Global Economy On The Verge Of Collapse As It Turns Down In An Already Bankrupt World

Today the man who has become legendary for his predictions on QE, historic moves in currencies, and major global events warned King World News that the global economy is on the verge of collapse as it turns down in an already bankrupt world.

October 25 – (King World News) – Egon von Greyerz:  “Eric, at the end of last week we again saw the madness of stock market investors in following every word a central banker utters.  At the ECB press conference, Draghi indicated that the money printing of the ECB might be increased in December…

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Egon von Greyerz continues:  “On cue the DAX (German stock market) jumped over 2 percent and the Dow also spiked.  As usual, bad news for the world economy becomes good news for investors in their eternal belief that more money printing creates wealth for the world.

On The Verge Of Collapse

But little do investors realize that the ECB will print more and so will the Fed, not to please the stock market but because the world economy and the financial system are on the verge of collapsing.  Liquidity in the banking system is extremely tight and bank lending is decreasing.

I published an article on KWN about the problems facing Deutsche Bank because of their $100 trillion derivatives position.  But Deutsche Bank is not the only bank with this massive exposure.  JP Morgan, for example, also has around $100 trillion of derivatives exposure, and the top U.S. banks have a staggering $250 trillion of derivatives exposure.  And if these derivatives are valued properly, the true value of the U.S. bank exposure is an close to the jaw-dropping figure of $500 trillion.

When counterparties fail, the $500 trillion U.S. bank total and the total global derivatives exposure of $1.5 quadrillion will sustain unimaginable losses.  And this, Eric, is one of the main reasons why central banks are petrified and will continue to print money again and again.

World Economy Turning Down 

On top of that, the world economy is turning down in every region of the world.  Most of the EU is under real pressure and Portugal is now the latest acute area.  The Portuguese Socialist Party has now joined forces with the Communists and the left bloc.  This gives them an overall majority and they now want to govern the country.  Obviously they are totally against austerity, including proposed wage cuts.  They also want Portuguese debt to be written down by 50 percent.  Naturally, they also want to leave the currency union. 

The euro has sadly destroyed several European countries since the currency has been much too strong for them.  But on the other hand, German exports have benefitted substantially from a weak euro.  My personal view, even before the euro was launched, was that it would fail.  And I’m sure it will — it’s only a matter of time.

So we have a Europe that is weak, both economically and financially, and the ECB is desperate to keep the circus going by printing more money.  It’s a fallacy to take the stock market as a bellwether of the economy, as most investors are doing.  Instead, investors should focus on some real indicators in the United States; for example, retail sales, Walmart, Caterpillar, as well as the large number of people not in the workforce.  All these examples are showing the real weakness of the economy.

A Bankrupt World

And if we look at how debt has grown exponentially, most countries and GDPs have stopped growing and in real terms are declining.  So it’s now clear that we have reached a point of diminishing returns.  Therefore, stock market investors should have no illusions that more printed money can in any way save a bankrupt world.

Stock market investors have had a very good time since 2009.  But with markets in bubble territory, I would not sleep well if I were heavily invested in stocks.  On the other hand, the investors who hold physical gold can sleep very peacefully because gold will be one of the few assets that avoid the coming wealth destruction.” ***The incredible KWN interview with Agnico Eagle CEO, Sean Boyd, has now been released.  This is a chance for KWN listeners around the world to hear from one of the top people on the planet in the gold world and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.

***ALSO JUST RELEASED: Agnico CEO Says Ignore Anti-Gold Wall Street Rhetoric, Sees Signs Of A Turn In Gold CLICK HERE.

KWN has also now released the audio interview with the top trends forecaster in the world, Gerald Celente, where he discusses the continued chaos in China, the desperation of Western central planners, what to expect from the gold and silver markets, and what to expect from major markets, CLICK HERE OR ON THE IMAGE BELOW.

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