Today Egon von Greyerz, who spoke with King World News from Switzerland, warned that the global financial system could fail at any time now. Greyerz, who is founder of Matterhorn Asset Management, also said the Cyprus disaster is now set to engulf the world. Below is what Greyerz had to say in this remarkable interview:
Greyerz:
“Eric, Cyprus is a momentous event. Losses could be in the tens of
billions of dollars. But like all major crises there is always a
catalyst, and whether it was a shot in Sarajevo (assassination of
Archduke Ferdinand which started World War I), or the fall of the
Credit-Anstalt in Austria in 1931, there is always an event in history
which people look back on as the start of tremendous global turmoil.
Cyprus could very well be that event.
There
will be some kind of solution eventually to the Cyprus problem, but it
will be seen as unsatisfactory in the fullness of time. It is unlikely
to come from Russia because I don’t think Europe would like to see
Cyprus become an entirely Russian state, which would of course be the
case if Russians were to give their support in a major way.
“The IMF is financed by the US and Japan,
and they have no money either. So wherever the money is going to come
from, it isn’t there. It has to be printed, and we know this will
impact world currencies and gold.
The
Cyprus banking system was too big, it was about 7 times their GDP. But
we have the same situation in Switzerland, the UK, and Singapore. If
banks lose even 5% of their capital, they have lost all of their
capital and they are bankrupt. And most banks in the world already
have unrealized losses in excess of 5%.
My
view is that banks will have losses of 25% or more in coming years that
they will have to recognize. This means the world financial system
will fail as central banks will be forced to print unlimited amounts of
money. Now the US banks are slightly smaller in terms of GDP, but of
course the US has more derivative exposure than any other country. I
strongly believe the derivative exposure is more than a staggering $300
trillion, and US banks have no reserves whatsoever to cover the losses
on these derivatives.
The
other problem is that whatever happens in Europe will also impact the
US because the global banking system is totally interconnected. What
is happening in Cyprus will absolutely spread to Spain, Italy, Greece,
France, the UK, and eventually to the US.
At
some point there will be panic, and this is when the central banks will
flood the markets with unlimited amounts of money. Japan is totally
committed to money printing and so is the Bank of England. Cameron has
given the green light to the incoming Bank of England leader, Carney,
and of course the ECB must print money because of all of the problems
they have with the member countries.
What’s
happening in the European economy is absolutely disastrous. Countries
are suffering tremendously. If you just look at Italy, there are 1,000
companies going bust every day. There is a similar pattern in Spain
and Greece. So Europe will print. They will have to print with all of
these companies going bust.
Bernanke
will also continue to print, and with the US economy turning down he
will print even more. So as the governments print money, they will
have to eventually recover it by grabbing the money from the people.
So they will, as in Cyprus, tax deposits. That will happen worldwide.
They
will also nationalize pension funds. We’ve seen the nationalization of
pension funds happen in several countries already and it will happen in
Europe and the US. They will also force depositors to buy government
bonds. It is also guaranteed that taxes will go up in all countries as
deficits continue to soar. So this will be a year of incredible
turmoil. This will be the year in which we see a major change in the
world because the 100-year Ponzi scheme will really start to collapse
in 2013.
The
most important point I want to make today is how absolutely critical it
is for investors to preserve their wealth. The crisis in Cyprus is yet
another sign of the massive destruction of wealth that we will see in
the financial system in coming years.
Investors
must heed this warning and get their assets out of the banks now. The
reality is the financial system could fail at any time and this is why
investors must act today. See what’s happening in Cyprus: Banks are
closed and whether people have cash, stocks, or gold in the bank, they
won’t get it out of there.
This
is why back in 2002 we told our investors to put up to 50% of their
assets into physical gold and silver, and also advised them to store it
outside of the banking system. The bottom line is that gold is
guaranteed to reflect the massive money printing we will continue to
see worldwide.”
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