Anyone who takes time to do a little digging can’t help but come to the conclusion that any hope of saving Greece’s economy is dead. However, from a political perspective, there is a great deal of effort being expended to cloud the verity of this no-win situation.
It’s not just Greece though. Ten-year Spanish bonds are moving upward again, cresting 6% early on and 5.75% in this week’s auction as investor fear of Spain’s economy grows. Why investors were encouraged by 5.75 seems largely short-sighted, but perhaps indicative of the times we face.
Italy has managed to keep somewhat quiet for some reason, in spite of the same problem. Portugal is perhaps the most telling of all the countries though. Some blame Spain for failing to tow the austerity line that was dictated by the ECB, claiming they would be better off if they’d followed orders. Portugal, however, has towed the line perfectly, cutting costs and doing everything their ECB masters have dictated. To what end? Labor reforms causing dissention; growing sovereign debt; as with all the euro countries, rising inflation with every stroke of austerity.
Perhaps the most incredulous of all central banking measures is the bond. In the end, it’s still simply taking on debt to pay debt. If a person were to pay one credit card bill with another credit card, nobody would be foolish enough to think that they were actually overcoming debt. But, for some reason, when central bankers do the same thing using sovereign debt, it’s progress.
Who’s really fooled though? Obviously some are, because we see such nonsensical headlines as “Euro Fears Easing” and “Eurozone Economy on the Mend.” Somebody’s buying the bonds. In other words, they’re convinced that inflation will be less than 5.75% per year for the next 10 years.
I wouldn’t be so sure though. The Spanish bonds only went down for a season because the ECB dumped 1 trillion euros on the market. How will they fix it this time? Many expect the ECB to continue its LTROs and bond-buying programs in order to keep up the appearance that the efforts are accomplishing something worthwhile.
Everyone who’s studied the figures knows that reported CPI rates are bogus. So, what do we make of the reported 2.7% Eurozone inflation? Where will it head when the ECB has no choice but to either allow countries to default or dump more euros into the market?
Steve Quayle shared a very interesting email he purportedly received from a bank insider. If there’s any truth to this, we’re going to get a lot of answers as the year comes to a close.
April 12, 2012
I write to you today to let you in on what some of the insiders at RBS, UBS, and Goldman Sachs already know. Greece has defaulted in secret. The strip mining of it’s lands, wares, resources, and infrastructure has begun and is in fact final stages.
That is the reason that the current technocrat in power is a former operative at Goldman Sachs. Same goes for Italy. We have already begun the proceedings in secret to absorb more of Greek banking, along with PNB Paribas, SAG, and Satander. They will keep the Euro afloat as long as possible. Next action will be Italy and Spain before the full “public” MSM announcement of Greek default will be official. By then the same strip mining pillage/programs will have already begun finishing their work on the rest of PIIGS. Look for a Euro crash end of 2012 followed by Dollar Collapse two weeks later.
Look to see market slowdown the next few weeks. Plunge Protection team working overtime.
Could the markets, currencies and perception of the Eurozone be propped up in order to avoid further impact on elections? Could this be part of a plan that includes the fleecing of the people of Europe? While convinced that it’s more than possible, I’ll leave the conclusions to the reader. However, if such is the case, there are few assets that will protect the investor. If these efforts accomplish their goals, we might not see a strong movement for months. This may be the perfect time for investors to move their focus from bonds and stocks to assets such as precious metals.
J. Keith Johnson’s Austrian and libertarian perspectives on current socioeconomic and geopolitical affairs are fueled by his insatiable desire to both discover and share the truth. A Goldco Direct affiliate, you’ll find his commentary on The Gold Informant website, as well as various Internet financial and news sites.