Gains Pains & Capital

As I’ve noted in previous articles, politics, not economics, rule Europe. What I mean by this is that most major decisions in Europe are determined by political agendas that ignore economic and financial realities.

This is at the core of the “welfare state” mentality that permeates Europe as a whole. The EU in general is comprised of an aging population that is more concerned about receiving the pensions/ health benefits/ social payouts that were promised to them by the system than anything else.

As a result of this, EU voters, who determine EU elections, don’t take action until what has promised to them comes under threat.

For this reason, EU political leaders will maintain their agendas regardless of whether said agendas go against financial or economic realities (or common sense for that matter) until these agendas begin to have real negative consequences for their political careers.

A perfect example of this paradigm in action is German Chancellor Angela Merkel who was relatively “pro-bailout” until German voters began to thrash her political party in Germany’s state elections (March 2011).

She then altered her strategy to one of offering to provide bailout funds to Greece and others but only if these EU members met fiscal demands that were so onerous that the likelihood of them accepting the deal was little to none.

As a result of this decision to start playing “hardball,” Merkel’s political approval ratings shot to their highest levels since her 2009 re-election. At the same time, she was able to maintain her agenda of extending Germany’s control over Europe from a fiscal perspective (another plus in the eyes of German voters) without abandoning Germany’s allegiance to the Euro which would only turn the rest of the EU against Germany.

And then… German voters found out that she’s secretly been bailing out Europe along with the Bundesbank:

German tempers boil over back-door euro rescues

Professor Hans-Werner Sinn, head of Germany’s IFO Institute, said German taxpayers are facing a dangerous rise in credit risk from a plethora of bail-out schemes. “The euro-system is near explosion,” he told Austria’s Economics Academy on Thursday.

Dr Sinn said Germany is on the hook for much of the €2.1 trillion (£1.72 trillion) in rescue measures for EMU debtors – often by the back-door – that will saddle Germans with ruinous losses one day.

“It is a horror scenario,” he said, warning that the euro system is splitting friendly countries into blocs of mutually hostile creditors and debtors, exactly the opposite of what was hoped.

Earlier this week, the Foundation for Family Business in Munich filed a criminal lawsuit against the Bundesbank, accusing the board of disguising the true scale of risk born by German citizens.

http://www.telegraph.co.uk/finance/financialcrisis/9215232/German-tempers-boil-over-back-door-euro-rescues.html

As a direct result of this, Merkel’s CDU party is getting slammed again in state elections. And remember, Merkel is up for re-election in 2013. In that context as well as the recent elections in France and Greece, the stage is set for the EU to collapse in the future. Indeed, Germany’s been almost expecting this for months now:

Seeing in Crisis the Last Best Chance to Unite Europe

MR. SCHÄUBLE said the German government would propose treaty changes at the summit of European leaders in Brussels on Dec. 9 that would move Europe closer to the centralized fiscal government that the currency zone has lacked. The ultimate goal, Mr. Schäuble says, is a political union with a European president directly elected by the people.

“What we’re now doing with the fiscal union, what I’m describing here, is a short-term step for the currency,” Mr. Schäuble said. “In a larger context, naturally we need a political union.”

Critics say the spending cuts German leaders have demanded from other countries are hurting growth across the Continent, in the process making debts only harder to repay. And his proposals to give the European Commission far-reaching powers to enforce budgetary discipline have been likened by skeptics in Britain to an invasive new “super state.” Even some euro supporters fear that Mrs. Merkel and Mr. Schäuble are talking about long-term changes while panicked investors and practiced speculators are tearing the euro to pieces right now.

“There is a limited transition period where we have to manage the nervousness on the markets,” Mr. Schäuble said. “If it is clear that by the end of 2012 or the middle of 2013 that we have all the ingredients for new, strengthened and deepened political structures together, I think that will work.”

He sees the turmoil as not an obstacle but a necessity. “We can only achieve a political union if we have a crisis,” Mr. Schäuble said.

http://www.nytimes.com/2011/11/19/world/europe/for-wolfgang-schauble-seeing-opportunity-in-europes-crisis.html?_r=1&pagewanted=2

Note that Schauble repeatedly emphasizes the goal of a “political union,” NOT a “fiscal union” or “monetary union.” Indeed, his one reference to a “fiscal union” is in the “short-term,” while stressing that in a “larger context” the EU needs a “political union.”

The message here is very, very clear: Germany is interested in the EU as a political entity, NOT the Euro as a currency. With that in mind, as well as Merkel’s recent political struggle, the stage is set for a possible exit from the Euro on the part of Germany.

True this would have horrible consequences for the EU both politically AND financially. But the alternative (implode Germany and commit political suicide) is no better. And in the end, politics wins, which is why I think when push comes to shove, Germany will pull out of the Euro (but not the EU) rather than backstop the system for much longer.

On that note, I fully believe the EU in its current form is in its final chapters. Whether it’s through Spain imploding or Germany ultimately pulling out of the Euro, we’ve now reached the point of no return: the problems facing the EU (Spain and Italy) are too large to be bailed out. There simply aren’t any funds or entities large enough to handle these issues.

With that in mind, I’m already positioning subscribers of Private Wealth Advisory for the upcoming EU collapse. Already we’ve seen gains of 6%, 9%, 10%, even 12% in less than two weeks by placing well-targeted shorts on a number of European financials.

And we’re just getting started. Indeed, we just closed our 50th straight winner last week: a 10% gain in one week’s time.

So if you’re looking for the means of profiting from what’s coming, I highly suggest you consider a subscription to Private Wealth Advisory. We’ve locked in 50 straight winning trades since late July (thanks to the timing of our trades), and haven’t closed a single losing trade since that time.

To find out more about Private Wealth Advisory and how it can help you make money in any market…

Click Here Now!!!

Best Regards,

Graham Summers

Chief Market Strategist

Phoenix Capital Research

We have entered an extremely dangerous environment: one in which the primary prop for asset prices (Central Banks) are running out of ammunition. This will have profound consequences for all asset classes as well as the financial system at large.

This was the real problem with Central Bank responses to 2008 all along: by attempting to prolong a peaked economic/ credit cycle, they have set the stage for an even larger Crisis, one that will see the Central Banks themselves collapse along with numerous sovereign defaults.

These are the key take home points ALL investors must come to grips with:

1)   Going forward  the Easy Money props are going to be removed from beneath the market.

2)   Sovereign defaults are coming. Whether it’s through hyperinflation, reneging on promised future social welfare / pension/ healthcare spending, or outright messy defaults (or various combinations of these) we will see most of the Western world defaulting on its debts in the coming years.

How soon all of this unfolds remains to be seen. The Multi-­‐Trillion Dollar Question is whether the markets realize that Central Banks are virtually powerless sooner rather than later.

By the look of things, it’s coming relatively soon. Spain, which is now at the forefront of the Great Western Debt Default Collapse, has opted to seek funding from the mega-bailout fund, the European Stability Mechanism (ESM) rather than going directly to the ECB or the IMF.

