Month: November 2011

This act is getting old.

Almost every other day we’re getting rumors about new bailouts and interventions in Europe. All of these rumors turn out to be total lies as they are refuted usually within a day and sometimes within a few hours.

Case in point, stock futures erupted overnight on Sunday on rumors that Italy would be getting a 600 billion euro bailout from the IMF. Just a few hours later this story came out:

IMF denies in Italy aid talks

However, an IMF spokesperson poured cold water on a report in the Italian daily La Stampa that said up to 600 billion euros could be made available at a rate of between 4-5 percent to give Italy breathing space for 18 months.

“There are no discussions with the Italian authorities on a program for IMF financing,” an IMF spokesperson said.

http://www.reuters.com/article/2011/11/28/us-italy-idUSTRE7AQ0GU20111128

Is this what the markets have devolved to? The equivalent of gossip that borders on “he said, she said” nonsense? Also, why is it no one even checks with the reporters who publish the initial rumor-based news? Can reporters simply publish total lies these days and no one cares (that’s a rhetorical question, we already know the answer).

The whole thing just reminds us of the core issue pertaining to this Crisis: values.

This is not a monetary Crisis; it is a Crisis of values and morals. It is a Crisis caused by the notion that you can lie about virtually everything pertaining to a business deal (the quality of the assets, who owns them, whether they’re even legitimate, etc) and get away with it.

To review how we go into this mess, Wall Street and other industries lobbied Congress to loosen regulations. However, the secondary nature of those lobbying efforts was it trained Congress to see Wall Street as the hand that feeds, thereby making it unlikely for Congress to prosecute or pursue any criminal activity on the part of the bankers.

Take away consequence and rules and you have anarchy. And that’s virtually what we had in the Financial System leading up to the Crisis. Looking back on some of the more glaring situations (AIG, Goldman Sachs, etc) it’s simply amazing the whole mess didn’t blow up sooner.

The Federal Reserve and regulators then blew a one in 100 years opportunity to reform the system. We’re now finding out that instead of doing anything positive, Bernanke literally gave away TRILLIONS of Dollars to the banks.

In simple terms, the Fed engaged in the exact same business practices that blew up the mortgage lenders: giving money away without inquiring as to the borrowers real financial position or needs.

By doing this, the Fed spread the lies (and toxic debts) onto the public’s balance sheet, thereby compromising the Republic’s creditworthiness.

In plain terms, Bernanke extended the Big Lie: that those working in the financial sector are the smartest, most capable people on earth and that they know what they’re doing (even though they almost blew up the system).

Which brings us to today.

The whole system is now built on lies. The lie that banks are solvent. The lie that the Federal Reserve actually cares about regulating the financial system. The lie that crimes will be punished. The lie that Congress will reform Wall Street. The lie that we’ll get “change” at the ballot box.

And on and on.

You cannot build a financial system on lies. It simply doesn’t work. All it does is breed distrust and resentment. And as any businessperson can tell you, without trust business cannot work.

Small wonder then that the private sector won’t hire and the economy won’t recover. Debt only becomes a problem when the person who borrows can no longer be trusted to pay you back. We’ve now crossed that line and are trying to prop things up with more lies and more easy credit.

Neither math nor common sense indicate that this will turn out well. Indeed, when this mess finally comes undone, it’s going to make Lehman look like a joke. We’re now talking about entire countries collapsing, not just private institutions

Many people will lose everything in this mess. Yes, everything. However, you don’t have to be one of them. Indeed, I can show you how to turn this time of collapse into a time of profits.

Few people on the planet can match my ability to return a profit during times of Crisis.

To whit, 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 since the latest round of the Euro Crisis began in July 2011, we’ve locked in not 10, not 20, but 32 Straight Winners including gains of 12%, 14%, 16% and 18%,

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.

The minute you subscribe to Private Wealth Advisory, you’ll be given access to my Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports telling you precisely which steps to take to prepare your loved ones and your personal finances for what’s coming.

You’ll also join my private client list in receiving my bi-weekly market updates outlining what’s really happening behind the scenes in the markets and which investments will profit in the coming months.

And when it’s time to pull the trigger on a given investment, I’ll send you real-time trade alerts.

All of this is yours for just $249 per year.

