IF Issue: Wednesday Nov 30, 2011

Excerpts and links from the latest issue:

Bob Chapman - Sovereign Economist - November 23, 2011

http://www.youtube.com/watch?v=s2LWjuX77CI&feature=email

Bob Chapman – Ralph Evans

WORLD FINANCIAL COLLAPSE - WWIII & Bankers Demise

http://www.youtube.com/watch?v=s1i6mVTPgWg&feature=email

Interview 418 – Bob Chapman

http://www.corbettreport.com/interview-418-bob-chapman/

Bob Chapman - The Financial Survival 28 Nov 2011

http://www.youtube.com/watch?v=YPU0G0z1paw&feature=email

Dr. Deagle Show 111123 1/3 - BOB CHAPMAN

http://www.youtube.com/watch?v=iqfIQmUJ1c8
http://www.youtube.com/watch?v=c0GzNM6o1Ck
http://www.youtube.com/watch?v=Ch-ELZ2z6VA

Bob Chapman - Radio Liberty 28 Nov 2011

http://www.youtube.com/watch?v=-144GuRT1h8&feature=email

US MARKETS

           

Except for the MF Global scandal Europe still stands at the forefront of world debt problems. Up until now little has been accomplished toward solving these problems and the traditional Christmas season is upon us, which stretches from December 7th, to January 10th, a period in which very little will be accomplished.

It is reminiscent of last summer. The only thing that the elitists have accomplished is the placement of Bilderbergs as the head of the ECB and the appointments of two more as PM’s in Italy and Greece.

Over the last ten years we saw all debt grow, but in particular among the southern members of the euro zone. The imbalance was predictable, but the northern countries just ignored the problem. Those in the north blamed the difference on culture and work ethics. Thrown into the mix was government and banking profligacy and growing lack of competitiveness. All of that was true, but it did not alter the fact that great imbalances existed and still exist and that certainly contributed to the underlying non-competitiveness.

Financial mismanagement certainly had a profound effect in the six countries in serious trouble and you can also include France in the group. The problems were also compounded by the wild growth of indebtedness lorded over the banking community. The latter just loved one interest for all. The banks were particularly the blame in Ireland and Spain where unnecessary building went absolutely berserk. Through this period, Germany and the Netherlands, in particular, couldn’t lend money fast enough to those who shouldn’t have been borrowing it. This, as we reflect back, it was malinvestment, a misallocation of capital instituted by the banking community, which was leveraged about 70 to 1. We continue to ask what could they have been thinking of? The performance of the banks was at the very core and heart of what we see today.

Two to three years ago Germany reached the conclusion that this could not continue and they attempted to Germanize Greece and to instill discipline. That ended up being unsuccessful, due to the great cultural differences. That brought about the EFSF, which provided loans to those countries that were unacceptable to the bond market. This, of course, was just another effort in avoiding reality. The northern Euro Zone members want to continue to export to these countries, but they cannot do that and that is why they have no money. They are finding that collectivism doesn’t work. There is no such thing as collective responsibility. These new world order geniuses forget that when you have austerity GDP falls and you have a recession. In addition, it also brings about added inflation, which had and has the ECB very concerned, because their mandate is to keep inflation in check. This then has put the ECB at cross-purposes.

This points out why the ECB does not want to act as lender of last resort to governments. The six nations in trouble have been forced kicking and screaming to accept austerity government changes and to reveal the terrible condition that their banks are in. Greece, as an example, went into the stage one bailout and austerity, which forced revenues lower and the ability to pay interest lower as well. Wages were cut 40%, government wanted to take licensees from taxi drivers and turn their businesses over to a Germany consortium, which forced the largest demonstrations to date. We wrote more than two years ago that Greece should default, return to the Drachma and straighten their economy out. No one wanted to hear that and now the situation is much worse.

We have six countries on the ropes. Contagion has set in. Stress tests are a scam and meaningless. Dexia passed with flying colors and two weeks later went bankrupt.

