Yes, Another Crisis is Coming… and It Will Be MUCH Worse!

www.zerohedge.com...

Finally, somebody (outside of ATS) telling it like it is!

At the heart of this entire situation is the key relationship that determines all economic policy: the relationship between banks and politicians. Most voters in developed countries continue to believe that their vote has some kind of influence in politicians’ decisions. They believe that they somehow can effect change at the ballot box.

The reality is that elections are largely for show these days. Politicians openly sell out their constituents to corporate donors, particularly banks, whether it be by directly taking large donations/ bribes or by appointing ex-bankers and other financial stooges to key decision making positions.

After all, when was the last time some politician picked an engineer or doctor or someone who might actually know anything about… well anything to a position of power? Try never.

No, instead politicians surround themselves with run of the mill financial stooges. Take the US where we allow guys who have rendered entire institutions (and endowments) bankrupt to be key economic decision makers. Heck, we even allow these types to “regulate” their former employers.

The situation is no better in Europe. Angela Merkel tries to maintain the illusion that she somehow will do the right thing (tell Greek bond holders to shove it) but in the end she always buckles. Why? Because German banks are on the hook for $65 billion worth of Greece’s debt. And whenever she comes close to telling them to take a hit, someone calls her up and tells her that if she does this the bank will implode.

It’s a perfect circle of influence: banks back politicians who once in office dish out the goodies/ handouts. And if the banks screw up, they threaten to take down the financial system, thereby destroying the politician’s chance at re-election.

All in all the banks have done leverage buyouts of Government. The leverage is political in nature (“screw us and we’ll take you down”). The buyout is in the form of donations/ bribes.

However, the primary problem with this system (aside from the fact it’s completely immoral) is that there are no consequences for bad decisions for the banks. Thus, they keep making bigger and bigger bets using more and more leverage thereby increasing systemic risk.

This is what happens when no one gets punished for screwing up, the screw-ups get bigger and bigger. And this time around the screw up will involve entire countries going belly-up (see Greece).

It’s already happening in Europe. Whether or not Greece gets another bailout is irrelevant. The European banking system is collapsing. And it’s going to spread to the US in short order.

Yes, I realize you viewers who are likely hired to keep the sheeple from waking up to the economic truth are going to jump in with "ooooh, but he's just sensationalizing to push his report/website", etc., ad nauseum. You know who you are (and so do we) so jump in and out yourself again, it will not make his opinion any less relevant.

Personally I see what is going on as a 3 way economic war between the bankers of the EU, US and China. Which has in turn strengthened the link between those bankers and the government they support.

Sadly I think this one will turn nasty in the end as they continue to undermine each others economic recovery it leaves little room to resolve the problems we all face.

But then again that could be the overall plan.. and I could be talking out my bottom.

Either way, thanks for the article

I agree,
the only thing
the situation in Europe is NOT spreading to the USA

the situation there is allready much worse, but they are to proud to admit it:-)


in time the system will explode

reply to post by buskey


Intill the people stand as one, sadly there is not much we can do except pray

Originally posted by ikke24



in time the system will explode

with impeccable timing!

Let the banks fall. They need to die, we lived for thousands of years without them, so we dont need them.

Originally posted by ikke24
I agree,
the only thing
the situation in Europe is NOT spreading to the USA

the situation there is allready much worse, but they are to proud to admit it:-)


in time the system will explode

If I understand you correctly I believe the "there" you are referring to is the USA. If so, you are correct it is much worse. You are incorrect to think Americans are too proud to admit it though. Most Americans are too ignorant of our economic situation to to even comment on it, and the politicians from the top down are clearly lying about it. Maybe you have heard the estimate using the CBO’s data and standard accounting methods like Ford, GE, or any other corporation that our obligations are in excess of $202 trillion.

(This is from last fall and the debts have continued to pile up in the interim).

"Boston University economist Laurence Kotlikoff says U.S. government debt is not $13.5-trillion (U.S.), which is 60 percent of current gross domestic product, as global investors and American taxpayers think, but rather 14-fold higher: $200-trillion – 840 per cent of current GDP."

"Let’s get real. The U.S. is bankrupt.
Neither spending more nor taxing less will help the country pay its bills."

"This is what happens when you run a massive Ponzi scheme for six decades straight, taking ever larger resources from the young and giving them to the old while promising the young their eventual turn at passing the generational buck."

Bloomberg article by Kotlikoff

This is 5 years old but makes a good point.

"U.S. Military Spending vs. The World"

"U.S. military spending – Dept. of Defense plus nuclear weapons (in $billions) – is equal to the military spending of the next 15 countries combined."

