid-sized banks, the European Banking Authority is resisting calls for a speed up of the time line. Frankly, I think the the real problem is not mid sized banks but the biggest ones. But let us keep in mind a couple of things about 'assets' and GDP (as found on link in previous graph). That being that 'assets' (i.e., outstanding loans) as they are placed on the books of these banks can quickly be turned into liabilities once a major debtor cannot repay their loans. This is pretty much what is happening now. The sovereign debt of Greece, to probably be followed by other countries has gone from 'asset' to (essentially) a liability. Now I have never believed US or even EU GDP data was anywhere near accurate. I think much of what we call 'product' is an invention of our own minds and adept accountants spreadsheets. Too much of it is like counting people doing jumping jacks, paying someone to do them and counting each one performed as part of 'GDP'. Sure there was work, maybe lots of it, but nothing was produced. I take America's byzantine tax code and the gargantuan 'tax compliance' industry as a perfect example. They produce nothing but government forms and make billions from it. Well I am not the only one who sees it. Much of our economy is really a sham made up from economic shadows and accounting opiates.
It is a strange day when the BRIC nations are lining up to put funding in the IMF to stabilize the Western Banking disaster. But that is probably going to be one factor of any package needed to bail out Europe’s banks who frankly, should be allowed or rather be forced into insolvency. They are criminally incompetent and that is why they need these bailouts. They are threatening the whole western financial system with this economic 'blackmail' in order to maintain a system that is terminally broken and cannot be saved even if all the assets of US and Europe's economies were dumped into their banks. So in my mind, you really have two choices. 1) To continue the covert transfer of all Western assets to incompetent and insolvent banks destroying the West, or take your bitter medicine now, let some of these banks fail, pick up the pieces and rebuild your financial sector. That is what the UK is doing and I think they will survive this crisis.
A New Currency?
I think we will see a new currency?
Eventually. The Euro will be fundamentally restructured or it will go
the way of the confederate dollar. Even now many European nations
are hoarding dollars. They are doing it very, very quietly but they
are doing it. Why? The dollar has always been a refuge in a time of
crisis. That was once true of the Swiss franc, but once they decided
to hitch their raft to the Titanic and peg the Franc to the dying
Euro, it will take a long time if ever, for folks to put their wealth
and trust in the Franc again. Indeed the Swiss seemed determined to
destroy their famous banking sector and currency with move after move
that appeases Brussels and Washington, the two lepers of the
financial world, to the long tern detriment of their own (formerly
rock solid) financial sector. Today, Germans who put their money
into Swiss banks cannot
get their money out. The Swiss seem to have some kind of economic
'leprosy envy'; they see everyone else has it and they want it too.
But I suspect the that US and EU have been putting much pressure of
the Swiss to destroy their own economy for many reasons and their tax
haven status is just one of those reasons. The dollar is accepted
in the UK, Ireland, Greece, Germany France, Spain... you name it. No
other currency can boast that and if the Euro collapses, the dollar
may be how day to day transactions are conducted. Simply put, I am telling you
that some EU governments are preparing for just such a scenario. So I
say, at least in the short term (medium term as well) provided that
we do not have another government shutdown and the US continues to
make interest payments on its debts, the Dollar may be an interim
currency inside some European nations. It may (strong qualifier here as I have not looked into it yet) MAY help explain this.
long before we see the institution of the Mark of the Beast? I do not
know, but I think these events are a key step along the road to
the day we are forced to worship an image and take it or are killed.
Something fundamental must transpire to the entire global economy for
it be brought into being. Most of us true Christians (who bear
the testimony of Jesus) will lose our lives and we must be prepared for
it. Remember how the Nazi's used incinerators to get rid of the bodies at their death camps? Well now you have something new to think about.