Due to outright lying by bankers and politicians money is going to be much harder to raise in the future. If Germany’s auction was real last week, and if they could only raise half of what they wanted to raise, how can those in trouble believe they can raise any funds at over 7% on 10-year bonds?

The simple solution is to end the euro, a poorly thought out experiment; which its creators thought would become a one-world currency. If currencies are managed properly, central banks do not need to be a lender of last resort. All the lender does in creating money and credit out of thin air is inflate away excesses by the bank and fiscal policies. A cap of 3% annually in central bank monetary creation will bring only limited inflation and allow for growth.

A break up of the euro zone does not have to be disorderly. Every two months, over a one-year period, one of the six nations can be allowed to leave the euro in full default. The second year the remaining 11 members can decide whether they want to keep the group together, or return to their original currencies. This is essentially what 65% of German citizens want.

IF Issue: Saturday November 26, 2011

Excerpts and links from the latest issue:

Bob Chapman - Radio Liberty 3rd Hour- 21 Nov 2011

http://www.youtube.com/watch?v=LLs0GFYT58Y&feature=email

Bob Chapman - Financial Survival - November 23, 2011

http://www.youtube.com/watch?v=o3Zxvf5qUpY&feature=email

US MARKETS

            In Europe each time a new player is presented we find he is a Goldman Sachs’ alumnus. Recent entries are Mario Monti “appointed” PM of Italy, Lucas Papademas “appointed” PM of Greece and Mario Dragahi “appointed” President of the European Central Bank. The banks blatantly control governments and agencies presenting us with an oligarchy, which controls most of the nations on the planet. In America politicians are bought and paid for. In Europe there is a different mind set, a shared worldview of bureaucrats, technocrats, politicians and the elite bankers of world government and domination. What has happened in this process is that Goldman Sachs, JPMorgan Chase and other mega-banking has retained power for decades. They control all the players in the field, so the outcome is always in their favor. The bankers and others in turn are paid via billions of dollars in bonuses. Banks are now bank holding companies having become that to avoid failure as brokerage firms. That is the case in the US, UK and Europe.

One of our subscribers in Brussels sent us a copy of “A European Mechanism for Financial Stability.” The present danger is seen in sovereigns heavily in debt and the heard effect of hedge funds. They say they won’t allow speculators to govern their societies. If they are serious why don’t they ban them from their markets? A universal ban would be even better and they could throw in derivatives for good measure.

Europe still does not have a longer-term structural solution to their debt crisis and none is in the offering. Germany cannot sell its total tranche of bonds and Mrs. Merkel says that if Germany can only sell 65% of its bonds how can Eurobonds or bonds of the six insolvent nations sell theirs? The debt crisis is burrowing even deeper like a large worm undermining the entire continent. Worse yet, we just found out that the Bundesbank usually holds back bonds for market making operations, thus, they only sold about half of the issue. If the crisis continues to deepen Germany and the other euro zone nations will have to reexamine where they are headed. As we know all currencies and debt rates are increasing, which ties the banks of all the participants, including the solvent ones. Even with the German bunds, who is going to want to hold debt in a country that will have to guarantee one-half or more of the debt of other countries? At the same time the call goes out for strict supervision and enforcement of budget discipline. We have lived in these countries and that is not possible for any sustained period of time.

The Spanish election turned out as well as could be expected Calling for a vote on November 20th, the anniversary of Generalisimo’s death, turned out to be the kiss of death for Socialist PM Joe Luis Zapatero. There are too many people who liked Franco. The PP is a pro business party and already governs 11 of 17 of the country’s autonomous regions. If PP beats the Socialists in their stronghold in March, the PP will be in power for a number of years. Zapater’s legacy to the PP will have its work cut out for it with 22% unemployment and almost 7% yields to contend with. They will have to also try to restore the country’s AAA rating. Many voted for the lesser of two evils.

In France we have another case of government bailing out the banks and other euro zone members. These efforts could cost France its AAA rating. We’ll know in mid-January, but it does not look good.

