This Is VERY interesting!!

[rocketman2010]

October 23, 2011: The Next Big Day of Reckoning

Martin D. Weiss Ph.D. | Monday, October 17, 2011

This coming Sunday, October 23, will go down in history as one of the most important days of the 21st century.

On that day, the leaders of 27 European countries will meet. They will announce a new master plan to save Europe. And then they will pray.

If their plan is not good enough, U.S. Treasury Secretary Timothy Geithner warns that Europe — and the entire world — could face “cascading default,” “bank runs,” and “catastrophic risk.”

Polish Finance Minister Jacek Rostowski says the euro-zone crisis is already suffering “a run on the sovereigns” — a mass exodus by investors from sovereign bonds.

French President Nicolas Sarkozy and German Chancellor Angela Merkel also openly admit the vast challenges they face. They know they have just six days left. And they know that before their time is up, they must find a way to …

• put Greece out of its misery with an “orderly default” …

• expand the firepower of Europe’s bailout fund for Spain, Italy and other European countries on a collision course with default, and …

• pump massive amounts of capital into European megabanks on the brink of collapse.

On October 23, Europe’s leaders hope they can do ALL this in one fell swoop.

But don’t be fooled!

Any New European Rescue Plan, No Matter How Big and Bold, Is Bound Cause an Even Greater Debt Catastrophe

Here’s why …

First, they’re running out of time! The crisis is already too far gone — Greek bonds trading at 40 cents on the dollar, Spain and Italy in a death spiral, and massive damage to the continent’s megabanks already done.

They can’t turn back the clock. And they’re nearly out of time.

Second, not enough money! The PIIGS countries alone have over $4 trillion in debts, much of which they’ll never be able to repay. And Europe’s troubled banks have far more.

This leaves a gaping hole that’s so large, even the richest countries in the world could not possibly fill it without gutting their own finances.

In fact, European leaders are trying so desperately to figure out where to get all that money, they’ve even asked emerging market countries to chip in.

Third, no way to stop a vicious cycle already in motion! Before they can get a dime of bailout money, the PIIGS countries must promise to drastically reduce their budget deficits.

Result: They’re forced to cut their government spending, crush their economy, kill their corporate profits, drive down their tax revenues, and, in the end, create even larger deficits.

This is why Greece is sinking so fast. And this is why, despite its Draconian austerity measures, Greece’s deficit for the first nine months of 2011 actually GREW to 19.2 billion euros, compared to 16.65 billion euros last year.

And this is also why we’re seeing similar vicious cycles in nearly every borrower that may need a bailout — not just banks but entire nations … not merely countries like Greece and Portugal, but also far larger economies like Spain and Italy … not just PIIGS countries, but also countries in Eastern Europe and elsewhere.

Fourth, expect many more credit downgrades!

As I showed you here last week, the countries and institutions downgraded by the major credit agencies in the last two weeks alone have $7.3 trillion in debts outstanding (see chart below).

Countries and Institutions Downgraded in

Past Two Weeks Alone Have At Least

$7.3 Trillion in Total Debts Outstanding

But the most shocking news about this crisis is not how often banks and governments have already been downgraded … it’s how many MORE deep downgrades are now on the way!

How do we know?

Because the credit agencies themselves have warned that most of the downgraded countries are now on the chopping block for still more rating cuts.

Because the government bonds of countries like Spain and Italy are already trading at prices that imply far lower ratings.

And because the cost of insuring those bonds against default has already surged to levels that also signal far lower ratings.

Moody’s itself admits that these kinds of market indicators can often warn you about coming troubles far sooner than their own ratings!

Hard to believe?

Then look at this chart from Moody’s Analytics (October 6) on the company’s sovereign debt ratings of Greece. (I’ve added the titles, but the underlying chart is from Moody’s.)

The analysts at Moody’s Analytics have plotted Greek bond prices on a scale that reflects the implied rating bond investors are assuming (the green line in the chart).

Plus, they’ve done the same for default insurance premiums on Greek debt (brown line).

