Europe: Taking the Path Blazed by the U.S. with Similar Consequences to Come
Politics / Credit Crisis Bailouts May 10, 2010 - 06:39 PM GMTBy: Mike_Stathis
After the threat of a continued sell-off in the global capital markets, leaders of the EU, IMF (and most likely members of the White House) arranged an emergency bailout fund to calm the markets.
Today, Wall Street is celebrating the news of a proposed $1 trillion bailout for European nations in danger of defaulting on sovereign debt.
Do not be fooled.
This news should only be taken as a temporary sign of relief. You should use this temporary momentum to extract money from the sheep while you can because the good times aren't going to last.
Rather than a remedy, this bailout is certain to create bigger problems down the road, similar to that which occurred in the U.S. after the TARP was passed. As you will recall, this massive bailout led to more bailouts, which ultimately catalyzed a massive sell-off in the global capital markets 16 months later.
The problem for Europe is three-fold.
First, where does Europe plan to get this $1 trillion when many of the EU members are in deep trouble?
I'll tell you where the money is going to come from; the EU member nations in the best shape (Germany and France). But even France's long-term outlook is very grim.
Rather than a solution, this bailout will add more momentum for key members to abandon the EU, as I discussed in my newsletter last year. Germany can only prop up EU gutter nations for so long before German and French citizens take to the streets.
The collapse of the EU may not happen for several years, but I am convinced it will happen. Once Germany departs, France will follow. Thereafter, you can kiss the EU goodbye.
Second, even $1 trillion is no where near sufficient to provide the assistance needed by the Eurozone. Similar to what has happened in the U.S., the latest bailout announcement has merely opened the door for more bailouts to come.
It’s astonishing how these global elites think you can reverse the effects of a global apocalypse simply by cutting down trees and feeding them into printing presses.
Third, unlike the U.S., whose currency must be used around the world to buy oil, the EU cannot print money it does not have.
Certainly, while the U.S. is headed for many additional problems as a result of its mounting debt and massive contingent liabilities, it has a unique advantage shared by no other nation on Earth; it can continue to export inflation since the dollar remains as the universal currency.
This arrangement was of course galvanized by negotiations between President Nixon and the Saudis. In exchange for unconditional support and military protection for the royal Saudi family, the Saudis established the dollar as the only tender of exchange for its oil back in the early 1970s. Thereafter, OPEC followed suit.
Interestingly, in 2006, Iran started its own oil exchange, demanding the Euro for its oil, as I discussed in America’s Financial Apocalypse.
Ever since then, Iran has asked OPEC to switch to the Euro. This explains in part why the U.S. has been trying to start a war in Iran.
You might recall that Saddam Hussein switched to Euro payments for Iraqi oil in 2000. I have discussed the
many times in the past.
In fact, the dollar-oil link serves as a very important reason why hyperinflation in the U.S. is impossible. Yet, the public continues to be brainwashed by certain media whores (salesmen disguised as financial experts) who insist hyperinflation is on the way.
I have already discussed why hyperinflation will not occur in the U.S. In the near future, I will add more credible evidence to debunk this myth.
You need to do yourself a big favor and stop listening to anyone who insists the U.S. will experience hyperinflation. Those who preach this myth have no clue what’s going on. Their only motive is to pump up the price of gold and get you to hand them your money.
Now if you don't believe me, you should compare my track record to the clowns positioned as experts by the criminal media monopoly. There is a damn good reason why they have been selected to serve as your guide by the media. And it has nothing to do with their qualifications. If you examine their track records in detail, you will see that.
The combined track record of these prophets of doom cannot come remotely close to mine. This is a fact. If you are not aware of this then you have not researched our track records.
As a kicker, you should also examine agendas. I have none. I don't sell gold or securities or ads for gold companies. Can you say that about the prophets of doom?
My best advice to you is to really dig deep before you listen to anyone. You had better research the track records of those you plan to listen to as if your financial future depends on it, because it does.
Once you have examined agendas and track records in detail, you will see who to trust and who to avoid. If you want access to institutional-level research, analysis and investment guidance, subscribe to the AVA Investment Analytics newsletter today. www.avaresearch.com
By Mike Stathis
www.avaresearch.com
Copyright © 2009. All Rights Reserved. Mike Stathis.
Mike Stathis is the Managing Principal of Apex Venture Advisors , a business and investment intelligence firm serving the needs of venture firms, corporations and hedge funds on a variety of projects. Mike's work in the private markets includes valuation analysis, deal structuring, and business strategy. In the public markets he has assisted hedge funds with investment strategy, valuation analysis, market forecasting, risk management, and distressed securities analysis. Prior to Apex Advisors, Mike worked at UBS and Bear Stearns, focusing on asset management and merchant banking.
The accuracy of his predictions and insights detailed in the 2006 release of America's Financial Apocalypse and Cashing in on the Real Estate Bubble have positioned him as one of America's most insightful and creative financial minds. These books serve as proof that he remains well ahead of the curve, as he continues to position his clients with a unique competitive advantage. His first book, The Startup Company Bible for Entrepreneurs has become required reading for high-tech entrepreneurs, and is used in several business schools as a required text for completion of the MBA program.
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