Funding costs on a 10-year bond level are up and they look like they are going to stay there. Major countries are still paying close to 7%, which is the highest funding cost since the creation of the euro. The spread between French and German rates is about 2%, which is unheard of. The euro continues to be hammered vs. the dollar and the same is happening worldwide in stock markets. Most two-year paper has risen in yield over the past month. France is paying close to 4% versus .40% in Germany and in the US .28%. In Europe these bond markets could not function without the assistance of the ECB and the money and credit creation of sovereign governments, some banks are showing desperate signs. The biggest bank in Italy, Unibank, has to refinance $51 billion of bonds shortly. Their bond yields are now over 10%. Only the ECB can bail them out like the Fed bailed out banks in the US and Europe three years ago.

While this transpires 70% of Americans are unaware of the seriousness of what is taking place in Europe. Wait until 2012. Banks alone have to raise $660 billion of maturing debt, most 10-year paper is selling above 7-1/4%, which is a sign that they all need the help; Greece, Ireland and Portugal has already received. Remember, we are talking $6 trillion just to bail these countries out and to keep their economies going sideways. The solvent countries cannot come up with that kind of money without failing themselves. You have to ask why did the bankers let things go so far? They deliberately impeded the system, because they cannot be that stupid. Then there is the matter of capital flight. This year Greek banks have lost 20% of their deposits. We hope they bought gold and silver. We ask are Italian and Spanish deposits next? Over in Hungary Moody’s has cut their debt to non-investment grade. In the wake of that announcement France’s Sarkozy and Germany’s Merkel tell us that the ECB will act appropriately, whatever that means. These leaders do not know what to say or what to do. The situation is unsustainable, but we wouldn’t be surprised if this phase lasted into late January. Remember, Europe virtually closes down from December 7th until January 10th. This while the future of the European banking system is in dire trouble. While this transpires we wonder how many derivative failures there are and what their consequences could be? At last we heard from the US government, US bank exposure was $670 billion, mostly in credit default swaps. If the six European countries default on their debt, US banks cannot possibly stay solvent. The knack on contagion could take the US banking system down with it. In Europe there is no question that all European banks will have to be recapitalized by the countries in which they do business. In fact, it has already begun, just as it did in the US three years ago. That makes their currencies worth much less and gold and silver worth much more.

This is the greatest risk the EU has ever faced and as yet no one has any solutions. The euro and the entire 27-country union are at risk. This as we predicted has no solution. The weaker states have to be cut loose and the euro has to be phased out. Article 123 of the EU Treaty, prohibiting monetary financing or central bank funding of government, is illegal. That certainly is a stopper. That means the euro zone and the EU are trapped by their treaty and would have to change the treaty and, of course, the outcome would be massive inflation. If they stick to the treaty the euro will collapse. What it comes down to is that desperate violators do not care about the law. All they want is survival. On the other hand, Germans are unwilling to sacrifice their credibility or to abandon the legal path. Crisis or no crisis there is no reason to break the rules for those who have already broken them. Monetary inflation is the direct result of bailout and purging the system is the only solution for the long-term. We do not think Germany will abandon the rules and their principals. That means they are prepared to cut loose the six insolvents and hope the core euro nations can hold together. It is not only inflation, but credibility and trust as well.

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IF Issue: Wednesday November 23, 2011

Excerpts and links from the latest issue:

Bob Chapman on the MF Global scandal

http://www.youtube.com/watch?v=5ZDJuVqDdp8&feature=email

Bob Chapman - The Financial Survival 18 Nov 2011

http://www.youtube.com/watch?v=NIH9LQOfMxk&feature=email

Interview 413 – Bob Chapman

http://www.corbettreport.com/interview-413-bob-chapman/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+CorbettReportRSS+%28The+Corbett+Report%29

