Today a 40-year market veteran sent King World News an incredibly important piece that warns the world is about to enter a period of immense financial destruction and social disorder. This piece exclusively for KWN also discusses why the financial destruction and social disorder will engulf the entire world.
By Robert Fitzwilson of The Portola Group
February 23 (King World News) – After much speculation, we now know the outcome of the negotiations between the EU and Greece. The two sides agreed to extend the status quo for another four months in exchange for promises including “flexible labor laws” and “rooting out corruption”. If you had to design a phony conclusion for the meetings, this one could not be any better. A government elected to end austerity agrees to vague promises in exchange for no money and a continuation of the austerity.
Elevator Shaft Of Wealth Destruction
It should not be a surprise to anyone other than the Greek people. Another election and another set of politicians promising to do the impossible. Even if the Greek officials had good intentions, there was no possibility of a scenario whereby the debt went unpaid, more money came in and austerity was lifted. Default and a Greek exit are virtually certain. The austerity under which the Greek people are suffering is going to seem modest compared to the elevator shaft of wealth destruction that awaits the general population….
Continue reading the Robert Fitzwilson piece below…
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Major Chess Moves Being Made
The Euro and the EU are sinking ships. The lifeboats are being readied for sail while the majority of the passengers dance to the music. Previous actions to repatriate sovereign gold reserves formerly held in other countries, the plan for each country to repurchase their own specific debt, and now this extend and pretend solution to the Greek debacle, should tell observers that the chess pieces are being moved. The timing on the end of the Euro and the EU is unknown, but the direction is clear.
The Greeks are not alone. Just about every major government and country around the world is broke. China is one of the outliers, but even their true financial situation is unclear. Despite their massive reserves, a black swan event hitting their banking system could quickly sweep aside even those vast sums.
A strong balance sheet is like a strong immune system. People in good health do not spend time to appreciate the immune system and the function constantly performed to ward off disease. Two healthy people would look the same to an outside observer, even if one had a compromised immune system. It only matters when a disease strikes.
Insolvent Japan Passes Massive Defense Spending Bill
Despite having impossibly compromised balance sheets such as for Greece, the Keynesian printing presses have temporarily made accumulated wealth and fiscal prudence irrelevant at the sovereign level. The Japanese just passed a massive defense spending bill as we had surmised they would do in an earlier piece. It makes no difference that the country is insolvent, at least for now. As long as the money can be conjured up out of thin air and people will accept it as payment, the show goes on.
EU Has No Choice
How temporary this suspension of reality can be is anyones’s guess. For the Greeks, there will be no lifeboat. The abandon ship order has been given. The EU could roll over the debt, but it is clear that the Greeks will require even more debt going forward. Extend and pretend is not a path to stability let alone even repayment. The EU really has no choice.
Art Cashin's Financial Ebola Warning
The problem is that Greece is not alone. Italy and Spain are not far behind. The EU/Euro experiment is failing on a massive and accelerating scale. We would be surprised if it lasts more than a couple of years. That is not to say that Europe cannot move forward, but the financial system must be jettisoned and reborn. That process is the financial Ebola Art Cashin referenced. It would not stop at the shores of the European continent.
The governments of the world need to declare bankruptcy. It is the only way to create a fresh start from which to move forward. Unfortunately, too many people and businesses rely upon government largesse to survive. Too many do not appreciate the importance and difficulty of generating a net income. For them, the money comes from government. Budgets are a thing of the past, and the austerity or abundance of the “bottom line” is a lost concept.
Entire World To Enter Period Of Immense Chaos
While a global bankruptcy is the only path to a sustainable resolution, the social disruption will be immense as a vast number of people are taken off of the dole and forced back into the real economy. Extend and pretend is the path for deferring the pain, but the future pain remains. It is just a matter of how much time. As pensioners approach the time to draw on government promises, most will find those promises to be empty. Perhaps that is what will trigger the restructuring that lies ahead. That day is not far off.
For Investors
For investors, all is not black or white. One can say that asset classes are relatively overvalued, but that does not mean that individual plays within those asset classes are so. While the world continues to ignore the insolvent balance sheets of various countries, there are many businesses that are doing well.
There will always be businesses producing goods and selling services that people want. Government spending, health care, industry consolidators, cyber security, quasi-monopoly industries, transportation, leisure spending, travel, and healthy food suppliers are some of the sectors that have been doing well.
For contrarians, there will also be securities being thrown away or unsustainably overvalued to short or to buy during panics. The discipline is to be always looking for those opportunities. In a world of zero interest rates, the only way to grow capital is by employing such efforts.
For precious metals investors, this year is exhibiting the same pattern we saw last year. With the Chinese on the sidelines in the last week, it is still too early to declare a repeat of 2014, but we must assume that the central planners are still at their keyboards. Their ability to manipulate these markets will end someday, but that day will probably come from a black swan event and not a sudden emergence of repentance. Successful investors will be those who persevere and endure until that moment arrives. ***ALSO JUST RELEASED: Man Who Predicted Riots In Athens And Chaos In Markets Now Says World Hurtling Toward Full-Blown Collapse CLICK HERE.
If you are interested in purchasing physical gold and silver for delivery you can call Steve Quayle or his staff at (406)586-4842, or you can email them at info@sqmetals.com
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