Well, guess what! This chart shows that …

1.) Bond investors first “downgraded” Greek debt in a big way back in the fall of 2008.

2.) Default insurance traders followed with their big “downgrade” about a year later, toward the end of 2009.

3.) Moody’s itself didn’t announce its first major downgrade until the late summer of 2010 — nearly two years after the bond markets.

4.) And it wasn’t until this summer — nearly THREE YEARS after the first bond market signal — that Moody’s finally caught up with reality, downgrading Greece to Ca.

We’ve seen a similar pattern of falling behind reality at S&P and Fitch … with their ratings on countries, banks, big manufacturing companies, municipal bond insurers and many more. (For the evidence, see the case studies in my article of May 10, 2010.)

The lessons to be learned: When countries, banks, or any other borrower is in a death spiral …

• Moody’s and the other major rating agencies rarely give an advance warning. Instead, they lag far behind the markets.

• Eventually, they catch up with reality. Unfortunately, however, by that time, the debt is already a disaster zone and most investors have already suffered massive losses.

• If you see a country’s bond prices plunge in the open market, it can be a reliable early indicator of surging default risk.

• And if you see default insurance premiums following a similar pattern, it can be a very reliable confirming indicator. That’s why we report regularly on both here in Money and Markets.

Bottom line: These danger signs are exactly what we’ve been telling you about each week for countries like Spain, Italy, Belgium, France and EVEN GERMANY!

Why is this so important? For one simple reason:

The bigger the rescue package announced on October 23, the bigger the damage to the finances — and to the credit ratings — of the countries that must finance the rescue!

And the more their credit ratings fall, the more expensive it will be for them to raise the money.

Ultimately, even the rescuers will need a bailout of their own, but none will be forthcoming.

This is why the cost of default insurance for France and Germany is now indicating a far higher default risk than it did even during the debt crisis of 2008-2009.

This is why the bonds of most European governments have been plunging in spite — or even because — of the tall promises we’ve been hearing in recent days.

And this, my friend, is why even the “mother of all bailouts” — or whatever is announced on October 23 — cannot, I repeat CANNOT, save Europe or the euro!

Yes, politicians may persuade some folks that they’ve “finally put this crisis to rest,” as they’ve done so many times before.

And yes, Wall Street may rejoice temporarily, as they’ve also done many times before.

But that’s not the same as stability. It’s not even enough to kick the can down the road. Quite the contrary, with both Europe and the U.S. now caught in a great debt trap, all the evidence indicates that the fanfare and hoopla are nothing more than a set-up for the next major collapse.

My recommendations:

Step 1. Consider any stock market rally — in anticipation of, or in reaction to, the October 23 Europe rescue package — a trap to avoid.

Step 2. Use any such rallies as opportunities to SELL your most vulnerable shares.

Step 3. To help determine which of your stocks are likely to be the most vulnerable, use our Weiss Watchdog. You can access it from the menu bar at the top of www.moneyandmarkets.com or you can point your browser to www.weisswatchdog.com.

Step 4. Also use Weiss Watchdog to check the safety of your bank, credit union or insurance company.

Step 5. Once the bulk of your money is secure, think seriously about seeking the massive profit opportunities that can be created by precisely this kind of crisis.

Good luck and God bless!

Martin

Dr. Weiss founded Weiss Research in 1971 and has dedicated the past 40 years to helping millions of average investors find truly safe havens and investments.

He is president of Weiss Ratings, the nation’s leading independent rating agency accepting no fees from rated companies. And he is the chairman of the Sound Dollar Committee, originally founded by his father in 1959 to help President Dwight D. Eisenhower balance the federal budget. His last three books have all been New York Times Bestsellers and his most recent title is The Ultimate Money Guide for Bubbles, Busts, Recesssion and Depression.

http://www.moneyandmarkets.com/october-23-2011-the-next-big-day-of-reckoning-47690

[Crow]

When you have idiots in charge this will happen....... I would love to see one...just one ""LEADER"" of any country have the balls to stand up and tell it like it is..... Do what they have to do inorder to make things right! If that means cutting stuff, so be it....if that means pissing off a massive amount of people, so be it.......

