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John Mauldin - Europe is Destroying Their Currency

With renewed fears of Europe becoming a systemic risk to the global banking system, today King World News interviewed John Mauldin, President of Millennium Wave Securities. Mauldin spoke candidly with KWN about the crisis, how much has been printed and what to expect going forward: “$7 or $8 trillion (in printing) is probably where we are, but whatever the number is, it’s significant. Will Europe have to print a great deal more? The answer is absolutely. What’s that number? We don’t know. We don’t know for two reasons.”

John Mauldin continues:

“We don’t know how truly bad the banking system is. If they clog the banking system up, the wheels really do come off. As a culture we are in the negative, very unpleasant situation of having to bail out a bank that we really don’t like, and we really don’t want to do that. But if we don’t, the wheels come off.

European banks are at least two and a half to three and a half times worse than US banks. Think about the US, as bad as it was in 2008, Europe is still that bad and in many cases worse. When they stop printing money, when they stop doing their version of TARP’s, which are called LTRO’s, it’s a disaster. It looks like Greece....

Continue reading the John Mauldin interview below...

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“The Greek banking system is simply not functioning today. Money is flying out of the country as fast as they can get it out. By the way, it’s moving from Portuguese and Spanish banks as well now.

I was having this argument with somebody who basically agrees with me on how bad Spain is. It’s a hedge fund that’s short Spanish everything. Their opinion is that Spain will have to declare bankruptcy and there is no way out. My opinion is, well, maybe.

The way out is if the ECB prints. That’s certainly a path out. Now, will they do that? That’s what we don’t know. My short answer to him, in an email I sent, was, ‘We should never underestimate the capacity of politicians to do things to keep the system together as long as they are spending somebody else’s money.’

The European politicians are totally committed to keeping the eurozone together. It’s a bad idea, but they are committed to it. And they are willing to spend everybody else’s money, especially German money to do that.

By the way, those of us in the US, every time Draghi prints money and he comes up with another half trillion LTRO, we should all stand up and give him an ovation. Thank you for keeping the crisis from coming to the United States, and doing it, by the way, on your nickel.

The fact that you (Europe) are destroying your currency and making it more difficult to come out of it, that’s okay. It’s keeping us (the US) from having to deal with it. If I was sitting in Europe, I would be saying, ‘What the hell are we doing?’ It’s the politicians spending somebody else’s money.”

John Mauldin discussed the crisis in Europe, the US, and around the world. The extraordinary KWN interview with John Mauldin is available now and you can listen to it by CLICKING HERE.