Eric King:  “John, we’ve been in this ongoing sort of rolling financial crisis that flares up from time to time, but inside of this Japan is going to be recognized as the basket case it really is.  It’s a little bit frightening because of some of the problems we’ve already been seeing.  How bad will this be as this starts to unfold for the financial markets globally?”

Mauldin:  “It’s going to be very difficult because unlike Greece, Japan makes a difference.  Japan’s banks fund a lot of Asia.  The money that’s been flowing into Japan for the last decade, but especially the last few years, is now going to have to figure out how to get out....

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“It’s going to be interesting, and it’s not going to play out the way we would normally think.  The Bank of Japan is going to be forced to move out the yield curve, to basically hit the bid.  They cannot allow rates to rise 2%.  If the rates rose 2%, they’d be spending 80% of their tax revenues just on the interest.  That’s not a working business model.  It can’t happen.

The old line is, ‘If something can’t happen, then it won’t happen.’  Well, then what else will happen?  What will happen is since they can control the price of money, they can’t control the quantity of money or the value of money.  So, if they are going to control the interest rate, then they are going to have to allow the value (of the yen) to go where it will.

It’s going to be very, very interesting times.  One of my other predictions is the problems that France begins to face (shortly).  France, over the next two or three years, is going to face its own internal Armageddon.  They are indebted, they are running huge deficits, and their rich people are fleeing the country.

Their country is already spending 55% of their GDP as government spending.  That’s not a working business model.  When the markets begin to get it that France isn’t going to fix themselves, that’s going to be another market-changer.

France and Japan are huge international financiers and banking systems.  World trade to a great degree depends on French banks.  Just the normal global trade of, I’m going to sell something in Beijing and deliver it to Saudi Arabia or to Paris or to London, somebody has to finance that.  While the product is going from here to there, somebody has to finance it and say the money is going to show up.”

Eric King:  “What are the implications of that John?”

Mauldin:  “When they (French banks) start to go into capital flow problems, like they had back in 2008, world trade begins to really suffer.  I’ve got a product here in this city, and I’ve got willing buyers over here in this city, but I can’t figure out how to get the money back and forth because the banks simply don’t (won’t) trust each other.  That’s a problem.

Over time, the French banks will lose market share, but in the short-term it’s a bitch.  Those are two big problems that are going to be facing the world coming to the fore in 2013 ... It’s going to become a real debacle.”

KWN has just released John Mauldin’s extraordinary audio interview.  He covers a tremendous amount of ground in a short period of time, discussing why the world is headed for another financial crisis in 2013.  Mauldin also talks about gold, the unbelievable problems both Europe and the United States will face in 2013, how that will contribute to the upcoming financial crisis, and what will be the “greatest trade” of his lifetime. The extraordinary KWN interview with John Mauldin is available now and you can listen to it by CLICKING HERE. 

© 2012 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 interviews with John Embry, John Mauldin, Michael Pento, Egon von Greyerz, Gerald Celente, Andrew Maguire, James Turk and Rick Rule are available now.  Also, be sure to listen to the other recent KWN interviews which included Nigel Farage, Chris Powell, Bill Fleckenstein, John Hathaway and Ben Davies by CLICKING HERE.

Eric King

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© 2012 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.

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