Bob Chapman joins Wide Awake Radio 11-21-11

http://www.youtube.com/watch?v=ZNnJ2ZxOT_o&feature=email

Bob Chapman - The Financial Survival 21 Nov 2011

http://www.youtube.com/watch?v=WI82-uY16lE&feature=email

Bob Chapman - The Money & Wealth Show. - 11 Nov 2011

http://www.youtube.com/watch?v=9LtJMc3iCUU

US MARKETS

We continue to write about Europe, because we have too. At the moment and for at least the next several months, it will be the lynchpin and the catalyst that could bring about a financial chain reaction worldwide. In turn Europe poses the biggest risk to the US economy. European direction has changed over the past few weeks to cut loose the six problem nations and any others who cannot stand on their own and reform a core euro zone. Presently Europe is nowhere close to ending its sovereign debt crisis. Germany does not want to use the European Central Bank as a lender of last resort. As riots erupt on the streets of Greece, talks are underway to structure 50% debt write-off that was the heart of the deal structured a month ago. In the meantime lending costs, already astronomical in Greece are relentlessly moving higher in Italy and Spain. The ECB has been active in the bond market as a buyer, but only in a limited way. The French, British and US want the ECB to act like the Federal Reserve overwhelming the market, and monetizing to solve the problems of the moment. The Germans do not want to deal with the inevitable inflation that follows. The extension of the problem, the hallmark of US, UK and French monetary policy obviously doesn’t solve the problem, but eventually compounds it by creating more debt and inflation. This policy has proven over and over again to be a failure in the longer term.

Confusion still reigns in Europe, and as a result the euro has lost 3%. In fact, climbing interest rates have many panicked. Interest rates on the 2-year Italian bills rose 150 bps last week, or ½%, as CDS, Credit Default Swaps, jumped 24%. Yields on Spanish, French and Belgian bonds had the highest divergence in euro history versus the bund this past week as well. As we have pointed out over and over that there is only one safe haven and that is gold and silver related assets. We ask how can the US dollar be perceived as a safe haven as its debt grows exponentially and its credit rating is approaching another downgrading? There has been only one safe haven for 6,000 years and that is gold and if the US government thinks they are going to change that they are mistaken. The money managers and hedge funds continue to chase the same failing currencies and refuses to buy gold, which appreciated more than 20% annually along with silver for the past 12 years. What are these genius money managers thinking about? They are so cowed by the establishment and propaganda they do not dare deviate. That in the face of historically low yields, which when matched against inflation is dreadful. Doesn’t anyone think outside the box?

In America Operation Twist, which has seemed to have faded from memory already has been a failure. How do you solve a debt crisis with more debt? Something the Europeans should take note of. But, they won’t, because that is today’s accepted poison. That in spite of its failure in the past. The end goal of Twist was lower mortgage rates, which really hasn’t happened. Who cares though? There are six million foreclosed homes in sale inventory and that will increase to 8 to 11 million over the next four years. We’d call this an exercise in futility.

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IF Issue: Saturday November 19, 2011

Excerpts and links from the latest issue:

Dr. Deagle Show 111109 1/3 to 3/3 - BOB CHAPMAN - COMING ECONOMIC STORM

http://www.youtube.com/watch?v=dT9b2mbaLFQ&feature=email

http://www.youtube.com/watch?v=kK5lPTWZj-w

http://www.youtube.com/watch?v=Gi66ivhliQY

Bob Chapman: Surviving The Banker Sociopaths 1/2

http://www.youtube.com/user/thealexjoneschannel/#p/u/11/2Ai4cgWzRiw

Bob Chapman - The National Intel Report with John Stadtmiller -15 Nov 2011

http://www.youtube.com/watch?v=9T6sXOcWC58&feature=email

Silver Update 11/16/11 - Stupor Committee

http://www.youtube.com/watch?v=e7jpMlWebWE

FFw/JB Podcast (11/17/2011): Bob Chapman

http://www.youtube.com/watch?v=O8cBOEpUiXw&feature=youtu.be

US MARKETS

            German Chancellor Merkel keeps moving the field of play away from the European Central Bank, and to the people of the euro zone. That is so she can get legislation to remove the sovereignty of EU members. The pitch is, if the new EU is to work all fiscal decisions that will have to be determined in unison by bureaucratic technocrats, all of whom want world government. This way Germany can lead European countries in locked goose step to one-world nirvanas. Incidentally, Britain’s PM David Cameron is going in the exact opposite direction. He sees an opportunity to allow powers to ebb back to national status from Brussels. What Mrs. Merkel is saying is that existing treaties and the ECB does not have a possibility of solving the euro problem.