The reasons for this are clear: the IMF doesn’t have the funds (nor will it as the US won’t fund a European bailout during a Presidential election year). And the ECB is now backed into a political corner with Germany.

However, as Spain has discovered, even ESM funding doesn’t come without strings attached:

Germany Rejects Spain Banks Tapping Bailout Fund, Meister Says

Spain’s rating downgrade at Standard & Poor’s doesn’t alter Germany’s stance that banks can’t have direct access to Europe’s financial backstops, a senior lawmaker from Chancellor Angela Merkel’s party said.

“The German position is absolutely strict,” Michael Meister, the deputy caucus chairman of Merkel’s Christian Democrats, said in a phone interview in Berlin. “And since such aid programs require unanimity, there’s not going to be any change. All sorts of people can try to set things in motion, but Germany won’t vote for it.”

http://www.bloomberg.com/news/2012-04-27/germany-rejects-spain-banks-tapping-bailout-fund-meister-says.html

The ESM funding idea is really just Spain playing for time (the ESM doesn’t actually have the funds to bail Spain out). But the fact that Germany is now making the ESM a political issue indicates the degree to which political relationships are breaking down in the EU. And once the political relationships break down… so will the Euro.

Indeed, Germany has no choice. If it decides to prop up Spain it will receive a ratings downgrade (something which France is about to experience anyway). Europe with a downgraded Germany is not a pretty sight.

Moreover, Germany’s decision to prop up the Euro is finally beginning to arouse furor from the German population. In particular, the below story which reveals that Germany has in fact put German taxpayers on the hook for over €2 trillion in back-door EU rescue measures could be the proverbial tipping point that sends German voters over the edge.

German tempers boil over back-door euro rescues

Professor Hans-Werner Sinn, head of Germany’s IFO Institute, said German taxpayers are facing a dangerous rise in credit risk from a plethora of bail-out schemes. “The euro-system is near explosion,” he told Austria’s Economics Academy on Thursday.

Dr Sinn said Germany is on the hook for much of the €2.1 trillion (£1.72 trillion) in rescue measures for EMU debtors- often by the backdoor- that will saddle Germans with ruinous losses one day.

“It is a horror scenario,” he said, warning that the euro system is splitting friendly countries into blocs of mutually hostile creditors and debtors, exactly the opposite of what was hoped.

Earlier this week, the Foundation for Family Business in Munich filed a criminal lawsuit against the Bundesbank, accusing the board of disguising the true scale of risk born by German citizens.

http://www.telegraph.co.uk/finance/financialcrisis/9215232/German-tempers-boil-over-back-door-euro-rescues.html

This is the last thing Angela Merkel needs right now. Between this and inflation arising in Germany she’s in major political hot water. So expect Germany to push even harder when it comes to fiscal austerity in the future…

Which means that the European mega-bailout funds (the ESM and EFSF) will be much less likely to put out money for Spain. This is why Spain has now opted to follow Germany’s steps in establishing a “Plan B.”

Spanish lenders in talks over ‘bad bank’ plan

As their losses from mortgages grow, Spanish banks have begun discussions about creating a separate entity -a “bad bank” – to take on these assets and relieve pressure on the country’s financial sector.

The goal of the new organization would be to reduce the financial strain on banks and prevent the need for either a more costly government bailout or an international rescue along the lines of Greece, Portugal and Ireland…

The official for Spain’s Economy Ministry confirmed Monday that the Spanish banking industry is discussing creating a private entity that would assume their toxic assets. The new asset management organization is designed to take the burden of trying to sell foreclosed properties off the banks and allow them to concentrate on providing credit to the private sector.

http://www.washingtonpost.com/business/markets/government-agency-confirms-spain-back-in-recession-following-2nd-quarterly-contraction/2012/04/30/gIQAYMuBrT_story.html

This is similar to Germany’s Special Financial Market Stabilization Funds, or SoFFin for short.

The SoFFin is essentially Germany’s emergency bailout fund for times of Crisis. It was created in October 2008 to help the German financial system get through the 2008 Collapse by allowing German banks to dump toxic mortgage assets and other items into the fund so they could clear their balance sheets.

Once things improved, SoFFin was essentially put on hold in December 2010. But in the last three months, Germany has brought it back. And it’s brought it back with one very crucial difference:

Germany Approves Bank Bailout Bill

The SoFFin will give up to €400 billion ($524.24 billion) in guarantees for banks and provide up to €80 billion for recapitalization. The fund, which for the first time will accept euro-zone government bonds, will be operational until Dec. 31 2012.

http://online.wsj.com/article/SB10001424052970204573704577184362262410868.html

The SoFFin and Spain’s “Bad Bank” represent essentially the same idea: attempting to make bad bank debts magically disappear by removing from the private banks’ balance sheets AND keeping them off the public’s balance sheet (they’d be parked in an external entity).

This is the equivalent of just sweeping bad debts “under the rug.” The debts still do in fact exist and still pose a threat to the financial system. The markets know this, which is why Spanish banks continue to be nationalized/ under major duress.

With that in mind, I’m already positioning subscribers of Private Wealth Advisory for the upcoming EU collapse. Already we’ve seen gains of 6%, 9%, 10%, even 12% in less than two weeks by placing well-targeted shorts on a number of European financials.

And we’re just getting started. Indeed, we just closed our 50th straight winner today: a 10% gain in one week’s time.

So if you’re looking for the means of profiting from what’s coming, I highly suggest you consider a subscription to Private Wealth Advisory. We’ve locked in 50 straight winning trades since late July (thanks to the timing of our trades), and haven’t closed a single losing trade since that time.

To find out more about Private Wealth Advisory and how it can help you make money in any market…

Click Here Now!!!

Best Regards,

Graham Summers

Chief Market Strategist

Phoenix Capital Research

With so much hanging in the balance, I went to Paris, France to witness the results of the French elections first hand. I arrived Sunday morning, May 6^th, the day of the second round of the election, which pitted Socialist Francois Hollande against Angela Merkel’s right hand man, Nicolas Sarkozy.

Everything was relatively quiet until the late afternoon. But once the elections were announced, the became jammed. Literally. By the look of things, French youth are celebrating Hollande’s victory by picking up all of their friends and then driving up and down the streets honking their horns incessantly. Most cars were packed to the brim with passengers hanging out of every window and even the sunroof waving French flags, singing, or simply yelling pro-Hollande slogans.

Indeed, at times traffic intersections become gridlocked as some cars simply parked in the middle of the street so their passengers could get on top of the vehicle and hang out (a few of them even lit cigarettes like they were sitting on a terrace instead of the roof of a fiat).

The Euro has taken the news much more poorly, gapping down sharply in the overnight session to below critical support at 1.30.

Stocks… are collapsing. The S&P 500 futures have gapped down from 1,360 to 1,346 as I write this Sunday night.