In fact, if you subscribe now, you’ll receive my latest issue of Private Wealth Advisory hot off the press when it’s published tomorrow evening after the market closes.

In it I detail six investments that are poised to produce enormous profits in the next month when the next leg down begins…

The time for dilly dallying is over. Europe is literally on the eve of systemic failure. Even the IMF has warned we’re facing a global collapse.

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…

Click Here Now!!!

Best Regards

Graham Summers

 

 

With the European End Game now in sight, the primary question that needs to be addressed is whether Europe will opt for a period of massive deflation, massive inflation, or deflation followed by inflation.

Indeed, with Europe’s entire banking system insolvent (even German banks need to be recapitalized to the tune of over $171 billion) the outcome for Europe is only one of two options:

1)   Massive debt restructuring

2)   Monetization of everything/ hyperinflation

These are the realities facing Europe today (and eventually Japan and the US). Either way we are talking about the destruction of tens of trillions of Euros in wealth. The issue is which poison the European powers that be choose.

Personally, I believe we are going to see a combination of the two with deflation hitting all EU countries first and then serious inflation or hyperinflation hitting peripheral players and the PIIGS.

In terms of how we get there, I believe that in the next 14 months, the following will occur.

1)   Germany and possibly France exit the Euro

2)   ALL PIIGS defaulting on their debt

3)   Potential hyperinflation in the PIIGS and peripheral EU countries

Regarding #1, we are already beginning to see hints of this development in the press:

DEATH OF THE EURO: SECRET PLOT TO WRECK THE CURRENCY

Ministers are understood to be deeply concerned that French President Nicolas Sarkozy and Germany’s Chancellor Angela Merkel are secretly plotting to build a new, slimmed down Eurozone without Greece, Italy and other debt-ridden southern European nations.

Well-placed Brussels sources say Germany and France have already held private discussions on preparing for the disintegration of the Eurozone.

http://www.express.co.uk/posts/view/283060

FRENCH AND GERMANS EXPLORE IDEA OF SMALLER EURO ZONE

German and French officials have discussed plans for a radical overhaul of the European Union that would involve setting up a more integrated and potentially smaller Euro zone, EU sources say.

“France and Germany have had intense consultations on this issue over the last months, at all levels,” a senior EU official in Brussels told Reuters, speaking on condition of anonymity because of the sensitivity of the discussions.

“We need to move very cautiously, but the truth is that we need to establish exactly the list of those who don’t want to be part of the club and those who simply cannot be part,” the official said.

http://www.reuters.com/article/2011/11/09/us-Eurozone-future-sarkozy-idUSTRE7A85VV20111109

With no one willing to foot the bill for the EFSF the markets are hoping Germany will step in and save the day. However, the German constitution forbids Germany from backing Euro-bonds.

German EconMin: court verdict rules out Euro bonds

German Economy Minister Philipp Roesler said on Thursday the constitutional court’s ruling on Euro aid made it clear that joint Euro zone bonds were not an option.

Addressing left-wing opposition parties in the Bundestag lower house of parliament, Roesler said: “You continue to talk up Euro bonds although the constitutional court yesterday made it clear that as transfer union such as the one you propose on the left will never be possible, never be allowed.”

“We don’t want it politically, either, and we will not let the German taxpayer be obliged to pay for the debt of other countries,” he said in a parliamentary budget debate.

http://www.reuters.com/article/2011/09/08/Eurozone-germany-Eurobonds-idUSB4E7K600L20110908

Moreover, Germans will simply not permit the monetization of debt. Weimar’s hyperinflation happened in the early 1920s and is still fresh in the memories of the German people (those who lived through it undoubtedly told their children and grandchildren about it). So the German people will not tolerate price instability in any form.

Germany is not alone in having little or no desire to attempt to backstop the system. Indeed, NONE of the G20 countries wish to support the EFSF from a monetary standpoint (yet another sign that the bailout game is ending).

No new Euro zone money for debt crisis at G20

The Euro zone won verbal support but no new money at a G20 summit on Friday for its tortured efforts to overcome a sovereign debt crisis, while Italy was effectively placed under IMF supervision.

Leaders of the world’s major economies, meeting on the French Riviera, told Europe to sort out its own problems and deferred until next year any move to provide more crisis-fighting resources to the International Monetary Fund.