            In the background we find German Finance Minister Wolfgang Schauble is a driving force behind the plans to run towards EU and fiscal and monetary union. This shows you how deliberately out of touch German politicians are and they seem to care less. They say this is the best way to ensure the EU’s survival, not the euro, the EU. Their plan will eventually destroy any possible solution in the quest to control European nations. As the Dir Spiegel put it so aptly, entering into voluntary euthanasia. What Merkel is up to here is massive changes in the German Constitution and the remaining Constitutions of Europe. Germany has one of the best Constitutions in the world, so why change it to abet world government? Herr Schauble and his Illuminist think tank behind the scenes is the one, which is really making all the decisions. An eminence guise, if you may. We wonder if Herr Schäuble has visions of himself as dictator of the EU? Perhaps these are his elitist orders. His quest along with Merkel’s is increase guarantees for the new ESM, which a majority of his own party rejects. Then again he doesn’t let democracy get in his way. Schäuble is the Illuminist’s main man in Germany and one to be watched closely. We knew Greece had to default two years ago, but so did Herr Schäuble and he told that to Mrs. Merkel.

            Herr Schäuble finding he could not raise enough funds for the EFSF he then recommended derivatives to extend the funds line from $518 billion, nearly half of which was donated by Germany, to $1.4 trillion. This concept at least for now ha fallen into disfavor.

            Supposedly, the only way the euro and the European Union can be saved is by transferring sovereign rights to the EU and amending Germany’s Constitution. As the situation deteriorates, which it is, they expect to use this opportunity to make the changes they want. They expect to turn the next crisis into an opportunity. The first shot would be a German natural referendum on Constitutional changes. The far more conservative Bavarian sister party certainly won’t go along with these ideas and changes. The entire exercise is a loser but Schäuble and the banks will push as hard as possible. In France Mr. Sarkozy is for the plan, but France and its banks are broke and the French government cannot even save them.

            If one is to present another Hitlerian concept one must understand cultural social issues stretching back thousands of years and the anthropology that makes them work. Yackey would have called what they are doing cultural distortion. These people. Schauble and Merkel are not idiots. They are the water carriers for world government. They are blinded by their goals and desires. As we have pointed out in earlier issues the six nations and any others in financial trouble will be cut loose to save the banking systems in the other 11 countries, although that may not be possible. They are willing to accept those odds, if for no other reason that they have known for some time that they cannot save the six. The financial sectors have to be saved at all costs, because this is the seat of elitist power. Saving the people and the economies isn’t even on their agenda. This is happening in the UK and US as well. This is what Occupy is protesting about. A defeat in Germany of these grandiose ideas will go a long way to preserving Democracy in Europe. We see the same forces doing the same thing in the UK and US and hopefully we’ll be seeing their defeat as well.

            There is turmoil among the European ranks, as to weather the ECB should continue to buy Italian and Spanish bonds. The German’s say no, because they fear inflation, which is understandable. They are fearful as well that the ECB could loose its independence. On the other hand British PM David Cameron says that the ECB should step in and save the day. His comment sounds like it came straight from the Fed.

            As we mentioned previously what Germany and France are trying to do is cut loose the financial failures from the euro, consolidate the remaining euro zone and via the ESM remove part of the sovereignty from this probable group of eight by allowing the ESM to make the fiscal domestic decisions of the group. They also want to revise the EU’s Lisbon Treaty that would now include fiscal union. France and Britain want the ECB to guarantee the EFSF. Germany does not. Germany is in a powerful position and has begun to use that power. Mrs. Merkel told Mr. Cameron that if he didn’t agree they’d move on without him. If England ever wanted to leave the EU, this would be the time to do so.