[DinarThug]

Thx for the post Rocketman.

I'm Glad that I'm not Invested in Euros. Just Sayin' !

[Cosmo]

Well, let's hope they have dinars tucked away in a repository somewhere and get Shabbs to punch that big red button!!!

(I tried)

[robboys33]

so true

[Crow]

Thx for the post Rocketman.

I'm Glad that I'm not Invested in Euros. Just Sayin' !

lol...Thug....there might be an opportunity down the road! lol...just like what we are involved with now.....COULD YOU IMAGINE THAT! LOL Euros for 5/10 of a cent.....buy now and it will revalue later!

Edited October 20, 2011 by Crow

[Markinsa]

I wonder, if all the countries are broke, who owns the debt?

-

[bamagirl]

I wonder, if all the countries are broke, who owns the debt?

-

Probably China

[srdedeaux]

Just Reset

[wildinar]

Thanks for the Post

GO RV!!!

[design interrupted]

Just Reset

Is that like a do-over?

[20MillionDinar]

In any situation there is a way to profit from or hedge yourself from loss.

http://www.dailymail.co.uk/news/article-2044363/Kyle-Bass-Meet-Texan-investor-millions-credit-crunch.html

Meet the Texan investor who made millions from the credit crunch... and now he stands to make 65,000% profit if Europe goes down the drain

• Kyle Bass founded hedge fund after saving $10million from Wall Street stint
• Gambled against sub-prime mortgage bond market before it crashed
  
• He has now started to bet against European countries including Greece
  
• Set to increase money by 650 times from Greek bet if default happens
• Keeps huge gold bars in his desk drawer and owns 20 million nickel coins
  

By MARK DUELL

Last updated at 3:48 PM on 3rd October 2011

• Comments (89)
• Add to My Stories
• Share

It’s been a torrid three years for most people since the world economy began to go into meltdown. But not everyone has suffered.

Investor Kyle Bass has already made millions from the credit crunch and he is set to increase his money by almost 650 times from a Greek default.

He founded hedge fund Hayman Capital in Dallas, Texas, in 2006 in his late 30s after saving $10million from selling bonds for Wall Street firms.

In the money: Kyle Bass founded hedge fund Hayman Capital in Dallas, Texas, in 2006 after saving $10million from selling bonds for Wall Street firms

He made millions gambling against the sub-prime mortgage bond market - and now he’s betting on the collapse of whole countries in Europe.

Mr Bass’s story so far has been documented in Michael Lewis’s new book 'Boomerang: The Meltdown Tour' - serialised in The Sunday Times.

More...

• Stand-off! The moment Wall Street protesters came face to face with suited champagne sippers at National City Bank

Mr Lewis charts how Mr Bass was one of only 15 people who placed ‘enormous bets that vast tracts of American finance would go up in flames’.

Mr Bass believed as the sub-prime market collapsed that the financial crisis was being hidden by rich western governments.

Clever man: Mr Bass made millions by gambling against sub-prime mortgage bond market - and now he's betting on the collapse of whole countries

He said these nations had taken on ‘dodgy securities worth trillions’, as worldwide debts doubled over just a few years to $195trillion.

'It may not be the end of the world. But a lot of people are going to lose a lot of money. Our goal is not to be one of them'

Kyle Bass

A big issue he identified was large banks being treated as ‘extensions of their governments, sure to be bailed out in a crisis’.

Mr Bass spoke to Harvard economics expert Kenneth Rogoff about sovereign balance sheets and finally realised the scale of the problem when he presented him with some research.

Professor Rogoff told Mr Bass: 'I can hardly believe it is this bad' after he had looked at their figures.

Mr Bass replied: 'If you don’t know this, who does?’ and thought: 'Holy s**t, who is paying attention?'

Falling prices: Traders work on the floor of the New York Stock Exchange in Manhattan last week, as the Dow Jones suffered another bad month

‘The sub-prime mortgage crisis was more symptom than cause,’ Mr Lewis wrote. ‘Deeper social and economic problems that gave rise to it remained.’

