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Freedom Files w/James Burns
Freedom Files w/James Burns
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http://tinyurl.com/Bob-Chapman-4-28-2011
Kerry H. Lutz
Kerry H. Lutz
We keep searching Congress for leadership and all we see and hear is compromises and moneyed footsteps leading back to their controllers on Wall Street and in banking. We find few willing to stand up to the military industrial complex or the moneyed powers that control our country. Spending restraint is very difficult to find.
We are supposed to be two years into an economic recovery. Tell that to those with stagnant wages who have to fight against 10% inflation, which our government ingeniously tells us, is 1.9%. Some $900 billion or more will have been created out of thin air by the Fed and spent buying Treasury and Agency bonds, notes and bills and the $862 billion consigned to the economy in December will all have been spent. We are about to enter the next round in June. Will there be austerity or rampant inflation, the result of $1.8 trillion in spending, or will we get trillions more funding from the Fed? We think we will get the funding, because little help can come from Congress. If such events unfold you can expect an upward move in real interest rates to offset a negative rating and more injections of money and credit. As we meander through the statistics that are available and the lack of domestic and foreign support, we can only conclude that the
Treasury market is a bubble fostered by the Fed. When that bubble eventually bursts there will be no one there to pick up the pieces. The bankers and Wall Street have again gone too far. This bubble is far more dangerous than the real estate and mortgage bubbles, because it affects all financial markets and incomes. There is no entity capable of bailing out the system and that is why there is such a demand for gold and silver – the only real money. All the mortgage bubble did was soften up the Fed for this next coming blow. Adding to this misery is municipal, state, corporate and personal debt. The downgrade from AAA for US government debt is 100% surety over the next couple of years. It looks like it has been decided that European debt is to collapse first.
The ECB, eurozone IMF meeting in Athens in this coming week will decide that. We expect default but what the numbers will be no one knows. A default of 40 to 70 percent is in the cards. If the bankers insist on collateral such as almost all Greek government assets there will be no partial default; it will mean full default. The PM and his party does not have anywhere near the votes to get such legislation passed. The bankers and other sovereign lenders are stuck this time. It is ironic that six months ago Germany was offered 50% default by the Greeks and rejected it. The Germans did not understand the full scope of the PIIGS problems and they could not envision Belgium in the wings ready to join the failures. They could not see, as we predicted, a $4 trillion unpayable bill to bail out these victims of one interest rate fits all, a colossal blunder from the very beginning. In anticipation of this the bankers and others have mistakenly driven the euro to $1.48 and it may move higher because when the world sees Europe’s terrible situation the euro will fall and that will keep a USDX dollar at 72.90 from plunging to 71.18 at least temporarily.
We do not believe Americans and most of Europe understand the impact of the European banking crisis. The meeting in Athens next week to restructure Greek debt probably will trigger a EU-wide banking crisis, which we have been warning about for the past two years. We do not see Greeks, Irish or Portuguese living in poverty for the next 50 years just to make sure the bankers get their money back, which the bankers created out of thin air. Greek debt to GDP is 150% and no country has ever survived such debt. There has to be default. In the wings Ireland, Portugal and Spain are watching intently to see which way they should fall. On the other side of the debate Germans and Finns do not want to spend one more euro on this problem. Let them default and leave the euro. They should have never been in the euro in the first place. The EU is fighting with Ireland as well over corporate taxation. If Ireland losses that advantage they’ll go back to growing potatoes. Greek Parliament will not accept more austerity, Ireland may walk away from bailing out the banks and Portugal may just give up and default. Next week will be an exciting one that may change Europe forever.
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