As I’ve noted in recent missives to you, the world financial system has begun the Great Collapse: the Crisis I’ve been warning about for over two years. I wanted to take some time to explain what is going to be coming this way
The first wave is going to come from Europe where it is clear that the ECB has reached the End Game of monetary intervention. Germany has said “NEIN” regarding further bailouts for Greece. No German backing… no bailouts… no EU.
So Greece will default. And the bondholders will take a 50% haircut if not more. But Greece is the last of Europe’s worries. Indeed, there is a MUCH bigger problem here and that problem is the same one that created the 2008 disaster: DERIVATIVES.
US commercial banks have over $200 trillion in derivatives outstanding on their balance sheets. However, worldwide, the derivatives market is over $600 TRILLION in size. And the financial system in Europe is as saturated, if not MORE saturated with toxic debt than the US financial system.
According to the Bank of International Settlements, the total exposure worldwide to PIGS (Portugal, Ireland, Greece, and Spain) debt is over $2.5 TRILLION. Most of this is in the form of derivatives. And 70% of it is from foreign entities (banks and firms located outside of the country).
Let’s take Greece for instance. Courtesy of derivatives, France has $92 billion in exposure to Greece debt. Germany is on the hook for $69 billion. Great Britain has $20 billion. And the US has $43 billion.
These levels, while dangerous, are not catastrophic. As I’ve stated before, Greece is NOT the big problem for the EU. However, worldwide exposure to Greek debt is in the ballpark of $277 billion. So a default there would result in significant market dislocations.
Now consider the exposure to a BIG Problem such as Spanish debt. In this situation, Great Britain is on the hook for $51 billion. The US is on the hook for $187 billion. France is on the hook for $224 billion. And Germany is on the hook for a whopping $244 billion.
As I said before, Greece is ultimately a small player in this mess. Worldwide exposure to Greek debt is $277 billion. Worldwide exposure to Spain, on the other hand, is north of $1 TRILLION.
Now this is where things get REALLY tricky. Because of the intertwined nature of the derivatives market, a Greek default could result in systemic risk for the simple fact that if one of the banks that goes down with Greece has extensive exposure to Spain as well, then things could get ugly very, VERY fast.
We are close DARN close to this happening. And when it does, we’re going to see a Crisis that makes 2008 look like a picnic.
Indeed, last week we got a confirmed SELL on my proprietary Crash indicator. This is the SAME indicator that registered before the 1987 Crash, the Tech Crash, and the 2008 collapse.
It’s just triggered again… which means that last week’s sell off is JUST the beginning of what’s coming.
Yes, the GREAT COLLAPSE has begun. The markets will be going to new lows (below the March 2009 lows) in the coming months.
We’re also going to be seeing major banks go under, market crashes, food shortages, government shutdowns, and SYSTEMIC FAILURE.
Yes, I believe that before this mess ends, the financial system as a whole will have collapsed. What’s coming is going to make 2008 look like a joke.
Many people will lose everything in this mess. Yes, everything. The US is going to be defaulting on its debt, paper currencies around the world will fail. It’s going to be a dark dark time.
I’ve recently published three reports devoted to helping my clients get through this mess in one piece. They’re titled Protect Your Family, Protect Your Savings, and Protect Your Portfolio.
All in all these reports cover everything from how much food to store to which banks will go under, when the US will default on its debts, which investments will pay out the biggest gains as the system collapses and more.
Regarding that last point, no one on the planet can match my ability to return a profit during times of Crisis.
To wit, my clients MADE money in 2008, outperforming every mutual fund on the planet as well as 99% of investment legends.
We also outperformed the market by 15% during the Euro Crisis of 2010. And in the last month and a half, while every one else lost their shirts, we’ve locked in 11winners.
So if you’re looking for a guide to get you through the coming disaster, I’m your man.
I’ve been helping investors, including executives at many of the Fortune 500 companies, navigate their personal portfolios through the markets for years.
I can do the same for you with my Private Wealth Advisory newsletter.
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I’m just putting the finishing touches on this report now. And it will be delivered “hot off the press” to your inbox the second it’s complete this evening.
The time for dilly dallying is over. The market’s have already taken out critical support and my Crash indicator is on a confirmed SELL. Failing to take action now means risking HUGE losses as the Great Collapse snowballs.
To take action to protect yourself… and insure that the coming weeks and months are a time of profit and safety, NOT losses and pain…