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Richard Russell continues:
“Koo finds agreement from Nouriel Roubini, the famous NYU prof. who was the first to warn of a coming housing collapse. Says Roubini, ‘Europe could get worse than Japan. Japan had a Great Recession and a Great Stagnation, but it never had a Great Depression. But a recession in some Eurozone countries could become a depression, just like the 1930s.’
The question the European central bank is facing is whether to cut back on money creation (thereby avoiding inflation -- Germany will not tolerate inflation) -- or go full steam ahead, and inflation be damned. So far, it looks as though the ECB is cutting back, and that, warns both Koo and Roubini, will mean recession or depression.
Richard Koo and Nouriel Roubini, both believe that cutting back on spending now could lead to depression in Europe. They both agree that the European centeral bank must open up the spigots. God save the Euro. The way its going, the Euro is going to need God's help.
Note that even with the ECB cutting back, gold is standing its ground. How come? The Russell answer: It's the ‘Chinese Put.’ China is moving in to scoop up gold on any gold weakness. At the low 1600s and below 1600 -- it's ‘enter the dragon.’
What we're seeing here is the retail public buying ‘good stocks’ for their dividend yields, because there is no return on bonds. This is strictly buying for yield -- the public is clueless on where or how to buy income. I note that one of the PIMCO funds attracted $1.7 billion during the first quarter. When in doubt, go with Bill Gross.
What is the meaning of the market (really the Dow) selling off at the last half hour during almost every session?
My guess is that this is the big money that has been holding off as long as it decently can -- and then dumping their goods just before the close. I don't think the big money likes this market, and I think they have been slowly exiting this market, as quietly as they can.
The big money takes the long view. The big money tends to look out six months to a year or so, and there is something ‘out there’ that they see -- but don't like. Is it a rise in interest rates, is it the power of the Chinese yuan, is it a further collapse in real estate values?
Honestly I don' know what it is, but I'm convinced that there is an ominous something out there waiting to materialize. The big money, the institutional money, doesn't want to be in this market when it materializes.”
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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.
Eric King
Richard Russell - Europe Headed into Massive Collapse
With gold holding near the $1,625 level and global stock markets attempting to stabilize, the Godfather of newsletter writers, Richard Russell, discussed Chinese gold purchases and warned about an imminent collapse and depression in Europe and urged investors to protect themselves: “Older subscribers probably remember the brilliant Richard Koo. He was the FIRST to warn of the coming balance sheet recession. In yesterday's Financial Times Koo warns that if the ECB cuts back on money creation, Europe could be in for an economic depression.”
© 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.
April 5, 2012
