Today a 40-year market veteran sent King World News an incredibly important piece that warns we may now be headed into the most shocking panic in world history. This piece exclusively for KWN also exposes the continued mainstream media and government lies as the world stands on the edge of a precipice.
By Robert Fitzwilson of The Portola Group
February 16 (King World News) – The Romans, the Spartans and the Athenians are no longer. What remains is a physical legacy in the form of such structures as the Colosseum and the Acropolis, even though the empires that created those monuments have been gone for up to 2,500 years.
The most valuable legacy left behind was not the physical manifestation of their power, but the knowledge of what made them great and what made them fail. Someday those physical remnants might crumble, but their wisdom and their mistakes are eternal….
Continue reading the Robert Fitzwilson piece below…
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The negotiations between Greece and the EU over their impossible-to-pay debt load and the austerity that was imposed on the Greek people, will either force the Greeks to maintain austerity, in exchange for more financial aid, or for Greece to default on the debt and exit the Euro.
Most Shocking Panic In World History?
A Greek default could very well trigger the end of the European banking system and the Euro. Such an event will reverberate throughout the world, perhaps bringing the entire global financial system down. But even if there is not a cataclysmic global reverberation, Greece is sure to suffer hyperinflation and other unpleasant consequences.
Unless fundamental, long-term reforms are put in place, the kind that eventually lead to the end to austerity, higher employment and rising wages, even more people will become disillusioned as the Greeks experience social deterioration similar to that of Weimar Germany.
The tragedy is that the formula for emerging to a better place is there for the taking. One can look at the early 20’s in the United States following World War I and the reforms in the early 1980’s that turned a very desperate economic situation into a huge rebound in both output and employment as well as an eventual drastic reduction in the inflation and interest rates.
Red Line Shows Production Skyrocketed In Chile As Poverty Collapsed
A Military Coup And A True "Economic Miracle"
Another example was Chile. Under the Allende regime, inflation reached triple-digits in the 1970s. The Chilean economy was a mess, characterized by protectionist trade barriers, runaway printing of the currency to maintain government spending, expropriations, price controls, etc. — all contributing to the economic malaise.
Allende was replaced in a military coup d’état in 1973. A confidential plan for reforms had been drawn up with the help of a group of economists called the “Chicago Boys”, alumni from the University of Chicago, steeped in the beliefs of the great Milton Friedman. While not all of the reforms were adopted and some were modified, a free-market approach emerged as trade barriers were dropped and Chilean businesses were forced to compete on a global basis.
The result over roughly 35 years was that the poverty rate fell from 50% to 11% (see chart above). Per capita income increased by 500%, and the inflation rate went from a reported high of 250% per annum to about 7%. It was called the “economic miracle”.
Could The Greek Tragedy Turn Into A Greek Miracle?
What seems really tragic about the Greek crisis is that the EU and Greece are not talking about how to turn around the Greek economy. Instead, the EU is looking to kick the can down the road and the Greeks are battling to default. There is no long-term solution with the current stalemate, just a continuation of the charade for the Euro and the EU, and misery for the Greek people.
In a rational world, consideration should be given to the Chilean economic turnaround as well as the other successful models in modern history. Greece possesses many physical and strategic assets. Greece could be the strategic hub between Eastern Europe, the Middle East and Asia.
With the proper reforms, leadership and commitment, Greece could also attempt to model itself after the success of Singapore, as a prominent financial center. Instead of a stagnating and bankrupt mess, Greece has the potential to be so much more than what is currently being contemplated. The Greeks could ascend to a very prominent position in the world economic order.
Will The ECB Blink Or Will There Be Panic?
We will soon know what path Europe and Greece will choose. The markets and the bank deposit holders seem to be betting that the ECB will blink and Greece will get the debt extension and more money. If that turns out not to be the case, there will be panic. This kind of panic would create enormous chaos in the global financial system.
Mainstream Media And Government Lies
For those believing the lies of the central planners and the mainstream media, those beliefs are beginning to be exposed for a much wider audience. The recent example Brian Williams in the news category and the continuing deterioration in the economic statistics are making more people realize that what has been reported is not the truth.
The central planners have been “putting lipstick on the economic and financial pig” for far too long. While there are economic success stories out there for both regions and specific companies, the macroeconomic picture is a disaster in the making. The message to be taken from the sustained and increasing volatility is that the central planners' ability to kick the can down the road is soon coming to an end. Just how much upheaval will occur in global markets remains to be seen, but based on past history, the world is headed toward extreme chaos that will create terrifying swings in major markets.
The Key For Investors
Investors need to carefully watch the recent trend of rising interest rates. Two of last year's standouts were utilities and longer-dated Treasuries. Both have seen reversals. Perhaps it is just a respite after a strong year. However, if it turns out to be something more than that, both traditional stocks and fixed income will be in for a very rough ride.
We continue to look for and find a small subset of companies that we believe have sustainable and attractive business models. Another favorite has been the energy sector. We saw an explosive bounce off of the lows in recent weeks. For those with short-term horizons, caution might be warranted. However, the long-term fundamental and technical picture remains very favorable unless severe and sustained economic conditions become a secular trend. Demand for oil will be one of the last economic inputs to turn down.
The HUI (Gold Stock Index) has pulled back from the extreme outperformance. The major stock market averages have also reduced the outperformance gap by a strong week. However, the HUI is still outperforming by roughly 16% year-to-date. Extreme undervaluation is still present in the mining stocks and precious metals.
Andrew Maguire’s latest KWN interview gives us hope that the separation of the physical market and the paper market is close to becoming a reality. Investors should consider adding to both their physical gold and silver holdings and mining positions on any temporary declines in prices.
As chaos engulfs world markets, gold will be called upon once again to reenter the global monetary system. Gold's reentry into the monetary system will create a drastic upside revaluation in the price of gold that will shock the world. It's important to be properly positioned ahead of the coming revaluation. ***ALSO JUST RELEASED: Will Europe Be Engulfed By Massive Bank Runs And Economic Chaos? CLICK HERE.
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