This shouldn’t be a surprise to anyone. Virtually every poll showed Hollande winning the election. And how exactly is the election of a socialist who proposed the following Euro-positive…

1. Proposed raising tax rates on high-income earners from 41% to 75%.

2. Wants to lower the retirement age to 60.

3. Completely goes against the recent new EU fiscal requirements Merkel just convinced 17 EU members to agree to and has promised to try and renegotiate them to be looser.

Oh, and Greece also had an election which saw its Parliament swing in favor or anti-bailouts/ anti-austerity measures.

Remember, politics, not economics, rule Europe. What I mean by this is that most major decisions in Europe are determined by political agendas that ignore economic and financial realities.

For this reason, EU political leaders will maintain their agendas regardless of whether said agendas go against financial or economic realities (or common sense for that matter) until these agendas begin to have real negative consequences for their political careers.

Well, we’re now at the point at which there are MASSIVE political consequences for the pro-bailout/ austerity measures political agenda. Which means… it’s only a matter of time before the EU in its current form collapses.

With that in mind, I’m already positioning subscribers of Private Wealth Advisory for the upcoming EU collapse. Already we’ve seen gains of 6%, 9%, 10%, even 12% in less than two weeks by placing well-targeted shorts on a number of European financials.

And we’re just getting started. Indeed, we just opened five new trades a few weeks ago Friday. Already we’ve closed out three of them for gains of 6%, 6%, and 9%.

So if you’re looking for the means of profiting from what’s coming, I highly suggest you consider a subscription to Private Wealth Advisory. We’ve locked in 49 straight winning trades since late July (thanks to the timing of our trades), and haven’t closed a single losing trade since that time.

Because of the level of my analysis as well as my track record, my work has been featured in Fox Business, CNN Money, Crain’s New York Business, Rollingstone Magazine, and more. Which is why we’re raising the price of Private Wealth Advisory from $249 to $399. The reason? This is a premium quality newsletter than commands a premium price.

So this is the last day during which you can subscribe Private Wealth Advisory at the soon to be old price of $249.

To do so…

Click Here Now!!!

Best Regards,

Graham Summers

Chief Market Strategist

Phoenix Capital Research

The following is an excerpt from my most recent issue of Private Wealth Advisory. In it, I explain why the markets are heading for a sharp correction due to the Fed and ECB no longer being able to make massive monetary interventions due to their political consequences. To find out more about Private Wealth Advisory and how I’m preparing clients to profit from this mess (we’ve already locked in 12 winners based on Europe’s woes in the two months)… Click Here Now!!!

As many of you know, my primary forecast regarding Europe is that the EU will be broken up and/or collapse within the coming months.

The reasons for this are political, financial, and monetary in nature. In bullet form they are:

1)   France is about to elect a hard core Socialist. This will greatly alter political dynamics in the EU and will weaken Germany’s push for austerity.

2)   Spain’s stock market and banking system are on the verge of collapse. The markets are flashing major warning signs here both in terms of technical developments in the markets as well as Spanish sovereign bond market yields.

3)   The ECB’s interventions in the European banking system are now politically toxic (the markets punish those banks relying on the ECB for aid) as well as monetarily impotent (the positive effects of spending hundreds of billions of Euros are only lasting a month at most).

4)   The US Federal Reserve’s Operation Twist 2 Program ends in June. Currently there are not new monetary programs planned at the Fed and it is unlikely they will launch anything before the US Presidential election in November (unless forced to by a Crisis).

In simple terms, we have a confluence of negative factors hitting this month and the next. Now, nothing in the political or financial worlds is static and we could see any number of changes made to the above items (for instance, France’s soon to be President Francois Hollande might backtrack on some of his more aggressive socialist policies).

Having said that, while individual changes to the above items might temporarily delay the collapse I’ve forecast, said collapse is coming and will hit before the year-end.

The reason for this is that we have reached the End Game for Central Bank intervention: the time during which Central Bank interventions either result in negative consequences that far outweigh their positive benefits (inflation/ increases in the cost of living vs. a rise in “good” asset prices such as stocks) or have negligible impacts.

We’ve already assessed the first one of these items in numerous past issues of articles. The most obvious example of this was the Fed’s QE 2 program which spent $600 billion, resulted in at most three months of upturned economic data for the US, but also sent food prices to all time highs inciting revolutions and riots around the globe.

Indeed, as noted previously on these pages, as far back as May 2011, Fed Chairman Ben Bernanke explicitly stated that QE was less “attractive” as a monetary option:

Q. Since both housing and unemployment have not recovered sufficiently, why are you not instantly embarking on QE3? — Michael A. Kamperman, Waco, Tex.

Mr. Bernanke: “Going forward, we’ll have to continue to make judgments about whether additional steps are warranted, but as we do so, we have to keep in mind that we do have a dual mandate, that we do have to worry about both the rate of growth but also the inflation rate…

“The trade-offs are getting — are getting less attractive at this point. Inflation has gotten higher. Inflation expectations are a bit higher. It’s not clear that we can get substantial improvements in payrolls without some additional inflation risk. And in my view, if we’re going to have success in creating a long-run, sustainable recovery with lots of job growth, we’ve got to keep inflation under control. So we’ve got to look at both of those — both parts of the mandate as we — as we choose policy”

http://economix.blogs.nytimes.com/2011/04/28/how-bernanke-answered-your-questions/

This is critical as it indicates that the Fed, despite all of its verbal interventions and posturing, is aware that its monetary interventions are having negative consequences that outweigh their benefits.

The same is occurring in Europe where the relationship between Germany and the ECB is deteriorating as the former finds its push for austerity counteracted by the latter’s monetary profligacy. Indeed, Germany is now facing its most dreaded consequence of the ECB’s money printing: inflation.

German unions turn up volume on pay rise demands

German labor leaders urged May Day demonstrators on Tuesday to fight for big pay rises after a decade of restraint that had seen wages in crisis-hit southern Euro zone nations soar.

The head of the powerful IG-Metall union, demanding a 6.5 percent rise, described an offer of 3 percent over 14 months as a farce…

“If we don’t have a result (from talks) by Pentecost, then there will be a strike ballot and strike,” said Berthold Huber, referring to the May 27/28 holiday…

IG Metall, with a membership of 3.6 million, (Graham’s note: about 4% of German population) held warning strikes at the weekend and is planning more for Wednesday in Germany’s industrial heartland of North Rhine-Westphalia…

There are signs German policymakers are already starting to worry about inflation, although it continues anchored around two percent. Last week, Economy Minister Philipp Roesler said the European Central Bank should refocus on price stability.

http://www.reuters.com/article/2012/05/01/us-germany-mayday-idUSBRE8400VU20120501

Remember, the core driving force in European policy-making is politics. Angela Merkel faces re-election in 2013. If inflation is already becoming a political issue in Germany now (though data shows that inflation actually slowed in April) Merkel is going to be highly incentivized to get it under control by appearing even more pro-austerity/ anti-monetization (more on this later). And if things get truly ugly she could even publicly threaten to pull out the Euro.

With that in mind, I’m already positioning subscribers of Private Wealth Advisory for the upcoming EU collapse. Already we’ve seen gains of 6%, 9%, 10%, even 12% in less than two weeks by placing well-targeted shorts on a number of European financials.