“There are hardly any countries here which said they were ready to go along with the EFSF (Euro zone rescue fund),” German Chancellor Angela Merkel told a news conference.

http://www.reuters.com/article/2011/11/04/us-g-idUSTRE7A20E920111104

So… everyone claims they want to support the EFSF… but no one wants to commit the money. Moreover, Germany’s constitution forbids the backing of Euro bonds… and the EFSF itself has failed to stage even a three billion Euro bond offering under normal market conditions.

Again, the bailout game is ending. Under these conditions, I believe Germany and France will push to either:

1)   Leave the EU

2)   Draft legislation that allows countries to leave the Euro but remain in the EU

3)   Propose kicking out the PIIGS from the Euro

Whichever one of these options Germany opts for, the Euro will collapse. Indeed, the primary reason the Euro has been rallying since October is due to French banks and others selling assets (buying Euros) to recapitalize themselves.

Put another way, the Euro rally is in fact NOT a sign of currency strength. Instead, it is a sign that the major players are moving to cash (Euros) in an attempt to lower their exposure to PIIGS’ debt.

Indeed, if we look at the bond or credit markets, it’s clear we’re into a Crisis far greater than 2008. Forget the stock market rally. Stocks ALWAYS get it last (just like in 2008). And before the smoke clears on this mess we’re going to see sovereign defaults, bank holidays, riots, and more.

Many people will lose everything in this mess. Yes, everything. However, you don’t have to be one of them. Indeed, I can show you how to turn this time of collapse into a time of profits.

Few people on the planet can match my ability to return a profit during times of Crisis.

To whit, 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 since the latest round of the Euro Crisis began in July 2011, we’ve locked in not 10, not 20, but 30 STRAIGHT WINNERS including gains of 12%, 14%, 16% and 18%,

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.

The minute you subscribe to Private Wealth Advisory, you’ll be given access to my Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports telling you precisely which steps to take to prepare your loved ones and your personal finances for what’s coming.

You’ll also join my private client list in receiving my bi-weekly market updates outlining what’s really happening behind the scenes in the markets and which investments will profit in the coming months.

And when it’s time to pull the trigger on a given investment, I’ll send you real-time trade alerts.

All of this is yours for just $249 per year.

In fact, if you subscribe now, you’ll receive my latest issue of Private Wealth Advisory hot off the press when it’s published tomorrow evening after the market closes.

In it I detail six investments that are poised to produce enormous profits in the next month when the next leg down begins…

The time for dilly dallying is over. Europe is literally on the eve of systemic failure. Even the IMF has warned we’re facing a global collapse.

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…

Click Here Now!!!

Best Regards

Graham Summers

 

 

The markets are rallying hard today for three reasons:

1)   Traders gaming the usual manic Monday

2)   The markets were oversold having fallen six straight days

3)   Short covering

These are the real reasons the market is exploding higher. Traders are simply using the (since refuted) IMF bailout of Italy rumor to gun the usual manic Monday rally and shred the shorts.

Technically, we were oversold and at support. So a bounce of some note here makes sense. However, a 3% rally? On rumors of an Italian bailout? Give me a break.

Regardless, this overnight move has already brought us up to resistance for the S&P 500. So we could easily see a reversal at any time (more on this in a moment).

The Euro also looks to be putting in a dead cat bounce:

I’ve received a few emails recently about my pessimism regarding the markets, even when stocks rally. The reason I am so pessimistic is because the bond markets, credit markets and interbank liquidity indicate that the situation in Europe is now into “2008 mode”.

Indeed, Treasuries have already exceeded their 2008/2009 peak. Tell me, what do you make of a situation in which the bond markets (which are far larger than stocks) are acting as though we’re in a Crisis worse than 2008… which stocks are rallying?

If you’ll recall from 2008, stocks rallied and held up much, much longer than the bond or credit markets. For that reason stocks are a terrible indicator of the real state of the financial system… which is why I remain so deeply concerned about the markets even though stocks have staged several very sharp rallies.

