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Egon von Greyerz continues:


“But the fiscal cliff is just a minor issue which involves around $120 billion, at best, savings in a year.  The US didn’t even succeed in rearranging those little deck chairs because cost-cutting has been deferred.  I’m sure that in 60 days when this is brought up again they will not cut costs significantly because no one will accept cost cuts.


The politicians won’t accept it because it means they won’t be reelected.  And the people won’t accept it because they will be even worse off.  Just like we’ve seen in Europe, austerity won’t happen.  Therefore, the deficits will continue, and they will continue at an accelerated rate. 


The performance of the US government over the last few weeks confirms that.  They couldn’t even agree on increasing the debt ceiling, even though the debt ceiling is a farce because it’s already been increased 150 times in the last 100 years.


This is why in 2013 we will see continued deficits and accelerated money printing.  This will happen not only in the US, but in the eurozone, Switzerland, the UK, Japan, and China.  We can just look at the problems here in Europe to see what’s going to come to the rest of the developed world....


Continue reading the Egon von Greyerz interview below...




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“Look at Spain:  The debt crisis has been going on there for quite a few years and the consequences are disastrous.  There was a banking reconstruction in Spain about six months ago which saved banks that were on the verge of bankruptcy.  Those banks were merged into one new bank, Bankia, which was recapitalized.


Well, Bankia has already eaten up that capital, which was about 4.5 billion euros, and now the balance sheet of this bank is showing a negative value of about 4.5 billion euros.  So the bank now has a negative value.  Another Spanish bank is showing 10 billion euros of negative value.


So in spite of major injections by the eurozone governments, these banks are collapsing.  The same is true in Greece.  In Greece, non-performing loans are now exploding, and they were already up 50% in 2012.  Non-performing loans are now up to 55 billion euros in Greece. 


Well, 55 billion euros is virtually the size of the rescue fund which was meant to recapitalize Greek banks.  The rescue fund was 50 billion euros.  So Greece has already used all of that money, and now they will need even more.  We know that the Greek state is bankrupt, but as I am showing with these figures, the banking system is also bankrupt.


What is the Greek government doing?  Well, they have actually stopped paying their bills because they can’t afford to.  They don’t have any money.  The amount of money owed to Greek debtors is going up continuously, and now totals 110 days.  They are paying some bills, but they are taking around four months to pay them.  The same thing is happening in Spain and in Italy.


So what we are seeing in Europe, Eric, is a financial system under pressure.  The governments which are helping these over-indebted countries survive are now scrutinizing all of the accounts of the governments which are in trouble.  When they are scrutinizing these figures, they are finding that virtually all of the assets are over-valued, and the liabilities are undervalued.


This is what always happens in a financial system that is under pressure.  The same thing happening in Greece, Spain, and Italy, is also going to happen in other countries, both in Europe and also in the US.  As these countries financial systems come under pressure, a lot of these things which are hidden will come to the surface.


This will reveal that assets within the financial system are greatly overvalued.  As I’ve said before, countries are allowed to value toxic debt at virtually any value they want.  A good example of this is Deutsche Bank.  In connection with the crisis in 2008, they did not recognize up to 12 billion euros in losses on CDOs.  They took the profits on one side, but they didn’t book the losses on the other side.


There has been an investigation into this and Deutsche Bank’s CFO has admitted they did not book the losing side of the bet, which was a potential liability as great as the outstanding 12 billion euros.  He said they didn’t book it because they were acting according to the rules.


Eric, this is the point I’m stressing to investors time and time again, that the financial system is only standing because of false valuations.  The $1.1 trillion worth of derivatives outstanding are to a great extent worthless.


Therefore, we have two options:  We can see the financial system failing, which is a high risk, or we will see unlimited money printing worldwide.  This money printing is what I believe is going to happen, and it will accelerate this year because it’s the only way to mask these losses and keep the financial system from imploding.”


Greyerz also added:  “We have seen stock markets get a lift because of the so-called fiscal cliff agreement.  We could see global stock markets continue to rise based on optimism and additional QE.  But I think this is a final rise.  The danger is that investors will be sucked into this.  Thereafter, I expect a massive, long-term fall in global stock markets.”


Greyerz had this to say regarding gold and silver:  “Looking at gold, I was expecting a bottom for gold in the last week of December.  This has now happened in my view.  We’ve seen the bottom, and I now see the rise starting.  Interestingly, my friend Alf Field now confirms that the bottom is in.  He is still looking for this move to take gold to $4,500 and silver to $150. 


So 2013 should be a spectacular year.  Will we reach those targets this year?  We might.  It’s not impossible.  It may take a little longer, but, regardless, investors have to remember they must own physical gold and silver and store it outside of the banking system.”


© 2013 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 Art Cashin, Stephen Leeb, John Embry, John Mauldin, Michael Pento, Egon von Greyerz, Gerald Celente, Andrew Maguire are available now.  Also, be sure to listen to the other recent KWN interviews which included, James Turk, Rick Rule, Nigel Farage, Bill Fleckenstein, and John Hathaway by CLICKING HERE.


Eric King

KingWorldNews.com

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