And we’re just getting started. Indeed, we just opened five new trades a few weeks ago Friday. Already we’ve closed out three of them for gains of 6%, 6%, and 9%.

So if you’re looking for the means of profiting from what’s coming, I highly suggest you consider a subscription to Private Wealth Advisory. We’ve locked in 49 straight winning trades since late July (thanks to the timing of our trades), and haven’t closed a single losing trade since that time.

Because of the level of my analysis as well as my track record, my work has been featured in Fox Business, CNN Money, Crain’s New York Business, Rollingstone Magazine, and more. Which is why we’re raising the price of Private Wealth Advisory from $249 to $399. The reason? This is a premium quality newsletter than commands a premium price.

So this is the last day during which you can subscribe Private Wealth Advisory at the soon to be old price of $249.

To do so…

Click Here Now!!!

Best Regards,

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Spain, which is now at the forefront of the Great Western Debt Default Collapse, has opted to seek funding from the mega-bailout fund, the European Stability Mechanism (ESM) rather than going directly to the ECB or the IMF.

The reasons for this are clear: the IMF doesn’t have the funds (nor will it as the US won’t fund a European bailout during a Presidential election year). And the ECB is now backed into a political corner with Germany.

However, Spain is discovering that even ESM funding doesn’t come without strings attached:

Germany Rejects Spain Banks Tapping Bailout Fund, Meister Says

Spain’s rating downgrade at Standard & Poor’s doesn’t alter Germany’s stance that banks can’t have direct access to Europe’s financial backstops, a senior lawmaker from Chancellor Angela Merkel’s party said.

“The German position is absolutely strict,” Michael Meister, the deputy caucus chairman of Merkel’s Christian Democrats, said in a phone interview in Berlin. “And since such aid programs require unanimity, there’s not going to be any change. All sorts of people can try to set things in motion, but Germany won’t vote for it.”

http://www.bloomberg.com/news/2012-04-27/germany-rejects-spain-banks-tapping-bailout-fund-meister-says.html

The ESM funding idea is really just Spain playing for time (the ESM doesn’t actually have the funds to bail Spain out). But the fact that Germany is now making the ESM a political issue indicates the degree to which political relationships are breaking down in the EU. And once the political relationships break down… so will the Euro.

Indeed, Germany has no choice. If it decides to prop up Spain it will receive a ratings downgrade (something which France is about to experience anyway). Europe with a downgraded Germany is not a pretty sight.

Moreover, Germany’s decision to prop up the Euro is finally beginning to arouse furor from the German population. In particular, the below story which reveals that Germany has in fact put German taxpayers on the hook for over €2 trillion in back-door EU rescue measures could be the proverbial tipping point that sends German voters over the edge.

German tempers boil over back-door euro rescues

Professor Hans-Werner Sinn, head of Germany’s IFO Institute, said German taxpayers are facing a dangerous rise in credit risk from a plethora of bail-out schemes. “The euro-system is near explosion,” he told Austria’s Economics Academy on Thursday.

Dr Sinn said Germany is on the hook for much of the €2.1 trillion (£1.72 trillion) in rescue measures for EMU debtors – often by the back-door – that will saddle Germans with ruinous losses one day.

“It is a horror scenario,” he said, warning that the euro system is splitting friendly countries into blocs of mutually hostile creditors and debtors, exactly the opposite of what was hoped.

Earlier this week, the Foundation for Family Business in Munich filed a criminal lawsuit against the Bundesbank, accusing the board of disguising the true scale of risk born by German citizens.

http://www.telegraph.co.uk/finance/financialcrisis/9215232/German-tempers-boil-over-back-door-euro-rescues.html

This is the last thing Angela Merkel needs right now. Between this and inflation arising in Germany she’s in major political hot water. So expect Germany to push even harder when it comes to fiscal austerity in the future…

On that note, I fully believe the EU in its current form is in its final chapters. Whether it’s through Spain imploding or Germany ultimately pulling out of the Euro, we’ve now reached the point of no return: the problems facing the EU (Spain and Italy) are too large to be bailed out. There simply aren’t any funds or entities large enough to handle these issues.

With that in mind, I’m already positioning subscribers of Private Wealth Advisory for the upcoming EU collapse. Already we’ve seen gains of 6%, 9%, 10%, even 12% in less than two weeks by placing well-targeted shorts on a number of European financials.

And we’re just getting started. Indeed, we just opened five new trades a few weeks ago Friday. Already we’ve closed out three of them for gains of 6%, 6%, and 9%.

So if you’re looking for the means of profiting from what’s coming, I highly suggest you consider a subscription to Private Wealth Advisory. We’ve locked in 49 straight winning trades since late July (thanks to the timing of our trades), and haven’t closed a single losing trade since that time.

Because of the level of my analysis as well as my track record, my work has been featured in Fox Business, CNN Money, Crain’s New York Business, Rollingstone Magazine, and more. Which is why we’re raising the price of Private Wealth Advisory from $249 to $399. The reason? This is a premium quality newsletter than commands a premium price.

So this is the last day during which you can subscribe Private Wealth Advisory at the soon to be old price of $249. This is literally the last call (today by noon… technically it was last night at midnight, but I’m giving those in different time zones an extra 12 hours to take advantage of this deal).

To do so…

Click Here Now!!!

Best Regards,

Graham Summers

Chief Market Strategist

Phoenix Capital Research

In a previous article I began delving into the toxic sewer that is the Spanish banking system. At the root of the problem is the previously unregulated Spanish cajas or regional/ local banks which own as much as 56% of all Spanish mortgages.

To give you an idea of how bad things are with the cajas, consider that in February 2011 the Spanish Government implemented legislation demanding all Spanish banks have equity equal to 8% of their “risk-weighted assets.” Those banks that failed to meet this requirement had to either merge with larger banks or face partial nationalization.

The deadline for meeting this capital request was September 2011. Between February 2011 and September 2011, the number of cajas has in Spain has dropped from 45 to 17.

Put another way, over 60% of cajas could not meet the capital requirements of having equity equal to just 8% of their risk-weighted assets. As a result, 28 toxic caja balance sheets have been merged with other (likely equally troubled) banks or have been shifted onto the public’s balance sheet via partial nationalization.

The markets are well aware that this policy has only spread the toxic garbage, not fixed it. Case in point, take a look at the chart for Banco Sabadell which was merged with toxic Caja de Ahorros del Mediterráneo or CAM for short.

The merger increased Banco Sabadell’s size by 75%… and the market saw this as a good thing for a total of two weeks: shares are now down 30% from their merger levels.

Banco Popular, which acquired failing caja Banco Pastor, has experienced a similar fate, falling to a new low soon after the merger:

My point with all of this is that merging one garbage bank with another larger slightly less garbage bank doesn’t solve anything. The market knows this, which is why we see these banks continuing to collapse despite being merged.

