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Rick Santelli - 2012 Will See Funding Crisis for Many Countries

With the dollar breaking to new recent highs, gold starting the new year strong and bonds near all-time highs, today King World News interviewed Rick Santelli, CNBC’s Business News on-air Editor. When asked about maturing securities in both the US and Europe in 2012, Santelli responded, “Yes, this is a big one. The best way to make banks in any country healthier is to have outside investors say, ‘Wow, this looks good. I want to buy the bonds or I want to buy the banks or I’m taking in deposits.’ Remember deposits have fled out of Europe. That’s why that big sucking sound, they need those swaps, they need dollars to fund some of these liabilities.”

Rick Santelli continues:

“$625 to $650 billion, so about two thirds of a trillion, needs to be rolled over by corporations in the United States in 2012. Add into that we have our own Treasury issuing paper because we are basically borrowing 38 cents of every dollar we spend. Europe is even worse. So, we have corporations, we have countries all trying to sell securities to take in money. The investors are going to be much more discriminating. I think that US corporations are going to find an easier time selling than governments, which could present a whole new list of problems for the back half of 2012.

We’re looking at rates in Italy are now back over 7%. They can’t afford to fund themselves, their T-Bill rates are in the sky. I just think these countries will not be able to fund themselves. The eurozone is going to change....

Continue reading the Rick Santelli interview below...

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“Maybe certain countries are going to drop out of participating in the euro. Why would they do that? Because, for example, in Greece if they went back to the drachma they could print as many of them as they wanted.

They would have high inflation, but maybe it would afford them more independence. I don’t think countries in trouble are going to surrender sovereign control to a central banking apparatus and give them control over the political domain or landscape in their country. So I think that’s going to fester.

In terms of our country, with all of the debt we have, to service this debt at these fairly low interest rates, should those rates start to go up because the government has to compete for investor dollars, when those costs go up, all of the sudden we’re going to have to borrow more and it becomes a downward spiral.”

Santelli also had this warning for investors and traders in the bond market and those who may need future financing for themselves or their businesses: “If you see a big rally that pushes interest rates down, I would fade that. I think interest rates are getting close to the lowest levels we’re going to see for the next generation. So I think in any endeavor in life that you need financing or credit, start thinking along those lines.”

Santelli was tremendous as always and he covered a lot of ground in a short period of time, including his outlook for 2012. The KWN audio interview with Rick Santelli is available now and you can listen to it by CLICKING HERE.

Eric King

KingWorldNews.com

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