Almost everyone I talk to thinks the European sovereign-debt
crisis has passed. They say Greece's bailout fixed the problem. Europe is on the
mend, they say. But as far as I'm concerned, nothing could be further from the
truth.
First, severe austerity measures continue to this day and
they are causing debt-to-GDP ratios to worsen.
The proof is in the numbers. Before the Greek crisis flared
up, debt-to-GDP in Greece stood at 113%. Today, Greece's debt-to-GDP stands at
a tad north of a whopping 177%.
In Spain, pre-crisis debt stood at 40% of GDP. Today it's
more than 97%. In Italy, it was106%. Now it stands at 132%.
Think the European sovereign-debt crisis is over? Think
again.
In France, it was 68%. Now it's 95%.
Even Germany's debt-to-GDP is worsening, leaping from almost
67% in 2008 to almost 75% today.
In each and every case, debt-to-GDP is worse than it was at
the beginning of the crisis — and the austerity measures are literally causing
the entire European continent to implode.
Second, austerity and climbing debt levels are hollowing out
Europe's economic growth.
According to Eurostat, Europe's GDP in the second quarter of
2015 slowed to 0.3%, leaving output 1.2% higher than a year ago. The figure
disappointed all 19 economists polled who were expecting 0.4% growth.
France's economy is slumping. GDP growth of 0.2% was
expected, but growth came in at 0.0%.
Italy's GDP came in at 0.2% compared with 0.3% in the first quarter,
leaving output only 0.5% higher than a year ago.
And Germany's economy, the only engine left holding the
feeble union together, expanded by 0.4%, lower than the consensus forecast of 0.5%.
All of this continues to create .
Third, some of the worst unemployment we've seen in modern
times.
Each and every one of these countries is in hock way over
its head. And each and every one of them is in the depths of a nightmare caused
by austerity measures.
Unemployment in Greece is at 25.6%. Spain: 22.5%. Portugal:
12.4%. Belgium: 8.6%. Italy: 12.7%.
Unemployment among youth (under 25) is still off the charts.
In June 2015, 3.181 million young persons were unemployed in the euro area, an unemployment
rate of 22.5%.
The lowest rates were observed in Germany (7.1%), Malta
(10%), Estonia (10.1% in May 2015), Denmark and Austria (both 10.3%).
And the highest rates were seen in Greece (53.2%), Spain
(49.2%), Italy (44.2%) and Croatia (43.1% in the second quarter 2015).
Bad News for Social Security and Medicare...
The 2016 presidential candidates are already talking about
making Social Security cuts.
Corporate and personal bankruptcies are surging. Social
discontent is on the rise again. And tensions between countries within Europe
are higher than ever.
Pretty picture? Hardly. It's the ugliest economic picture
for Europe since the 1930s, when 17
European countries went belly up, sending
hundreds of billions of dollars' worth of francs, marks, lira, and
more flooding into the U.S.
That, in turn, sent the U.S. stock markets exploding higher.
It sent the dollar and gold simultaneously into a moon shot as well. And it's
all about to happen again.
Fourth, deflation is picking up momentum.
With austerity measures squashing growth all over Europe, deflation
is starting to run rampant.
According to the latest data, prices euro-zone producers
charged for their goods fell a whopping 2.2% at the August data release.
In short, nothing, and I mean nothing, has been solved in
Europe. The crisis will soon escalate
with a vengeance.
When (not if) Europe's economy roils again:
First, you're going to see trillions more euros stampede for
the exits. That's going to send several large European financial institutions
down the tubes.
Second, that flood of capital is going to send the U.S.
dollar again into rally mode. Just like it did in the early 1930s when Europe
last went bankrupt.
Third, after a correction, it's also going to send our stock
markets roaring higher. Just like it did between 1932 and 1937 when the Dow
Jones Industrials soared 387% as Europe went under.
Fourth, it's going to give you multiple profit opportunities
to potentially make more money than you ever dreamed of. In stocks. In
commodities. In the dollar. And in gold
and silver.
My suggestions right now are:
A. Keep your eyes on
Europe. And keep most of your liquid funds in cash, ready to be deployed on a
moment's notice, but as safe as can be right now.
The best way, in my opinion: A short-term Treasury-only fund
in the U.S., or the equivalent.
B. Earmark a portion
of your cash for speculation. Not too much, and not too little. I recommend 25%
of your total investable funds. Funds that you do not need for anything else.
Finally, don't let anyone kid you. Europe's problems are
simply the beginning of a great sovereign-debt crisis that will soon spread
around the globe, creating some of the worst times we have ever seen.
And some of the biggest threats to your wealth, ever. But
along with this crisis will also come some of the greatest speculative profit
opportunities, ever .And you should do everything in your power to take
advantage of them. I know I will. Best wishes, Larry
Source: Money and Markets
Comments
Western governments need to cut unnecessary
spending to begin to reverse their overspending. There is plenty to cut. We see it every day
in the US and in Europe. Dumping UN Agenda 21 is a start. Next, all “busybody” laws and enforcement
employees can go. Subsidies can begin to shrink. Non-assimilating Muslims can be cut from the
welfare rolls. Entire industries can be
returned to the free market for repair. Governments not only need to balance
their budgets, they need to repay principle to shrink their debt.
Norb Leahy, Dunwoody GA Tea Party Leader
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