Having addressed all of this, I firmly believe that no one, not even the Spanish Government has a clue how much toxic garbage debt exists in the Spanish banking system.

Moreover, it’s not as though the Spanish Government is heavily incentivized to come clean about the true nature of the Spanish banking system even if it did know the facts.

Case in point, the Government just admitted that Spanish banks will need another €29 billion in loan loss provisions yesterday, before revealing that  “problem loans” for the Spanish banking system are now at an 18-year high of 8.15% (€140 billion of the total €1.7 trillion in loans within the Spanish Banking System).

Put another way, by the Spanish Government’s own admission (read extremely conservative estimate) nearly one out of every €10 leant out by Spanish banks is probably not going to be paid back.

And things are only going to get worse. Spanish citizens (at least those that have money) have been pulling their money out of Spain en masse: €65 billion left the Spanish banking system in March 2011 alone.

This flight of capital will result in higher leverage levels for Spanish banks (already leveraged at 20 to 1) and smaller capital buffers with which to address future losses.

Put another way, capital is leaving Spain at the very time when Spanish banks need it the most. Indeed, things have gotten so bad that the Spanish Government has limited cash transactions over €2,500.

Simply put, Spain’s banking system is an absolute sewer of toxic debts that no one, likely not even the Spanish Government or Spanish Central Bank, truly has a grip on.

The few facts that we do know are:

• Total Spanish banking loans are equal to 170% of Spanish GDP.
• Troubled loans at Spanish Banks just hit an 18-year high.
• Spanish Banks are drawing a record €316.3 billion from the ECB (up from €169.2 billion in February).
• The share prices of Spanish banks that were merged with cajas have broken to new lows.

None of this is good news at all. Especially when you also consider that…

Spanish banks need to roll over 20% of their debt this year.

That’s correct, one fifth of all Spanish bank bonds need to be paid off or renegotiated in 2012. And this is happening at a time in which Spanish interest rates are rising. Indeed, the Spanish ten year is approaching the dreaded 7%: the level at which Greece and other PIIGS sought bailouts.

The only problem is: Spain is far too big to be bailed out.

With that in mind, I’m already positioning subscribers of Private Wealth Advisory for the upcoming EU collapse. Already we’ve seen gains of 6%, 9%, 10%, even 12% in less than two weeks by placing well-targeted shorts on a number of European financials.

And we’re just getting started. Indeed, we just opened five new trades a few weeks ago Friday. Already we’ve closed out three of them for gains of 6%, 6%, and 9%.

So if you’re looking for the means of profiting from what’s coming, I highly suggest you consider a subscription to Private Wealth Advisory. We’ve locked in 49 straight winning trades since late July (thanks to the timing of our trades), and haven’t closed a single losing trade since that time.

Because of the level of my analysis as well as my track record, my work has been featured in Fox Business, CNN Money, Crain’s New York Business, Rollingstone Magazine, and more. Which is why we’re raising the price of Private Wealth Advisory from $249 to $399. The reason? This is a premium quality newsletter than commands a premium price.

So this is the last day during which you can subscribe Private Wealth Advisory at the soon to be old price of $249. This is literally the last call (today by noon… technically it was last night at midnight, but I’m giving those in different time zones an extra 12 hours to take advantage of this deal).

To do so…

Click Here Now!!!

Best Regards,

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Spain is a catastrophe on such a level that few analysts even grasp it.

Indeed, to fully understand just why Spain is such a catastrophe, we need to understand Spain in the context of both the EU and the global financial system.

The headline economic data points for Spain are the following:

• Spain’s economy (roughly €1 trillion) is the fourth largest in Europe and the 12^th largest in the world.
• Spain sports an official Debt to GDP of 68% and a Federal Deficit between 5.3-5.8% (as we’ll soon find out the official number)
• Spain’s unemployment is currently 24%: the highest in the industrialized world.
• Unemployment for Spanish youth is 50%+: on par with that of Greece

On the surface, Spain’s debt load and deficits aren’t too bad. So we have to ask ourselves, “Why is unemployment so high and why are Spanish ten year bills approaching the dreaded 7%?” (the level at which Greece and Portugal began requesting bailouts).

The answer to these questions lies within the dirty details of Spain’s economic “boom” of the 2000s as well as its banking system.

For starters, the Spanish economic boom was a housing bubble fueled by Spain lowering its interest rates in order to enter the EU, not organic economic growth.

Moreover, Spain’s wasn’t just any old housing bubble; it was a mountain of a property bubble (blue line below) that made the US’s (gray line below) look like a small hill in comparison.

In the US during the boom years, it was common to hear of people quitting their day jobs to go into real estate. In Spain the boom was so dramatic that students actually dropped out of school to work in the real estate sector (hence the sky high unemployment rates for Spanish youth).

Spanish students weren’t the only ones going into real estate. Between 2000 and 2008, the Spanish population grew from 40 million to 45 million (a whopping 12%) as immigrants flocked to the country to get in on the boom. In fact, from 1999 to 2007, the Spanish economy accounted for more than ONE THIRD of all employment growth in the EU.

This is Spain, with a population of just 46 million, accounting for OVER ONE THIRD of the employment growth for a region of 490 million people.

This, in of itself, set Spain up for a housing bust/ banking Crisis worse than that which the US faced/continues to face. Indeed, even the headline banking data points for Spain are staggeringly bad:

• Spanish banks just drew €227 billion from the ECB in March: up almost 50% from its February borrowings
• Spanish banks account for 29% of total borrowings from the ECB
• Yields on Spanish ten years are approaching 7%: the tipping point at which Greece and other nations have requested bailouts

As bad as these numbers are, they greatly underestimate just how ugly Spain’s banking system is. The reason for this is due to the structure of the Spanish banking industry.

Spain’s banking system is split into two tiers: the large banks (Santander, BBVA) and the smaller, more territorial cajas.

The caja system dates back to the 19^th century. Cajas at that time were meant to be almost akin to village or rural financial centers. As a result of this, the Spanish country is virtually saturated with them: there is approximately one caja branch for every 1,900 people in Spain. In comparison there is one bank branch for every 3,130 people in the US and one bank branch for every 6,200 people in the UK.

Now comes the bad part…

Until recently, the caja banking system was virtually unregulated. Yes, you read that correctly, until about 2010-2011 there were next no regulations for these banks (which account for 50% of all Spanish deposits). They didn’t have to reveal their loan to value ratios, the quality of collateral they took for making loans… or anything for that matter.

As one would expect, during the Spanish property boom, the cajas went nuts lending to property developers. They also found a second rapidly growing group of borrowers in the form of Spanish young adults who took advantage of new low interest rates to start buying property (prior to the housing boom, traditionally Spanish young adults lived with their parents until marriage).

In simple terms, from 2000 to 2007, the cajas were essentially an unregulated banking system that leant out money to anyone who wanted to build or buy property in Spain.

Things only got worse after the Spanish property bubble peaked in 2007. At a time when the larger Spanish banks such as Santander and BBVA read the writing on the wall and began slowing the pace of their mortgage lending, the cajas went “all in” on the housing market, offering loans to pretty much anyone with a pulse.