"These numbers show military expenditures for each country. Some say that U.S. military spending will naturally be higher because it has the highest Gross Domestic Product (GDP) of any country. The United States accounts for 47 percent of the world’s total military spending, however the U.S.’s share of the world's GDP is about 21 percent. Also note that of the top 15 countries shown, at least 12 are considered allies of the U.S. The U.S. outspends Iran and North Korea by a ratio of 72 to one."



There is obviously a limit to what we can "print" and spend and we have passed it. The next limit to pass will be the global tolerance of our fiscal irresponsibility. I doubt we know anything foreign governments don't know so it's not a matter of "if they discover we are worse off than Greece" they will quit buying our government debt. They still think they will get their money back, when they think they may not things will likely change very quickly.

I'm not the only one to see such an epic failure economically and think "how can that be anything but intentional?" Most however simply say "things still look normal to me", as long as the satellite works and Wal-Mart & McDonalds are open everything is just fine.

reply to post by KaiserSoze


KS - thanks for bringing even greater clarity to the desperate situation the US economy finds itself in. Fantastic information my friend, this is precisely the caliber of contribution that keeps me coming back here day after day.

Peace.

Today at 2:15 When Bernanke comes out of the 3 days meeting we will found out what is going to happen to our economy, anything that comes from that historical meeting (only 2 on the recent years since the market crash) will dictate if we are to fall on a full blown depression, or a high scale inflation

I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.

Thomas Jefferson,
3rd president of US (1743 - 1826)


"We must not let our rulers load us with perpetual debt. We must make our selection between economy and liberty or profusion and servitude. If we run into such debts as that we must be taxed in our meat in our drink, in our necessities and comforts, in our labors and in our amusements, for our callings and our creeds...our people.. must come to labor sixteen hours in the twenty-four, give earnings of fifteen of these to the government for their debts and daily expenses; and the sixteenth being insufficient to afford us bread, we must live.. We have not time to think, no means of calling the mis-managers to account, but be glad to obtain subsistence by hiring ourselves to rivet their chains on the necks of our fellow suffers. Our landholders, too...retaining indeed the title and stewardship of estates called theirs, but held really in trust for the treasury, must...be contented with penury, obscurity and exile.. private fortunes are destroyed by public as well as by private extravagance.

This is the tendency of all human governments. A departure from principle becomes a precedent for a second; that second for a third; and so on, till the bulk of society is reduced to mere automatons of misery, to have no sensibilities left but for sinning and suffering... And the fore horse of this frightful team is public debt. Taxation follows that, and in its train wretchedness and oppression." Thomas Jefferson

"The money powers prey upon the nation in times of peace and conspire against it in times of adversity. It is more despotic than a monarchy, more insolent than autocracy, and more selfish than bureaucracy. It denounces as public enemies, all who question its methods or throw light upon its crimes. I have two great enemies, the Southern Army in front of me and the Bankers in the rear. Of the two, the one at my rear is my greatest foe.. corporations have been enthroned and an era of corruption in high places will follow, and the money powers of the country will endeavor to prolong its reign by working upon the prejudices of the people until the wealth is aggregated in the hands of a few, and the Republic is destroyed. Abraham Lincoln


We Have Failed These Men.

More great commentary from respected investment adviser Porter Stansberry, providing his insight into what he calls 'the next stage of the crisis':

The next stage in the ongoing global financial crisis will feature the collapse of both the Spanish and the Italian economies. This should occur within the next six months. Concurrently, I believe the "Chinese miracle" will be unmasked as mostly a fraud powered by a huge increase in bad lending from state-controlled banks.

Ironically, the coming wave of financial trouble will probably force people back into U.S. dollars. Gold will also do well. In the currency markets, I believe the euro will collapse in the second half of this year, as will the Australian dollar, which serves as a proxy for the Chinese economy.

I expect this next "down leg" in the world's markets to be more severe than the crisis of 2008, because the balance sheets of the Western democracies are now less prepared to manage the losses.

Finally, I believe the euro will simply cease to exist.

More great insight at the the source:

www.thedailycrux.com...

reply to post by KaiserSoze


Man I'm right there with you. I got a buddy who frequents this site and he still thinks this is a recession and that it's because people got greedy...

I have a hard time (after stepping back and looking at the entire economic picture) believing this was just from irresponsibility, I can't see how this wasn't intentional... Now when someone asks "ok, well why would they do that..?" That's when Conspiracy comes in and people's eyes glaze over..


Str and flg OP