Greyerz: “Eric, Cyprus is a momentous event.  Losses could be in the tens of billions of dollars.  But like all major crises there is always a catalyst, and whether it was a shot in Sarajevo (assassination of Archduke Ferdinand which started World War I), or the fall of the Credit-Anstalt in Austria in 1931, there is always an event in history which people look back on as the start of tremendous global turmoil.  Cyprus could very well be that event.

There will be some kind of solution eventually to the Cyprus problem, but it will be seen as unsatisfactory in the fullness of time.  It is unlikely to come from Russia because I don’t think Europe would like to see Cyprus become an entirely Russian state, which would of course be the case if Russians were to give their support in a major way.

“But whether the bailout comes from the ECB or the IMF, of course they have no money....

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“The IMF is financed by the US and Japan, and they have no money either.  So wherever the money is going to come from, it isn’t there.  It has to be printed, and we know this will impact world currencies and gold.

The Cyprus banking system was too big, it was about 7 times their GDP.  But we have the same situation in Switzerland, the UK, and Singapore.  If banks lose even 5% of their capital, they have lost all of their capital and they are bankrupt.  And most banks in the world already have unrealized losses in excess of 5%. 

My view is that banks will have losses of 25% or more in coming years that they will have to recognize.  This means the world financial system will fail as central banks will be forced to print unlimited amounts of money.  Now the US banks are slightly smaller in terms of GDP, but of course the US has more derivative exposure than any other country.  I strongly believe the derivative exposure is more than a staggering $300 trillion, and US banks have no reserves whatsoever to cover the losses on these derivatives.

The other problem is that whatever happens in Europe will also impact the US because the global banking system is totally interconnected.  What is happening in Cyprus will absolutely spread to Spain, Italy, Greece, France, the UK, and eventually to the US. 

At some point there will be panic, and this is when the central banks will flood the markets with unlimited amounts of money.  Japan is totally committed to money printing and so is the Bank of England.  Cameron has given the green light to the incoming Bank of England leader, Carney, and of course the ECB must print money because of all of the problems they have with the member countries.

What’s happening in the European economy is absolutely disastrous.  Countries are suffering tremendously.  If you just look at Italy, there are 1,000 companies going bust every day.  There is a similar pattern in Spain and Greece.  So Europe will print.  They will have to print with all of these companies going bust.

Bernanke will also continue to print, and with the US economy turning down he will print even more.  So as the governments print money, they will have to eventually recover it by grabbing the money from the people.  So they will, as in Cyprus, tax deposits.  That will happen worldwide.

They will also nationalize pension funds.  We’ve seen the nationalization of pension funds happen in several countries already and it will happen in Europe and the US.  They will also force depositors to buy government bonds.  It is also guaranteed that taxes will go up in all countries as deficits continue to soar.  So this will be a year of incredible turmoil.  This will be the year in which we see a major change in the world because the 100-year Ponzi scheme will really start to collapse in 2013.

The most important point I want to make today is how absolutely critical it is for investors to preserve their wealth.  The crisis in Cyprus is yet another sign of the massive destruction of wealth that we will see in the financial system in coming years. 

Investors must heed this warning and get their assets out of the banks now.  The reality is the financial system could fail at any time and this is why investors must act today.  See what’s happening in Cyprus:  Banks are closed and whether people have cash, stocks, or gold in the bank, they won’t get it out of there. 

This is why back in 2002 we told our investors to put up to 50% of their assets into physical gold and silver, and also advised them to store it outside of the banking system.  The bottom line is that gold is guaranteed to reflect the massive money printing we will continue to see worldwide.”

© 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 Gerald Celente, Michael Pento, Nigel Farage, Eric Sprott, Dr. Paul Craig Roberts, Egon von Greyerz, Rob Arnott, James Turk, Jim Sinclair and Andrew Maguire are available now.  Also, be sure to listen to the other recent KWN interviews which included Marc Faber, Felix Zulauf and Art Cashin by CLICKING HERE.

Eric King

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