MONEY: Predicting a Euro collapse

2/09/2012 @ 12:35PM
If The euro Breaks Up — Scenarios For Greece, PIIGS And Total Collapse
Tom Groenfeldt, Contributor

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SunGard is not alone in modeling the potential for a eurozone break-up. Finextra reports that firms such as ICAP and industry utilities like CLS, the FX settlement bank, have initiated scenario planning in the event of a major soveriegn default and subsequent euro exit. It also said that banknote printers have reported that central banks have been scouring the market for printing presses capable of running large stocks of once-defunct currencies.

As the song says, breaking up is hard to do.

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So how does the little guy play this?

Like the sailing ship of old, it’s rig for stormy weather.

* Cut your OPEX (operating expenses).

* Minimize your CAPEX and build your capital for the future.

* As many in the tin foil hat community say, build your food larder. Even if you’re not preparing for the end of the world, food prices are not going down anytime soon. The Mormons are said to believe that everyone should store a year’s worth of food. Can’t hurt.

* Save in inflation protected way. (The tax of inflation is the silent killer of savings.) If nothing else, everytime you get a nickel save it. (It’s worth 7½¢ now.)

* Develop skills or sidelines that can lead to alternate streams of income. A web-based business can have an store open 24/7/365. You can write stories and publish them for free.

* Stay in shape because getting sick will be even more expensive in the future.

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GOLD: Unfunded liabilities

Gold Chart Walk 2012
by Morris Hubbartt

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Unlimited government requires unlimited funding. The unfunded liabilities of the USA are staggering. Over the next 20-25 years there is probably a gigantic $75 trillion unfunded liability problem for the US government. Think of the move in gold against the dollar with a debt of $15 trillion. Can you imagine the action in gold with a debt five times the current size?

The United States could be headed towards decades of dollar devaluation. With all of the problems in Europe, why isn’t the euro hitting new lows? Why can’t the dollar mount a real rally, instead of this tiny bit of strength?

The answer is that the dollar isn’t really very strong at all. If America goes into a crisis like you’ve just seen in Europe, the fall in the dollar could dwarf the euro’s fall, because America is the largest debtor nation in the history of the world.

The nature of all fiat currencies is to be competitive, with each currency group looking for an advantage in trade, and more importantly, an advantage in debt relief for the governments that issue these currencies. Fiat currencies are designed to be depreciated over time. Buy Gold in this time of gold price weakness, because your opportunity won’t last forever.

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Regardless of how you feel about gold — the magic mineral, an obsolete anachronism, or something in between — this quote should strike fear into the heart on anyone who understands “real life”.

As if “unlimited government” was NOT scary enough, “unlimited funding” should be down right terrifying.

The national debt stands at 15T$ and growing every second.

Then you hit the guesstimate of 75T$ of unfunded liability, which should knock your socks off. It does mine.

How did “we” get in this mess? Even a crooked accountant, with two sets of books, has one that tells him the truth. Even Bernie Made-off knew he was “underwater”. We don’t even have ONE set that tells us the truth.

“Jobs created or saved”, “unemployment” stats that don’t account for the “99 week”-ers, and an inflation rate that doesn’t include food or fuel.

These are the statisticians that you’re looking to tell you “the truth”.

Can you even handle “the truth”?

“The truth” is that we’re going to be like Japan, the Soviet Union, and Zimbabwe all rolled into one.

As one of those war movies said: “Tell everyone to get small in their holes because trouble is coming.”


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