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There Is Now Massive Pressure On The Fed & ECB To Print
With most major indexes around the world trading in the red, today King World News interviewed 25 year veteran Caesar Bryan. Gabelli & Company has over $31 billion under management and Caesar Bryan has managed the gold fund since its inception in 1994. Caesar told KWN that there is now massive pressure on the Fed and the ECB to print money. Here is what Ceasar had to say about the situation: “Here we are in the post-Spanish bailout period, and now we are waiting, in terms of Europe, for the Greek election. But the larger issue is that there has been no permanent solution put in place for the European debt crisis. The steps that have been taken so far are sort of Band-Aids.”
Caesar Bryan continues:
“At some point there is going to have to be a larger solution. Clearly we are not at that point yet, although we are heading toward there. I believe there is a powerful institutional desire to maintain the euro. Therefore, at some point, the ECB is going to have to play a more active role.
This will involve purchases of sovereign debt, and there will be other things they can do. It’s virtually impossible to see the ECB not becoming considerably more active....
Continue reading the Caesar Bryan interview below...
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“There are various rules in place right now, but a way will have to be found to get around some of those obstacles that the ECB currently faces.
The US economy seems to have stalled once again. The recent numbers suggest the US is struggling and this is putting considerable pressure on the central bank (Fed) here in the United States to take more action. I also believe they are getting pressured from the administration to do something with the election upcoming in November.
At the same time, the US continues to apply pressure to Europe to get them to put their economic house in order. With recessionary conditions in Europe, the US struggling and China slowing, none of the three major engines of the global economy are contributing anything but decay.
The European banking sector is a very large banking sector relative to the European economy, and they also have a major role to play in a number of emerging markets as well. The fact that European banks are under pressure, this curtails their lending activities, which then further cripples the global economy.
Germany can’t walk away from this. Indeed they can’t stand alone because everything in Europe is so intertwined. So the Germans are in a particularly difficult position because even though they hold the power, they continue to become increasingly isolated with their policies.”
Caesar Bryan also added: “You know it’s a multi-step process, and in terms of investors protecting themselves, the knee-jerk reaction is to go into cash and bonds. What is going to happen is investors are going to realize they are not entirely safe hiding in the bond markets.
For example, if you look at the two-year bond rates in Switzerland, they are a negative 56 basis points. Denmark is a negative 10 basis points. Japan is only positive by 9 basis points, Germany 12, Hong Kong 17, the United States 29, and the United Kingdom 26. This reveals the extraordinary fear in global markets.
On the other hand, we have Italian 10-Year bond yield at about 6.2%. So that’s what Italy is paying for 10-Year money. They are about a 20% participant in the bailout or the line of credit to the Spanish banking system. So Italy, with about a 120% debt to GDP ratio, is borrowing at over 6%, and then lending to Spain at 3%. I mean that doesn’t sound sustainable to me.
Investors will reach a point where they no longer feel safe in these bond markets because of the reaction to these high debt levels, and to the slowing global economy, is going to be further monetary accommodation. This is exactly why investors have to be positioned in gold because gold is nobody else’s liability, it can’t be printed, and it’s always liquid.”
© 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 and Bill Fleckenstein are available now. Also, be sure to listen to this week’s line-up of other KWN interviews which include Egon von Greyerz, Nigel Farage, Michael Pento, Dr. Stephen Leeb, Don Coxe ($538 billion BMO), Art Cashin ($612 billion UBS) and Rob Arnott (oversees $100 billion) by CLICKING HERE.
Eric King
© 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.
June 13, 2012