            You cannot maintain democratic control of the group with it operating at two speeds. In the 1950s you had this between the EEC and EFTA. That is why they were merged into the EU. If you have one speed it is easier and that is why Germany wants to dump the weak sisters.

            Here Europe is in a panic crisis and the politicians are jockeying for power. England and Germany want more export breaks, apparently unaware that if present deterioration continues they may not have a euro zone or a EU.

            As Italy and Greece grab the headlines our subscribers right from Slovenia, that their banking system may collapse. There are lots of problems, but the worst we hear is the government’s incompetence.

            Unemployment unofficially is about 15% the housing market is dead, prices are falling and most construction companies have shut down. Late payments by these companies to banks are about 25%. In the residential sector about 15% of loans are behind on payments. As with Greece and Italy, Slovenian bonds are now yielding more than 7% - a clear sign that they are probably on the edge of bankruptcy. As you can see there are many problems within the EU that few talk about, that just adds to the European turmoil.

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IF Issue: Wednesday Nov 16, 2011

Excerpts from the latest issue:
Corbett Report Interview 408 – Bob Chapman

http://www.corbettreport.com/interview-408-bob-chapman/

Interview 408 – Bob Chapman

http://www.corbettreport.com/interview-408-bob-chapman/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+CorbettReportRSS+%28The+Corbett+Report%29

Bob Chapman - The Financial Survival 11 Nov 2011

http://www.youtube.com/watch?v=8MrnUrbC6go&feature=email

Bob Chapman - HoweStreet.com Radio with host

Phil Mackesy:

http://talkdigitalnetwork.com/2011/11/corzine-cftc-get-it-wrong/

Bob Chapman: The Collapse is Coming!

http://www.youtube.com/watch?v=eCG4hv6Ds2k&feature=email

Bob Chapman: Surviving The Banker Sociopaths 1/2

http://www.youtube.com/watch?list=PLD2DD1CF2245D0675&v=2Ai4cgWzRiw&feature=player_embedded

Bob Chapman - The National Intel Report with John Stadtmiller -08 Nov 2011

http://www.youtube.com/watch?v=o9_96J09r9s&feature=email

Dr Deagle Show 111109 1/3 - BOB CHAPMAN - COMING

http://www.youtube.com/watch?v=Gi66ivhliQY

Dr Deagle Show 111109 2/3 - BOB CHAPMAN - COMING ECONOMIC STORM

Dr Deagle Show 111109 3/3 - BOB CHAPMAN - COMING ECONOMIC STORM

http://www.youtube.com/watch?v=dT9b2mbaLFQ

Bob/the Power Hour with Joyce

http://archives2011.gcnlive.com/Archives2011/nov11/PowerHour/1114111.mp3

Bob Chapman w/ Kerry Lutz

http://bit.ly/bob-chapman-11-14-11

Bob Chapman - The Financial Survival 14 Nov 2011

http://www.youtube.com/watch?v=8F1wpjPe7no

US MARKETS

It wasn’t all that long ago that industry estimates were that the issuance of credit default swaps in Europe, CDS, were about $18 billion. At the same time on the street it was estimated that the exposure was $75 billion. We estimate $150 billion - this represented insurance on the holders of bonds issued by Greece, Portugal, Ireland, Spain and Italy. The Bank for International Settlements says that figure is now $518 billion. As we have noted before the big problem is counterparty risk. When CDS, credit default swaps, are triggered to default will the counterparties pay up? Even if writers are buying from one another someone has to get caught holding the bag and loose money. That is where the risk comes in.

We are seeing a change in tactics by Europe’s politicians as they head toward allowing euro zone members to leave the arrangement. The realization is that no matter what, the five weak nations cannot compete with the stronger euro zone countries. They want legislation for their exit and to allow them to remain in the European Union. They obviously know that if they all or in part leave the euro they’ll probably default as well, in whole or in part. The derivative writers contend if the owners of bonds agree to take a 50% loss on bonds then the insurance doesn’t take effect. Fitch, the rating service says yes it is a payable default. We will see who is correct. We agree with Fitch.