The reality for Europe is very, very grim. Among other items, we’ve recently seen:

1)   Italy’s 10 year note pass 7% in yield (the end of the line level)

2)   Germany post a failed bond auction

3)   The EFSF plan scaled back with less leverage

4)   German companies warning their Greek subsidiaries to prepare for contracts that are based in Drachma, NOT Euros

5)   Germany hint that it will leave the Euro if the ECB prints money

6)   The currency trading house ICAP prepare for the dissolution of the Euro

Do you still think stocks “get” what’s happening today?

The reality is that we are already into a full-scale Crisis in Europe. Do you remember warnings of riots and systemic collapse in 2008? Well, we’re getting those this time around. Do you think these folks are issuing these warnings because we’re going to get through this mess easily?

If you’re an individual investor (not a day trader) looking for the means of profiting from all of this, then you NEED to check out my Private Wealth Advisory newsletter.

Private Wealth Advisory is a bi-weekly investment advisory that uses stocks and ETFs to profit from the dominant market trends.

Every two weeks I outline what’s REALLY going on behind the scenes in the markets, as well as which investments will profit best from these developments.

Case in point, Private Wealth Advisory subscribers caught the initial market Collapse in August. They’ve also profited beautifully from the ongoing turmoil in Europe as well as the volatility in the US Dollar.

In fact, we just closed out our 30th straight winner last week. And we haven’t closed a single loser since the END OF JULY.

But don’t worry that all the profits have already been made. We currently have several trades open that are primed to explode higher in the coming weeks. By subscribing today, you’ll immediately be given access to them.

You’ll also gain immediate access to my Protect Your Family, Protect Your Savings, and Protect Your Portfolio Special Reports outlining how to prepare these areas of your life for the coming Great Crisis.

These reports outline:

1) how to prepare for bank holidays

2) which banks to avoid

3) how much bullion to own

4) how much cash is needed to get through systemic crises

5) how much food to stockpile, what kind to get, and where to get it

And more…

To take out an annual subscription to Private Wealth Advisory now… start profiting from the market’s gyrations (again we haven’t closed a losing trade since JULY)… and gain access to all my Special Reports…

Click Here Now!

Best Regards,

Graham Summers

 

Let’s rehash the European situation for those who still don’t get it.

Taken as a whole, the US banking system is leveraged at 13 to 1. Leverage levels at the TBTFs are much much higher… but when you add them in with the 8,100+ other banks in the US, total US bank leverage is 13 to 1.

The European banking system as a whole is nearly twice this at over 25 to 1. That’s the ENTIRE European Banking system leveraged at near Lehman levels (Lehman was 30 to 1 when it collapsed).

To put this into perspective, with a leverage level of 25 to 1, you only need a 4% drop in asset prices to wipe out ALL capital. What are the odds that European bank assets fall 4% in value in the near future?

Now let’s consider TOTAL debt sitting on Financial Institutions’ balance sheets in Europe. The below chart shows this number for financial institutions in several major EU members relative to their country’s 2010 GDP.

Country	Financial Institutions’ Gross Debt as a % of GDP
Portugal	65%
Italy	99%
Ireland	664%
Greece	21%
Spain	113%
UK	735%
France	148%
Germany	95%
EU as a whole	148%

Source: IMF

As you can see, financial institutions in Germany, France, Italy, Spain, the UK, and Ireland are all ticking time bombs. Indeed, taken as a whole, European financial institutions have more debt than Europe’s ENTIRE GDP.

These leverage levels alone position Europe for a full-scale banking collapse on par with Lehman Brothers. Again, I’m talking about Europe’s ENTIRE banking system collapsing.

This is not a question of “if,” it is a question of “when.” And it will very likely happen within the next 10-12 months if not sooner depending on how soon Greece defaults.

The reason that this is guaranteed to happen before the end of 2012 is that a HUGE percentage of European bank debt needs to be rolled over by the end of 2012.

Between now and then…

• French banks need to roll over 30% of their TOTAL debt.
• Spanish banks and Italian banks need to rollover more than 33% of their TOTAL debt.
• German banks need to roll over nearly 40% of their TOTAL debt.
• Irish banks need to roll over almost HALF (50%) of their TOTAL debt.

Good luck with that.

The situation is no better for European Sovereign states themselves, which are facing their own debt roll over issues at a time when investors are rapidly losing their appetite for sovereign debt.