To give you an idea of how out of control things got in Spain, consider that in 1998, Spanish Mortgage Debt to GDP ratio was just 23% or so. By 2009 it had more than tripled to nearly 70% of GDP. By way of contrast, over the same time period, the US Mortgage Debt to GDP ratio rose from 50% to 90%. Like I wrote before, Spain’s property bubble dwarfed the US’s in relative terms.

The cajas went so crazy lending money post-2007 that by 2009 they owned 56% of all Spanish mortgages. Put another way, over HALF of the Spanish housing bubble was funded by an unregulated banking system that was lending to anyone with a pulse who could sign a contract.

Indeed, these banks became so garbage laden that a full 20% of their assets were comprised of loan payments being made by property developers. Mind, you, I’m not referring to the loans themselves (the mortgages); I’m referring to loan payments: the money developers were sending in to the banks.

To try and put this into perspective, imagine if Bank of America suddenly announced that 20% of its “assets” were payments being sent in by borrowers to cover mortgage debts. Not Treasuries, not mortgages, not loans… but payments being sent in to the bank on loans and mortgages.

This is the REAL problem with Spain’s banking system. It’s saturated with subprime and sub-subprime loans that were made during one of the biggest housing bubbles in the last 30 years.

Indeed, to give you an idea of how bad things are with the cajas, consider that in February 2011 the Spanish Government implemented legislation demanding all Spanish banks have equity equal to 8% of their “risk-weighted assets.” Those banks that failed to meet this requirement had to either merge with larger banks or face partial nationalization.

The deadline for meeting this capital request was September 2011. Between February 2011 and September 2011, the number of cajas has in Spain has dropped from 45 to 17.

Put another way, over 60% of cajas could not meet the capital requirements of having equity equal to just 8% of their risk-weighted assets. As a result, 28 toxic caja balance sheets have been merged with other (likely equally troubled) banks or have been shifted onto the public’s balance sheet via partial nationalization.

On that note, I fully believe the EU in its current form is in its final chapters. Whether it’s through Spain imploding or Germany ultimately pulling out of the Euro, we’ve now reached the point of no return: the problems facing the EU (Spain and Italy) are too large to be bailed out. There simply aren’t any funds or entities large enough to handle these issues.

With that in mind, I’m already positioning subscribers of Private Wealth Advisory for the upcoming EU collapse. Already we’ve seen gains of 6%, 9%, 10%, even 12% in less than two weeks by placing well-targeted shorts on a number of European financials.

And we’re just getting started. Indeed, we just opened five new trades a few weeks ago Friday. Already we’ve closed out three of them for gains of 6%, 6%, and 9%.

So if you’re looking for the means of profiting from what’s coming, I highly suggest you consider a subscription to Private Wealth Advisory. We’ve locked in 49 straight winning trades since late July (thanks to the timing of our trades), and haven’t closed a single losing trade since that time.

Because of the level of my analysis as well as my track record, my work has been featured in Fox Business, CNN Money, Crain’s New York Business, Rollingstone Magazine, and more. Which is why we’re raising the price of Private Wealth Advisory from $249 to $399 at the end of April (TODAY). The reason? This is a premium quality newsletter than commands a premium price.

So this is the last day during which you can subscribe Private Wealth Advisory at the soon to be old price of $249.

To do so…

Click Here Now!!!

Best Regards,

Graham Summers

Chief Market Strategist

Phoenix Capital Research

Yesterday we discussed the political fall-out for German Chancellor Angela Merkel regarding revelations that the Bundesbank has in fact put Germany on the hook for over €2 trillion via various back-door deals.

Today we need to consider how those same revelations will impact the Bundesbank itself. Already we’re seeing its head Jens Weidmann (also a policymaker at the ECB) taking a hard-liner approach to dealing

Weidmann says not ECB’s job to tackle Spain’s problem

Spain should take a rise in its bond yields as a spur to tackle the root causes of its debt woes, not look to the European Central Bank to help by buying its bonds, European Central Bank policymaker Jens Weidmann told Reuters.

Weidmann, who has led a push by some policymakers from core euro zone countries for the bank to begin planning an exit from its crisis mode, said no ECB policymakers favoured using the bank’s bond-buying plan to target specific interest rates on sovereign bonds, and ECB board member Benoit Coeure was simply stating a fact by saying last week that the programme still existed.

In a wide-ranging interview, Weidmann, who turns 44 on Friday, also said he saw no reason to discuss a third LTRO, the funding instrument with which the ECB has pumped over 1 trillion euros into financial markets since late last year.

Weidmann, who is head of Germany’s Bundesbank, which gives him a powerful voice on the ECB’s 23-man Governing Council, spoke to Reuters against a backdrop of growing tensions in Spain, where benchmark sovereign bond yields are near the closely watched 6 percent level.

http://uk.reuters.com/article/2012/04/18/uk-ecb-weidmann-idUKBRE83H0C820120418

Relations between the ECB and Bundesbank have been deteriorating for some times now. Disgusted with its monetary profligacy, two Bundesbank officials Axel Weber and Jürgen Stark, resigned from the ECB last year. Since that time Weidmann and the Bundesbank have fired a warning shot across the ECB’s bow.

Germany launches strategy to counter ECB largesse

The plans have major implications for monetary union, dashing hopes in Southern Europe that Germany might accept a few years of mini-boom at home to help lift the whole system off the reefs.

Andreas Dombret, a key board member of the Bundesbank, said the body would be given powers to check “excessive credit growth” and impose “maximum leverage ratios” to nip economic overheating in the bud.

The Bundesbank will be able to impose “counter-cyclical capital buffers” on lenders, and use “macro-prudential haircuts” in the securities markets. It is understood that the menu of new tools will include limits on the loan-to-value on mortgages along the lines of those used in Hong Kong and other Asian states.

The new framework – introduced by German government in a draft law this week – is partly inspired by the Bank of England’s new system but it also has a German twist…

German house prices rose 5.6pc last year after a decade of stagnation. Officials in Frankfurt are watching the property data closely, fearing that Germany may succumb to the sort of housing bubble that engulfed the Club Med bloc in the early years of EMU.

“The Bundesbank does not want to be blamed for making the same mistakes as central banks in Ireland and Spain where they did not address asset bubbles early enough,” said Bernhard Speyer from Deutsche Bank.

The German authorities are in effect preparing a form of quasi-monetary tightening to offset ECB largesse…

“If the eurozone is to adjust, southern countries must be able to run trade surpluses, and that means somebody else must run deficits,” said Dr Speyer.

“One way to do that is to allow higher inflation in Germany but I don’t see any willingness in the German government to tolerate that, or to accept a current account deficit.

http://www.telegraph.co.uk/finance/financialcrisis/9174661/Germany-launches-strategy-to-counter-ECB-largesse.html

The ECB recognizes a warning shot when it sees one. Indeed, ECB President Mario Draghi knows that if inflation rises in Germany, the latter will take very serious actions, including potentially threatening to walk out of the Euro:

Draghi Says Inflation Risks Prevail as Economy Stabilizes

European Central Bank President Mario Draghi said policy makers are prepared to act against inflation threats if needed, while assuring investors that the ECB doesn’t plan to withdraw emergency stimulus any time soon.

