- For years, Progressive Radio News Hour contributor Bob
Chapman warned about troubled Eurozone financial institutions and possible
sovereign defaults.
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- Greece died months ago. Default is certain. Only its
obituary hasn't appeared. Germany prepared contingency plans to reissue
the Deutschemark if Eurozone stability crumbles.
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- Six possible sovereign defaults loom if contagion spreads
out of control. "Considering the condition of other European banks,
and the possibility that three major French banks may be purchased by China,
we could see disruption in the global banking system," warns Chapman.
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- "The very fact that Germany is building a reserve
of Deutschemarks has to spell the possible end of the euro."
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- If conditions keep eroding, its advocates will be discredited
for believing its time had come. Without Germany as its lynchpin, it's
heading for history's dustbin.
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- Markets know Greek default is certain, but haven't priced
in Germany readopting its D-mark. Chapman "predicted it 12 years ago
and many times since."
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- Disruption will be severe if it happens. "Overall,
we cannot imagine a euro without German involvement. Secretly, the Germans
have already made the decision."
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- They're trying to save themselves financially and economically.
An entirely new Germany will emerge. "We believe that (it's) on the
cusp of taking care of domestic institutions and problems and protecting"
domestic investors over others in troubled countries.
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- In preparation, they're also protecting their banks.
"At least six countries are going under, and all their debt will be
worthless or near worthless."
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- Watch troubled Greece. When it goes, they'll "all
go." If Greece doesn't get its (next infusion, it'll) happen quickly."
Otherwise, it'll be delayed another six to 12 months.
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- US banks won't escape trouble. Bank of America will "probably
(be) nationalize(d)." Heavy European exposure of other major ones
means they'll all be greatly impacted. Convulsion will grip financial markets.
"We could eventually have what looks like 1929 - 1933 all over again"
after Wall Street crashed.
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- D-marks are being printed in preparation for "the
greatest crisis to (grip Europe) since WW II. Moreover, bailing wire hold(ing)"
Eurozone countries to the euro is "coming unraveled....The dream of
Europe as the centerpiece for a new world order is over. There will be
big government changes" across the continent as many insolvent banks
are nationalized or shuttered.
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- As Europe's strongest economy, Germany's preparing to
save itself as insolvent countries fail. "This is truly how dire the
situation is. Cost analysis dictates the end of the euro and perhaps....the
EU."
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- Crooked bankers caused these problems, knowing bailouts
will save the largest too-big-to-fail ones. Concerned French officials
are following Germany's lead by printing francs just in case.
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- Unity perhaps works with equal partners. Unequal ones
under common rules assures inevitable trouble, especially when finance
capital giants engage in reckless speculation and massive fraud for short
and intermediate term gains.
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- As conditions in Europe unravel, global reverberations
will follow. Ongoing Depression crisis will worsen, hitting working households
hardest everywhere.
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- Financial expert Martin Weiss also sees serious trouble
coming. On October 10, he issued seven major advance warnings.
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- Months before 2008's financial storm, he warned of failures
hitting Bear Stearns, Lehman Bros., Citigroup, Washington Mutual, and Fannie
Mae "four years before it collapsed."
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- His new calls are some of his "most important in
40 years." They mostly affect Europe, but will impact global economies.
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- 1. Insolvent Greece will soon default. European, US and
other global banks hold billions of its toxic assets. Whether or not they'll
accept a major haircut makes no difference. Greece is dead.
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- 2. Fear contagion will spread because Greece has "over
328 billion euros" in toxic debt, "more than Ireland and Portugal
combined." Moreover, other Eurozone countries are also troubled. Once
one collapses, expect others to follow.
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- 3. "European megabanks will collapse" under
the weight of billions of dollars in toxic debt defaults combined with
"mass withdrawals" as investors run for the exits.
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- "Spain's banks are especially vulnerable, swimming
in a cesspool of bad mortgages" caused by the country's imploding
housing bubble.
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- So are larger French banks, including BNP Paribas with
$2.7 trillion in assets, Credit Agricole with $2.1 trillion, and Societe
Generale with $1.5 trillion.
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- Combined, these banks have more assets than JPMorgan
Chase, Bank of America and Citigroup. "All three are drowning in bad
loans" and are in danger of cratering.