To wit, Spain, Portugal, and Italy have all relied heavily on the ECB to buy their debt at recent auctions. Germany actually just had a failed debt auction this morning.  And in this environment , these nations need to meet the following debt roll over obligations:

	Maturing Debt Plus Budget Deficit as a % of GDP
	2011	2012
Portugal	21.6%	21.0%
Italy	22.8%	23.1%
Ireland	19.5%	18.0%
Greece	24.0%	26.0%
Spain	19.3%	18.7%
UK	15.7%	13.6%
France	20.6%	19.7%
Germany	11.4%	10.5%

 

And this is just maturing debt that’s due in the near future: it doesn’t include unfunded liabilities.

Jagadeesh Gokhale of the Cato Institute puts the situation as the following, “The average EU country would need to have more than four times (434 percent) its current annual gross domestic product (GDP) in the bank today, earning interest at the government’s borrowing rate, in order to fund current policies indefinitely.”

As I said before, Europe is finished. The region’s entire banking system is insolvent (with few exceptions). European non-financial corporations are running massive debt to equity ratios. And even EU sovereign states require intervention from the ECB just to meet current debt issuance, to say nothing of the huge amount of sovereign debt roll over that is due over the next 14 months.

Again… Europe. Is. Finished.

The Great debt Implosion will hit Europe within the next 14 months and likely much much sooner. When it dues, we will see numerous debt defaults and restructuring on both the corporate and sovereign levels. We’re also very likely going to see significant portions of the European banking system collapse “Lehman-style” along with subsequent HUGE losses of capital.

The impact of this will be global in nature. The EU, taken as a whole, is:

1)   The single largest economy in the world ($16.28 trillion)

2)   Is China’s largest trade partner

3)   Accounts for 21% of US exports

4)   Accounts for $121 billion worth of exports for South America

So if the EU banking system/ economy collapses, the global economy could enter a recession just based on that one issue alone (ignoring the other issues in China, Japan, and the US).

Again, we’re in for a rough rough future in the financial system.

So if you have not already taken steps to prepare for systemic failure, you NEED to do so NOW. We’re literally at most a few months, and very likely just a few weeks from Europe’s banks imploding.

When this happens the entire system could go down. I’m talking about bank holidays, sovereign debt defaults, retirement accounts and pension funds wiped out, even food shortages in some areas.

This will NOT be permanent, nor will we enter some kind of Mad Max apocalypse. But there will be temporary shutdowns of the banking system as they work through this mess. And given that most folks rely almost entirely on their credit cards to survive and haven’t prepared at all, things could indeed get very messy at times.

So you NEED to take steps now to prepare for all of this. This includes having some cash on hand as well as actual physical bullion. It also means stockpiling some food and water.

So if you have not already taken steps to prepare for systemic failure, you NEED to do so NOW. We’re literally at most a few months, and very likely just a few weeks from Europe’s banks imploding.

I’ve already alerted Private Wealth Advisory to 12 CRISIS trades (three for Europe, nine for the US) that will all produce HUGE profits as this mess collapses.

We’ve also taken steps to prepare our loved ones and personal finances for systemic risk with my Protect Your Family, Protect  Your Savings, and Protect Your Portfolio Special Reports.

With a total of 20 pages, these reports outline:

1) how to prepare for bank holidays
2) which banks to avoid
3) how much bullion to own
4) how much cash is needed to get through systemic crises
5) how much food to stockpile, what kind to get, and where to get it

And more…

I can do the same for you. All you need to do is take out a subscription to my Private Wealth Advisory newsletter.

You’ll immediate be given access to the Private Wealth Advisory archives, including my Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports.

You’ll also join my private client list in receive my bi-weekly market commentaries as well as my real time investment alerts, telling you exactly when to buy and sell an investment and what prices to pay (we’ve recently closed out 28 straight winners… including gains of 10%, 15%, 16%, and more)

All of this, for one full year, for just $249.99.

To take out an annual subscription to Private Wealth Advisory now and start taking steps to insure your loved ones and personal finances move through the coming storm safely…

Click Here Now!!!

Best Regards,

Graham Summers

By now, even the mainstream media is realizing what I’ve been saying for well over a year: that the EU in its current form is finished.

I initially believed that we would see Greece kicked out of the EU. However, at this point it looks much more likely that it will be GERMANY who leaves.

