James Turk continues:

“There are two crises actually, Eric, but they are interlinked.  Worryingly, these sovereign debt and bank insolvency crises are deepening.  Today we have Spanish 10-year yield topping 7%.  That is the level that brought Greece, Ireland and Portugal to their knees.  These countries asked for bailouts because private lenders no longer wanted to take the risk of lending money to them.

Three years ago when the Greek crisis was just getting started, I wrote an article that focused on the core issue that still resonates today.  That article noted that the fuse on the sovereign debt crisis had been lit, and I asked whether the crisis would bring about the end of national socialism because governments had run out of money....

Continue reading the James Turk interview below...


To hear which company has one of the highest grade gold deposits

in the entire world, as well as a number of other

extraordinary projects click on the logo:

“Since then it has become clear that governments have also run out of borrowing capacity.  The central planners have used up their ability to borrow to keep their game going.

The socialist governments of Europe spent taxpayer money to live far beyond their means, while politicians made promises that could never be fulfilled.  The interesting point though, Eric, is that these unrealistic promises have become clear to everyone except socialist politicians and the people who vote for them, who either don't understand or hope that these promises are not hollow.  We can see this divide in this weekend's Greek election.

Older voters supported the bailout, while younger voters threw their weight behind renegotiating or defaulting on the externally imposed austerity measures.  It was not a vote for or against the euro, because over 80% of the Greek population want to keep that currency. 

The choice voters faced was business as usual, or for making an about-face and heading in the right direction.  In that sense, what happened in Greece is much like we are seeing in the US with the support being given by younger Americans to Ron Paul.  By a slim margin, the older Greek voters won.

These older voters hope the unrealistic promises of Greek politicians will be kept, but younger voters sense the reality of the situation.  It is these younger voters who are without work because of the 53% youth unemployment rate.  Understandably they want and need economic conditions to change.

Focus will now shift to France, where elections this weekend brought in a socialist majority in their parliament.  We'll soon see where President François Hollande will find the money to fulfill his election promise to hire 12,000 civil servants a year.  How he expects more central planners are supposed to help a weakening economy is beyond me.

So what it comes down to, Eric, is who is going to blink first?  Germany and its like-minded neighbors who want Bundesbank discipline for managing the euro, or will it be the socialists and central planners?  The London Telegraph reported on Friday:  ‘Mrs Merkel warned the policies of the new Socialist president could destroy the eurozone by bringing the sovereign debt crisis to France itself.’ That is where I think the crisis is headed, and it seems inevitable that the eurozone will soon split.

To make matters worse, there is added worry for private lenders because the EUR 100 billion bailout for Spanish banks will supposedly be senior to existing debts.  So just as occurred with the Greek bailout, governments changed the rules to favor government institutions over the private market. 

Europe is becoming increasingly unfavorable to private capital, so it is not surprising money is moving to other parts of the world.  This is having the undesired effect of further weakening the European economy.”

Turk also added: “For a few weeks now I have been saying that we are headed into a fear event.  There has been no change in my thinking.  That means that I am still looking for gold to shock market participants by soaring this summer.  This will also pull the silver price higher as well.  Similarly, because there is no shortage of liquidity, as there was when Lehman collapsed, I expect this fear event will mean the price of mining shares is headed much higher also.”

© 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 Egon von Greyerz and Gerald Celente are available now.  Also, be sure to listen to this week’s line-up of other KWN interviews which include John Embry, Bill Fleckenstein, MEP 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

To return to BLOG click 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.

Subscribe to RSS
KWN Blog