“All the necessary tools are available to address upside risks to price stability in a firm and timely manner,” Draghi told reporters in Frankfurt after the ECB held its benchmark rate at a record low of 1 percent today. At the same time, it’s premature to talk about the ECB’s exit strategy, Draghi said, adding that the economic outlook is subject to downside risks and inflation will remain contained in the medium term.

The ECB is balancing the threat of inflation in Germany, Europe’s largest economy, against the need to fight the sovereign debt crisis. While nations from Greece to Spain are battling recessions and record unemployment, workers in Germany are winning some of the biggest pay increases in 20 years.

 [ECB President Mario Draghi] declined to comment on recent wage settlements in Germany, where 2 million public service workers are set for a 6.3 percent raise over two years, according to the Ver.di union. It would be the biggest increase negotiated by the union since 1992. IG Metall, Europe’s biggest labor union with about 3.6 million workers, is demanding 6.5 percent more pay.

http://www.bloomberg.com/news/2012-04-04/draghi-says-inflation-risks-prevail-as-economy-stabilizes.html

And so the ECB has found its hands tied: if it continues to monetize aggressively, inflation will surge and Germany will either leave the Euro or at the very least make life very, very difficult for the ECB and those EU members asking for bailouts.

After all, doing this would score MAJOR political points for both Merkel and Weidmann who have both come under fire for revelations that the Bundesbank has in fact put Germany on the hook for over €2 trillion via various back-door deals.

Against this backdrop, it’s quite clear that the EU’s banking system remains under extreme duress. Case in point, European financials have in fact wiped out all of the gains produced by LTRO 2 in just one month’s time. Small wonder. When we take a big picture perspective of Europe, the entire banking system is a disaster waiting to happen.

Consider the following:

1. According to the IMF, European banks as a whole are leveraged at 26 to 1 (this data point is based on reported loans… the real leverage levels are likely much, much higher.) These are a Lehman Brothers leverage levels.
2. The European Banking system is over $46 trillion in size (nearly 3X total EU GDP).
3. The European Central Bank’s (ECB) balance sheet is now nearly $4 trillion in size (larger than Germany’s economy and roughly 1/3 the size of the ENTIRE EU’s GDP). Aside from the inflationary and systemic risks this poses (the ECB is now leveraged at over 36 to 1).
4. Over a quarter of the ECB’s balance sheet is PIIGS debt which the ECB will dump any and all losses from onto national Central Banks (read: Germany)

So we’re talking about a banking system that is nearly four times that of the US ($46 trillion vs. $12 trillion) with at least twice the amount of leverage (26 to 1 for the EU vs. 13 to 1 for the US), and a Central Bank that has stuffed its balance sheet with loads of garbage debts, giving it a leverage level of 36 to 1.

And all of this is occurring in a region of 17 different countries none of which have a great history of getting along… at a time when old political tensions are rapidly heating up.

As bad as the above points may be, they don’t even come close to describing the REAL situation in Europe. Case in point, regarding leverage levels, PIMCO’s Co-CIO Mohammad El-Erian (one of the most connected insiders in the financial elite) recently noted that French banks (not Greece or Spain) currently have 1-1.5% capital relative to their assets, putting them at leverage levels of nearly 100-to-1.

And that’s France we’re talking about: one of the alleged key backstops for the EU as a whole.

With that in mind, I’m already positioning subscribers of Private Wealth Advisory for the upcoming EU collapse. Already we’ve seen gains of 6%, 9%, 10%, even 12% in less than two weeks by placing well-targeted shorts on a number of European financials.

And we’re just getting started. Indeed, we just opened five new trades on last Friday. Already ALL FIVE of them are up in less than a week.

So if you’re looking for the means of profiting from what’s coming, I highly suggest you consider a subscription to Private Wealth Advisory. We’ve locked in 49 straight winning trades since late July (thanks to the timing of our trades), and haven’t closed a single losing trade since that time. And we just opened five new trades to profit from Europe’s banking collapse on Friday.

Because of the level of my analysis as well as my track record, my work has been featured in Fox Business, CNN Money, Crain’s New York Business, Rollingstone Magazine, and more. Which is why we’re raising the price of Private Wealth Advisory from $249 to $399 at the end of April. The reason? This is a premium quality newsletter than commands a premium price.

To learn more about Private Wealth Advisory and how we make money in any market environment…

Click Here Now!!!

Best Regards,

Graham Summers

Chief Market Strategist

Phoenix Capital Research

As long time readers know, a central theme to my analysis regarding Europe is that politics, not economics, rule Europe. What I mean by this is that most major decisions in Europe are determined by political agendas that ignore economic and financial realities.

This is at the core of the “welfare state” mentality that permeates Europe as a whole. The EU in general is comprised of an aging population that is more concerned about receiving the pensions/ health benefits/ social payouts that were promised to them by the system than anything else.

As a result of this, EU voters, who determine EU elections, don’t take action until what has promised to them comes under threat.

For this reason, EU political leaders will maintain their agendas regardless of whether said agendas go against financial or economic realities (or common sense for that matter) until these agendas begin to have real negative consequences for their political careers.

With that in mind, we must consider that Germany’s decision to prop up the Euro is finally beginning to arouse furor from the German population. In particular, the below story which reveals that Germany has in fact put German taxpayers on the hook for over €2 trillion in back-door EU rescue measures could be the proverbial tipping point that sends German voters over the edge.

German tempers boil over back-door euro rescues

Professor Hans-Werner Sinn, head of Germany’s IFO Institute, said German taxpayers are facing a dangerous rise in credit risk from a plethora of bail-out schemes. “The euro-system is near explosion,” he told Austria’s Economics Academy on Thursday.

Dr Sinn said Germany is on the hook for much of the €2.1 trillion (£1.72 trillion) in rescue measures for EMU debtors – often by the back-door – that will saddle Germans with ruinous losses one day.

“It is a horror scenario,” he said, warning that the euro system is splitting friendly countries into blocs of mutually hostile creditors and debtors, exactly the opposite of what was hoped.

Earlier this week, the Foundation for Family Business in Munich filed a criminal lawsuit against the Bundesbank, accusing the board of disguising the true scale of risk born by German citizens.

http://www.telegraph.co.uk/finance/financialcrisis/9215232/German-tempers-boil-over-back-door-euro-rescues.html

This is the last thing Angela Merkel needs right now. She’s already about to lose her primary ally in pushing for fiscal reform in the EU (Nicolas Sarkozy will very likely lose the second round of the French elections).

For her to now appear to be a complete hypocrite who talked of austerity in public while the Bundesbank was secretly signing Germany up for more and more EU debt behind the scenes could quickly become a MAJOR issue in German politics.

