Monday, November 28, 2016

The Upcoming European Elections Threaten To Shake The House Of Cards

Quick summary of the important upcoming votes in Europe from John Rubino...

"No rest for the wicked. With the shockwaves from Brexit and President Trump still reverberating around the world, the established order is bracing for more bad news. Next up is a December 4 Italian constitutional referendum that might end the reign of centrist prime minister Matteo Renzi and replace him with a bunch of anti-euro iconoclasts from the Brexit/Trump part of the spectrum.

And not long after Italy takes its shot at the status quo, France will go to the polls for a run-off presidential vote pitting far-right Fran├žois Fillon against extreme-right Marine Le Pen.

It’s hard to overstate the threat posed by these two votes to the EU — the world’s largest economic entity — and by implication to the rest of the global financial system. Italy is the third biggest country in the EU, and France is the second. Let either pull out and the result might be dissolution and the end of the euro. Trillions of dollars of euro-denominated bonds would suddenly be converted to lira or francs, forcing the holders of those bonds to take big losses and impairing bank capital across the continent, leading in turn to derivatives blowing up pretty much everywhere, and so on until the whole house of cards is threatened. 

So what does a fiat currency/fractional reserve banking Establishment do when confronted with such a looming catastrophe? What it always does of course: Cut interest rates and ramp up money creation in order to devalue the currency."

2 comments:

  1. Which should give Gold & Miners the boost for the next leg up correct?

    ReplyDelete
  2. You are calling for both hyperinflation and massive crashes. Nice.

    ReplyDelete