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- They also face mass withdrawals if worried investors
sell to avoid big losses. Moreover, deposits comprise less than 35% of
Eurozone bank assets. They mostly rely on "wholesale funding - money
borrowed from other banks and institutions. In other words, they're hooked
on HOT MONEY" used for highly leveraged speculation.
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- When troubled signs appear, withdrawals quickly follow.
In 2008, similar bank runs doomed Washington Mutual and other US banks.
They almost sunk giants like Citigroup and Bank of America. They and other
major US banks remain vulnerable to a similar crisis today.
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- Giant Eurozone banks are especially at risk "because
they rely on hot money far more than US banks. And many appear to be suffering
big runs" right now.
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- An emergency European Central Bank (ECB) $40 billion
bailout tried to compensate unsuccessfully. It's a "drop in the bucket,
barely covering ONE CENT for each dollar of PIIGS' (Portugal, Ireland,
Italy, Greece & Spain) outstanding debt.
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- 4. Eurozone countries "will suffer a cascade of
new credit rating downgrades." France and Germany will provide temporary
relief. However, bailouts only work short term, letting smaller crises
become greater ones.
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- Out-of-control debt isn't solved by more of it. Eventually
a house of cards collapses crushing economies. Moreover, counterproductive
measures cause "governments (to) gut their own fiscal balance."
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- Downgrades follow. Borrowing costs rise, forcing sovereigns
to "pay through the nose with far higher interest rates. In other
words, in their zeal" to rescue banks from collapse, governments drag
themselves "into the abyss."
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- 5. Spain and Italy are next in line "to face default
on their massive debt." Combined, they have nearly $3.4 troubled trillions,
"10 times more than Greece." The combination of higher borrowing
costs and failing banks risks defaults in both countries because they can't
borrow enough to service crushing amounts owed.
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- 6. Global debt market meltdowns may follow. If investors
fear Spain and/or Italy may default, they'll freeze because of mass withdrawals.
Major countries like Germany, France, Britain, Japan and America will be
affected. So will others. Interest rates will rise sharply. Borrowing at
any cost will be curtailed or impossible.
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- 7. Sovereign debt defaults and bank failures will cause
more of them. Global Depression will deepen. "Ultimately, we will
see an extended period of great economic hardship for billions of people"
everywhere.
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- In fact, crisis conditions have "progressed far
beyond the deniability stage." Enough money power doesn't exist to
bail out everyone. "The era of big bank bailouts is over!"
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- Short-term stopgap measures only are possible that exacerbate
current crisis conditions. Global financial structures delay the inevitable
by "l(ying) about the value of their loans" to troubled countries.
"And governments lie about how much (is needed) to save insolvent
banks."
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- "Solemn promises are made. Paper is shifted back
and forth." Manipulated markets rally. But it's all a shell game "no
better than rearranging chairs on the deck of the Titanic," taking
on water fast and sinking.
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- On October 10, giant Belgium-based Dexia bank failed,
the largest collapse since 2008-09. Its assets exceed Belgium's GDP. It
was the largest global municipal governments lender. It actually passed
Europe's stress test three months ago.
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- Major banks larger than Dexia may follow. Rigged stress
tests let insolvent ones like Italy's UniCredit and French giants BNP Paribas,
Credit Agricole and Societe Generale pass.
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- Toxic debt didn't sink Dexia. Mass wholesale funding
withdrawals did, threatening insolvent European and US banks if contagion
spreads.
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- So far, policy measures pile good money on bad. Sovereign
finances weaken. Credit downgrades and higher borrowing costs follow. Hard
times worsen.
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- Loaded with toxic debt, US banking giants are vulnerable.
A day of reckoning approaches when nothing tried will work.
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- Conditions globally are out of control. Belgium's Dexia
defaulted with $707 billion in assets. Despite reeling with unfixable problems,
Greece bailed out its failed Proton Bank. So did Denmark for its Max Bank.
Others anywhere across the continent can implode any time, including troubled
giants.
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- Meanwhile, everything done makes a bad situation worse,
heading for big trouble perhaps sooner than expected.
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- Stephen Lendman lives in Chicago and can be reached at
lendmanstephen@sbcglobal.net.
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- Also visit his blog site at sjlendman.blogspot.com and
listen to cutting-edge discussions with distinguished guests on the Progressive
Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central
time and Saturdays and Sundays at noon. All programs are archived for easy
listening.
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- http://www.progressiveradionetwork.com/the-progressive-news-hour/.
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