At least for the moment bond yields in Europe seem to be finding balance and the euro seems to want to do the same. Pressure is still being applied and yields will probably move up over the next six weeks and we could see the euro at $1.30. the French and Germans are exposing a smaller euro zone finally facing reality, although the euro was all they cared about in the first place. Excepting Germany, most bonds were lower.

At the beginning every sovereign was going to be bailed out if necessary. Germany believed 2 years ago it would cost $1 trillion, we said $4 trillion. When Germany admitted to $3.5 trillion two months ago they knew then they and the other solvent countries couldn’t carry the burden without going under themselves. That was very short sighted of Germany. If they had made these decisions earlier they wouldn’t have had to make them now in a crisis where the problems are spiraling out of control. What poor preparation and planning. This should have been over last summer, but no they had to have their summer vacations. These people live in la la land. This corrupt socialist model does not work as many socialist countries have discovered.

The future of the euro zone is sealed. There will be six less participants a year from now. The European economy will have 1% negative growth next year and lower growth the following year. In Europe several more members will be forced to phase out the euro and return to their own currencies. We see this as the best option Europe’s one-worlders can hope for. What we are seeing is not a liquidity issue. These five countries are broke and all the saviors can do is throw good money after bad.

We hear morbid stories of the terrible results of changing currencies, some of which are true. You know what the problems are. You just avoid them. Everything has to be done ahead of time. You simply trade in each euro for ½ drachma or lira and seven days later there are no more exchanges. There is a 50% devaluation and a total default on debt. The government in question has to either bail out the banks or lets them go under. Either way a new banking system has to be put in place. In order to prepare for such events you simple exchange euros for gold and silver coins and bullion. Only keep enough euros to survive.

The troubles in Europe are not going to go away anytime soon. Expect two years or less before the euro is history. This will cause a rising dollar temporarily, but do not be deceived, it won’t last long.

Just to show you how rapid the deterioration has become, Italian banks borrowed $152 billion at the end of October, up from $144 billion in September. Italy’s $2 trillion plus in liabilities exceeds the four other countries in trouble. The banks holding these bonds as collateral are seeing their value erode, which means they cannot lend as much money as they would like to lend. In addition, banks have also purchased these bonds and as they fall in value it reduces their capital base. They cannot lend as much and may have to raise additional capital. That is in addition to raising funds to meet the BIS requirement of 9% reserves.

Italy’s PM Silvio Berlusconi as of this writing has not stepped down and as a result the yield on the Italian 10-year notes rose. These are killer rates, because Italy has to sell $204.2 billion in notes in 2011 and $231.9 billion in 2012. Italy, like all the other sovereigns that are in austerity programs, has already slipped into recession in addition to a natural slow down in the European Union. That will make all these nations have a difficult time increasing revenues.

Italy is now the key not Greece, and the very fact that France’s Sarkozy and Germany’s Merkel are pushing for legislation to allow sovereigns to exit the euro zone but stay in the EU is very telling. European and US stock markets sold off on the news, but the US’s Working Group on Financial Markets brought the markets right back up. In case you hadn’t noticed there are no longer free markets. Most everyone in the investment community knows the markets are being manipulated but no one says anything. That is because all they have to do is watch what the US is doing and follow suit. These actions, of course, make it much more difficult for the nations to sell their bonds and notes and the yields they must pay go higher. There is now no question the euro zone will change. The weak six countries will soon leave and eventually we see an end to this unnatural union. The healthy nations will concentrate on bailing out their banks, which will cost taxpayers a fortune. The bankrupt nations will have to nationalize banks. Depositors will lose 50% to 90% of their deposits. Those subscribers in Europe get out of those banks now. Take those funds and buy gold and silver shares, coins and bullion. In the healthier countries do the same thing, because we do not know how big the losses will be? No one knows how bad this will get.