Europe gets worse…
November 16, 2011 by Steve
Filed under Commentary, Economy
Just when you start thinking the worst is behind them, it gets even more disturbing. The Bank of England issued some pretty dire warnings about the UK economy sending stocks worldwide down , dollar soaring and gold and silver down.
The worst is definitely not behind us. Spain is petitioning for a ‘broader’ range of assets to be included as capital. This means that they are running out of assets that have value as they lose money on their existing portfolios on a daily basis. With declining asset (read capital ratios) values they have to both deleverage (reduce loans) and sell assets to the extent they can. Herein lies the problem. Reduce liquidity (loans) to companies that produce goods and services and they will not hire, in fact they will fire people. This type activity will put the respective economies into deeper recessions/depressions.
The banks themselves if they can’t raise their capital ratios (what is required by the governments and financial regulators to cover losses from bad bets and loans) will eventually fail, as their assets are too low to cover debts, bad loans and bad bets etc. When the public is finally informed of the weakness in the system, you have bank runs and bank holidays and then nationalization of the entire systems…
Then you will see nationalization of any financial industry, pension companies, trust companies-basically anywhere that has cash and/or assets that the government can lay their hands on to support the broken companies/banks etc that they just had to nationalize. that my friends is one scenario that could very well happen…not a guarantee but certainly a possibility.
I suggest you have some precious metals on hand, some cash and a place to go in the event anything close to that scenario happens. People will just lose it when all their money is absconded with by the bandits in their respective governments. Most people will become completely reliant on the ‘State’ for just about everything…their daily bread, retirement, health care etc…truly enslaved to big brother.