Remember, Merkel has been riding a wave of popularity not seen since her re-election in 2009 courtesy of her decision to play hardball with Greece and the other PIIGS: her agenda there was to offer bailout funds under fiscal requirements that were so onerous that it made it highly unlikely the troubled PIIGS would go for them.

So for Merkel to appear two-faced concerning Germany’s involvement in the EU bailouts could have dire political consequences for her career (next year will be a federal election year for Germany).

So what’s next? Merkel’s reputation as a hardliner for fiscal reform just went out the window… she’s about to lose her #1 ally in pushing for fiscal austerity in Europe (Nicolas Sarkozy)… and all of this is happening while inflation is rising in Germany and Germans are openly outraged regarding the EU bailouts.

In simple terms, Angela Merkel is now at the point at which she is facing potentially very serious political consequences for her policies. Which prompts the question… is it be time for her to start floating Germany’s “Plan B” (leaving the Euro)?

Remember, in the last six months Germany has:

1)   Passed legislation that would permit Germany to leave the Euro but remain a part of the EU

2)   Reinstated its Special Financial Market Stabilization Funds, (or SoFFin for short)

It is the second of these items (the reinstatement of the SoFFIN) that the western media and 99% of investors have missed entirely. In short, Germany has given the SoFFIN:

1)   €400 billion to be used as guarantees for German banks.

2)   €80 billion to be used for the recapitalization of German banks

3)   Legislation that would permit German banks to dump their euro-zone government bonds if needed.

That is correct. Any German bank, if it so chooses, will have the option to dump its EU sovereign bonds into the SoFFIN during a Crisis. So in simple terms, Germany has put a €480 billion firewall around its banks thereby allowing Germany to potentially pull out of the Euro if it has to.

Now, I’m not suggesting that Merkel will suddenly opt to do pull Germany out of the Euro. Doing that would only worsen EU relationship and arouse more anti-German sentiment.

However, I wouldn’t be surprised to see Merkel start threatening this in the coming weeks as German outrage grows regarding their exposure to back-door EU bailouts. Remember, her political popularity is largely due to her appearing tough on the PIIGS. She has to regain that appearance as quickly as possible in order not to face serious political consequences.

On that note, I fully believe the EU in its current form is in its final chapters. Whether it’s through Spain imploding or Germany ultimately pulling out of the Euro, we’ve now reached the point of no return: the problems facing the EU (Spain and Italy) are too large to be bailed out. There simply aren’t any funds or entities large enough to handle these issues.

With that in mind, I’m already positioning subscribers of Private Wealth Advisory for the upcoming EU collapse. Already we’ve seen gains of 6%, 9%, 10%, even 12% in less than two weeks by placing well-targeted shorts on a number of European financials.

And we’re just getting started. Indeed, we just opened five new trades on last Friday. Already four of them are up (4%, 4%, 5%, and 6%) in less than a week.

So if you’re looking for the means of profiting from what’s coming, I highly suggest you consider a subscription to Private Wealth Advisory. We’ve locked in 49 straight winning trades since late July (thanks to the timing of our trades), and haven’t closed a single losing trade since that time. And we just opened five new trades to profit from Europe’s banking collapse on Friday.

Because of the level of my analysis as well as my track record, my work has been featured in Fox Business, CNN Money, Crain’s New York Business, Rollingstone Magazine, and more. Which is why we’re raising the price of Private Wealth Advisory from $249 to $399 at the end of April. The reason? This is a premium quality newsletter than commands a premium price.

To learn more about Private Wealth Advisory and how we make money in any market environment…

Click Here Now!!!

Best Regards,

Graham Summers

Chief Market Strategist

Phoenix Capital Research

As expected Francois Hollande won the first round of the French elections. He and Nicolas Sarkozy will run against each other in the second round, which will occur on May 6th.

The Euro isn’t taking this news well. As I write this Sunday night the Euro currency futures have gapped down. I’ve added this move to the chart below.

130 remains the line in the sand for the Euro. If we take it out with conviction then we’re in BIG trouble.

I believe we’re at most a month or so away from this. Spain has now stepped center stage in the Euro Crisis. And the Spanish Ibex has just taken out its 15-year trendline:

This spells MAJOR trouble for Spain and the rest of the EU. Unlike Greece, (which has its own elections, which could go very wrong for the EU, on May 6^th by the way), Spain is too big to bail out.  Indeed, the Spanish banking system is a toxic sewer of bad mortgage debt: over half of all mortgages were generated and owned by the unregulated cajas. If you’re unfamiliar with the caja banking system, let me give you a little background…

Until recently, the caja banking system was virtually unregulated. Yes, you read that correctly, until about 2010-2011 there were next no regulations for these banks (which account for 50% of all Spanish deposits). They didn’t have to reveal their loan to value ratios, the quality of collateral they took for making loans… or anything for that matter.

As one would expect, the cajas have been collapsing like dominos in the last few years. Spain’s been trying to prop them up by merging them with larger (likely equally insolvent) banks with no success (the merged banks have all collapsed to new lows in the last month).

On top of this, Spanish Banks are drawing a record €316.3 billion from the ECB (up from €169.2 billion in February).

Things have gotten so bad that Spanish citizens are pulling their money out of Spain en masse: €65 billion left the Spanish banking system in March 2011 alone. And all of this is happening at a time in which relations are breaking down between Germany and the ECB as well as between Germany and France.

In other words, the EU collapse is about to enter its next round. Remember, all collapses follow the same pattern:

1) the initial drop
2) the re-test/ attempt to reclaim upwards momentum
3) the roll-over/ REAL fireworks

The most money is made during #3. Right now we’ve finished #1 and are now ending #2.  When #3 hits (likely after the French election on May 6th), is when the REAL Fireworks will begin (assuming Spain’s collapse allows things to hold up that long).

So if you’re not already taking steps to prepare for the coming collapse, you need to do so now.

With that in mind, I’m already positioning subscribers of Private Wealth Advisory for the upcoming EU collapse. Already we’ve seen gains of 6%, 9%, 10%, even 12% in less than two weeks by placing well-targeted shorts on a number of European financials.

And we’re just getting started. Indeed, we just opened five new trades on last Friday. Already four of them are up (4%, 4%, 5%, and 6%) in less than a week.

So if you’re looking for the means of profiting from what’s coming, I highly suggest you consider a subscription to Private Wealth Advisory. We’ve locked in 46 straight winning trades since late July (thanks to the timing of our trades), and haven’t closed a single losing trade since that time. And we just opened five new trades to profit from Europe’s banking collapse on Friday.

Because of the level of my analysis as well as my track record, my work has been featured in Fox Business, CNN Money, Crain’s New York Business, Rollingstone Magazine, and more. Which is why we’re raising the price of Private Wealth Advisory from $249 to $399 at the end of April. The reason? This is a premium quality newsletter than commands a premium price.

To learn more about Private Wealth Advisory and how we make money in any market environment…

Click Here Now!!!

Best Regards,

Graham Summers

Chief Market Strategist

Phoenix Capital Research