“In Europe, the US, and Japan, we have governments that can only prevent an immediate collapse by borrowing and printing money that will never be paid back. On top of that, we have a financial system that only survived the 2008 crisis through a massive package of $20 trillion of fiat money which was printed out of thin air. One would have thought that by now the balance sheets of the bankrupt banks would have been repaired, but that is not the case. Instead, the banks are back to the same old games of leveraged loans and the dangerous use of enormous amounts of derivatives. Public and private debt is now 30% higher, in relation to GDP, than it was in 2007, and leveraged loans have jumped to 45% of total loans -- that’s 10% higher than before the 2008 collapse began. Also, interbank credit to emerging markets is at the highest level on record. So there is a massive debt buildup in Asia, Latin America, and in the Middle East. But in spite of the total buildup in debt around the world, the problems in Europe continue. Spanish bank lending to financials is down 30% in the last 2 years. In my view, we are not far from a major financial crisis in Spain. The Spanish banks are still valuing their assets at fantasy numbers, and they have not taken the massive losses on their property portfolios. The situation in most European countries is similar. All European loans are declining at record rates now, and loans to the private sector have dropped 16 months in a row. The latest drop is the biggest since 1999, when the euro was created. So, Brussels is clearly worried about the state of the eurozone banks. They are now hiring investment banks to advise on potential rescues. They are also hiring hundreds of support staff. I assume the investment banks they are hiring are the same ones that would have collapsed in 2008 without the rescue from central banks. Well, at least these investment banks have experience in a near-bankruptcy. So, Eric, clearly there are problems in many European countries, and I could see bailouts in the not-too-distant future not only in Spain but also in Greece and Italy. As I mentioned previously on KWN, there are major problems in the US and the Japanese economies. But together with what’s happening in Europe, we know there is no chance of ending QE. The Fed will need to print not just to save the US economy but also the European and the Japanese economies because everything is interconnected. But we know that printing money will not solve anything, and the inevitable outcome will be a hyperinflationary depression. Of course the best protection against this coming disaster is to own physical gold and silver, stored outside of the banking system. Silver has made three attempts to break above and stay above $22, but each time it has tried the price has been pushed lower, I believe because of intervention. But I feel that we are very close to seeing the next major move. This means silver will break above $22 and gold will follow silver higher. So I expect much higher prices for gold and silver later this autumn and in 2014 as the global situation really begins to rapidly deteriorate.” ***IMPORTANT - KWN will be releasing a second written interview with legendary Jim Grant later today. © 2013 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged. The audio interviews with Gerald Celente, William Kaye, Dr. Paul Craig Roberts, Chris Powell, Michael Pento, Eric Sprott, Andrew Maguire, Grant Williams, Bill Fleckenstein, Art Cashin and Egon von Greyerz are available now. Also, other outstanding recent KWN interviews include Marc Faber and Felix Zulauf to listen CLICKING HERE. Eric King KingWorldNews To return to BLOG click here.
Posted on: Sun, 29 Sep 2013 00:04:10 +0000
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