Today a 42-year market veteran warned King World News that the financial world is now on fire and we will soon see a 2008-style collapse. Below is what Egon von Greyerz, who is founder of Matterhorn Asset Management out of Switzerland, had to say in this extraordinary interview.
Greyerz: “Eric, the cracks in the world and the world economy are getting greater by the day, and we are soon entering a stage where these cracks will turn into black holes. One of Portugal’s largest banks is now under real financial pressure. And in Austria, the Hypo Alpe Bank is finished. Erste Bank is also under pressure due to major losses on mortgage loans in Swiss francs to Hungary and Romania....
“We’ve
been discussing for a while how the European banks are not reflecting
their true bad debt situation, and this is not just in countries like
Spain, Italy, Portugal, and Greece, but also in France.
In
Germany, Deutsche Bank, which has 50-times leverage, is also having
problems. Even in Sweden, whose economy is considered robust, they
could not survive a major increase in interest rates. The Swedes are
borrowing more than most European countries in relation to their size.
Mario
Draghi is aware of all this and will soon have to pull the trigger on a
major support package. The deflation in Europe is already a major
problem since countries are borrowing even more due to the low interest
rates. So debts are rising and so are the risks. All of this will lead
to major bail-ins worldwide, with depositors being liable for the banks
losses.
Germany
has now approved bail-ins and the same is true for Canada. We will
soon see the return of the 2008-style crisis. This time it will not be
governments that will take the first hit, but bank depositors. But
eventually governments will have to step in since depositors funds will
not cover the bank losses as the one quadrillion derivatives bubble
explodes.
Stock
markets are still at ridiculous levels in many countries. In the U.S.,
for example, there are a lot fewer people employed, and the ones who
have jobs have not seen a real wage increase for the last 30 years. The
U.S. also has massive debts and deficits, and on top of that GDP is
falling. Is that the sign of a booming economy? No, certainly not.
And investors will soon find out through painful losses.
As
the Fed ends tapering in October and stops buying Treasury bonds, stock
markets and credit markets will crash. But this crash may begin to
unfold before October. One of the key indicators of trouble will be a
significant decline in the U.S. dollar. The dollar is weak both
fundamentally and technically.
As
the reserve currency of the world, all it has backing it is massive
debts. The FATCA regulations as well as the attack by U.S. authorities
on foreign banks will exacerbate the fall of the dollar. After the U.S.
$9 billion fine on the French bank BNP, the U.S. authorities are now
looking at taking similar actions with German banks. Both Deutsche Bank
and Commerzbank are now being examined.
Russia,
China, India, and many other countries are now turning away from the
dollar, and so will many other European countries. Are we looking at
the demise of the dollar? Well, these trend changes don’t happen
overnight but we will soon see the start of this dramatic change. There
will be no reason for foreign investors to hold dollars, and Americans
will see their mighty dollar lose value versus all currencies, and
mostly against gold.
So,
Eric, this time it is different because, as opposed to 2008/2009,
investors and depositors will not be saved by printed trillions or
quadrillions. Yes, governments and central banks will print, but this
time the dollar and other currencies will collapse. So printed money
will have virtually no effect and will be worthless.
KWN
has done a superb job in explaining to people what is happening in the
gold market. Gold is hated by governments in the West because it
reveals their poor economic policies and the destruction in purchasing
power of their currencies. Also, the West has no physical gold left.
Central banks and bullion banks in the West have virtually empty gold
vaults. All this gold has gone to the East, especially China and India.
The
West is now going to fight this final battle by issuing unlimited
amounts of worthless paper, but this time it will have no effect. We’ve
seen a good rise in gold and silver today, and as we’ve discussed, the
final low has already taken place in early June. I would expect a major
move between now and the end of July. We may then see a pause in
August, before the autumn when gold and silver will start their surge to
new highs.”
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