'I thought: "Holy s**t, who is paying attention?"'

Kyle Bass on sovereign troubles

This made Mr Bass believe another bigger economic crisis was brewing - and he started to buy ‘credit default swaps’ on European countries, according to the book serialisation in The Sunday Times.

These let him bet against a bond’s price without owning it - like ‘default insurance on another person’s investments’.

He believes Greece, Portugal, Ireland, Switzerland, Italy and Spain are the countries least likely to be able to pay off their debts.

New Book: Michael Lewis's Boomerang: The Meltdown Tour - which features Mr Bass, left - is out this week

He bought Greek default insurance for 11 basis points - meaning insuring $1m of bonds would cost $1,100 dollars a year.

'We’ve bought a lot of this stuff'

Kyle Bass on his gold collection

A Greek default would make it pay down its debt by around 70 per cent, meaning every $1,100 bet would net him an astonishing $700,000, Mr Bass said.

He said his mother tells him to put his money in 'guns and gold'.

Mr Lewis recalled him pulling out a huge gold brick from his desk drawer and saying: 'We’ve bought a lot of this stuff.'

Mr Bass, who lives in a 40,000 sq ft house, has also bought 20 million nickels for $1million. He said the metal inside each coin is worth 6.8 cents.

‘It may not be the end of the world,’ Mr Bass added. ‘But a lot of people are going to lose a lot of money. Our goal is not to be one of them.'

[pontiyak]

"European leaders are trying so desperately to figure out where to get all that money, they’ve even asked emerging market countries to chip in. "

No chit Sherlock !!!

Got Dinars ??

The best things in life RV

yak

[thatoneguy]

I wonder, if all the countries are broke, who owns the debt?

-

Great question. I tell ya, if I knew, I would be buying up some of it. I read a Robert Kyosaki book and that was an angle he worked. Getting 16-25% returns... But with heavy risk. Always thinking of ways to make money, but as usual, gotta have money to make money, and my/our time is coming! Chao.

[rjboots1]

The two groups who own most of the debt are: 1) Private investors, many of whom are retired on fixed-incomes, just like Americans who own T-bills and savings bonds, 2) Other banks, both private and central. This is where the crunch comes. When Greece defaults, other large European banks, who are already hanging by a thread from a capital standpoint, lose billions, and then when they default, the American banks, who are already hanging by a thread from a capital standpoint, lost billions. And at some point, there's nobody left to bail anyone out. Elderly get hosed. Banks get hosed. People and businesses can't borrow so the economy can't grow. Tax revenues go down. Governments go broke. And the whole cycle starts over again. Apart from massive currency exchange rate adjustments and international forgiveness of debt, we're all in trouble. Sorry, but let's wake up and smell the money burning................

[zigmeister]

Thanks 20 Million great post. Good to see you.

[SINGH]

I read a like a year ago that if they give the citizens the money, tax them on it, and let them pay off their debt, might be a better solution instead of giving it to the banks who will do nothing to help the citizens. (TARP)

Does anybody else feel that way? I sure do!

[magicman6685]

I read a like a year ago that if they give the citizens the money, tax them on it, and let them pay off their debt, might be a better solution instead of giving it to the banks who will do nothing to help the citizens. (TARP)

Does anybody else feel that way? I sure do!

Sure, I thought that way when USA went though the same economic crisis. give the money to the people and they will spend it in the right way, where they need it, ie: pay bills, gas, pay mortgage, pay-off loans, food, utilities ans so forth.

[krome2ez]

[abby01]

20MillionDinar Man,

You are a very intelligent man. What do you think the average person should be doing to prepare?

Would just like to hear your thoughts.

Edited October 20, 2011 by abby01

[Markinsa]

Instead of the TARP Loans, the Government should have created a Home Loan Program that would have helped the Homeowners keep their homes. The Government would have owned the house, and the loan would have been like a student loan. The homeowner gets to keep their house, and make a low monthly payment and the loan gets paid period. You don't pay, we take it out of your tax returns, etc.. You sell the house for a loss, we take it out of your tax return, etc.. Either way the Government would have gotten their money back.

-

[Brisco]

When you have idiots in charge this will happen....... I would love to see one...just one ""LEADER"" of any country have the balls to stand up and tell it like it is..... Do what they have to do inorder to make things right! If that means cutting stuff, so be it....if that means pissing off a massive amount of people, so be it.......

I AGREE 100%

They should have slaughtered that PIG AIG right out of the gate. Let cards fall where they will.

Instead of all this BU?? SH?T Bail OUT CRA?

I make bad decisions for my Co. I suffer! not the entire Country.

We need to KICK their A???? to the curb and start all over. Shorter Tearms and only 1

REMEMBER our forefather's set this system up for THEM TO REPRESENT US

NOT US WORK FOR THEM!

[20MillionDinar]

20MillionDinar Man,

You are a very intelligent man. What do you think the average person should be doing to prepare?

Would just like to hear your thoughts.

Thank you. Well I can tell you a little bit about what I am (and have been) doing.

Diversify + Focus

You need to diversify your investments while also keeping focus on what you are putting your time and energy into. I know that is a "generic" statement, but it is true. I came across a private wealth club about a year ago and I have learned a ton from them. They are involved with over a dozen alternative investments meaning they put their money where their mouth is.

Figure out your game plan, choose which investments you want to start building with, keep studying and learning, and keep building. You also need to have a solid money management system in place.

My money is in my control 100% and my returns are extremely above average. I'm talking about 15%-30% a week. Sometimes I make close to 50% a week on my money! I have been studying and researching for years, and only last year I came across this private club which is literally my gold mine! I expect to be making $50,000 a month by this next March/April.

Most people don't think they can make money with money until they have lots of it, but that is not true at all. I got tired of waiting for the Dinar to RV so I took matters into my own hands as I hate waiting!

Thanks 20 Million great post. Good to see you.

Hey Zigmeister!

Thanks! I've only checked in a couple times during the past few weeks. Just been enjoying life out here in Hawaii! Hope all is well with you and yours.

[Nelg]

Thanks for the post . . . I think. Tell us that we are running as fast as we can toward a cliff and that we can't stop is not good news. The U.S. dollar is falling, euro is failing, French and German currency is faltering. . .so the Gulf and Arab states are delinking from the dollar and creating their own currency. The "gulfo," an Arab petro-currency that will give oil countries like Kuwait, Saudi Arabia, Qatar, and Bahrain, a way to displace the U.S. dollar and use their on currency for oils contracts.

We are in great shape! NOT! We need an RV right now. However, if the $$ falls, what will we have? A handful of toilet paper?

[20MillionDinar]

Thanks for the post . . . I think. Tell us that we are running as fast as we can toward a cliff and that we can't stop is not good news. The U.S. dollar is falling, euro is failing, French and German currency is faltering. . .so the Gulf and Arab states are delinking from the dollar and creating their own currency. The "gulfo," an Arab petro-currency that will give oil countries like Kuwait, Saudi Arabia, Qatar, and Bahrain, a way to displace the U.S. dollar and use their on currency for oils contracts.

We are in great shape! NOT! We need an RV right now. However, if the $ falls, what will we have? A handful of toilet paper?

We can either choose to be a victim or responsible. Responsible = Response Able or the Ability to Respond

For example: With FOREX, you can profit when a currency rises, and you can also profit when a currency declines. I am not saying to go start "day trading" as you will probably lose all of your money if you don't know what you are doing. What I am saying is take responsibility, don't be a victim, and look for ways to profit from any situation that arises.

I believe the Dinar will RV but I won't let the potential RV be my one and only hope in life. It is not my savior, it is a speculative investment that required no work on my behalf. It is a "set it and forget it" type of transaction. All we can do is wait, in the meantime, it would be wise to keep looking for other investments, learn how to protect your money, keep your money, and make your money grow.