The reason is quite simple really. Germany WILL NOT tolerate debt monetization. They’ve seen how that situation plays out (Weimar) and will not allow it again, END OF STORY. If the ECB opts to print money, Germany is out.

So… the only other option to save the EU to last would be the leveraged EFSF. However, as we’ve seen, that option is a dead end as well:

No new Euro zone money for debt crisis at G20

The Euro zone won verbal support but no new money at a G20 summit on Friday for its tortured efforts to overcome a sovereign debt crisis, while Italy was effectively placed under IMF supervision.

Leaders of the world’s major economies, meeting on the French Riviera, told Europe to sort out its own problems and deferred until next year any move to provide more crisis-fighting resources to the International Monetary Fund.

“There are hardly any countries here which said they were ready to go along with the EFSF (Euro zone rescue fund),” German Chancellor Angela Merkel told a news conference.

http://www.reuters.com/article/2011/11/04/us-g-idUSTRE7A20E920111104

Remember, the EFSF failed to even stage a 3 billion Euro bond auction without buying some of the bonds itself. And with no one in the G20 wanting to fund the EFSF, the EFSF is in no way going to backstop Europe.

So there are now only two REAL outcomes:

1)   The ECB prints (and Germany walks) resulting in the Euro losing at the minimum 30-40% of its value

2)   Massive defaults and debt restructuring accompanied by systemic failure in Europe

These are the facts. I know that the mainstream financial media and other “experts” like to proclaim that Europe can somehow muddle through this, but they’re wrong. The EU kicked the can down the road for over a year in terms of debt restructuring for Greece. Now it’s facing a problem it CANNOT possibly bail out: Italy.

In other words, the can has finally hit up against the wall. The market is not willing to lend to Italy at present levels. Nor is the market willing to lend to the EFSF. The only two potential backstops for the EU are now Germany or the ECB. And Germany WILL NOT allow money printing/ debt monetization to take place.

Folks, I don’t know how else to say this, but if Europe experiences just a 2008 type event, it will be LUCKY. The entire European banking system is leveraged at 26 to 1. At these levels even a 4% drop in asset prices wipes out all equity.

Add to this the fact that with unfunded liabilities included, the average EU member states sports a REAL Debt to GDP ratio north of 300%, and you’ve got the makings of systemic failure. Indeed, even Germany, the supposed beacon of fiscal stability has a REAL Debt to GDP of 200% (this data points comes straight form Axel Weber’s mouth) and has yet to recapitalize its banks.

And Germany is THE most solvent major member of the EU.

I cannot say just how bad things will be when the stuff hits the fan in Europe. But the EU is going into a banking/ sovereign crisis with WORSE fundamentals than the US had when it went into its own 2008.

So if you have not already taken steps to prepare for systemic failure, you NEED to do so NOW. We’re literally at most a few months, and very likely just a few weeks from Europe’s banks imploding.

When this happens the entire system could go down temporarily. I’m talking about bank holidays, sovereign debt defaults, retirement accounts and pension funds wiped out, even food shortages in some areas.

So you NEED to take steps now to prepare for all of this. This includes having some cash on hand as well as actual physical bullion. It also means stockpiling some food and water.

If you’re an individual investor (not a day trader) looking for the means of profiting from all of this, then you NEED to check out my Private Wealth Advisory newsletter.

Private Wealth Advisory is a bi-weekly investment advisory that uses stocks and ETFs to profit from the dominant market trends.

Every two weeks I outline what’s REALLY going on behind the scenes in the markets, as well as which investments will profit best from these developments.

Case in point, Private Wealth Advisory subscribers caught the initial market Collapse in August. They’ve also profited beautifully from the ongoing turmoil in Europe as well as the volatility in the US Dollar.

In fact, we just closed out our 20^th and 21^st straight winners last week. And we haven’t closed a single loser since the END OF JULY.

But don’t worry that all the profits have already been made. We currently have several trades open that are primed to explode higher in the coming weeks. By subscribing today, you’ll immediately be given access to them.

You’ll also gain immediate access to my Protect Your Family, Protect Your Savings, and Protect Your Portfolio Special Reports outlining how to prepare these areas of your life for the coming Great Crisis.

These reports outline:

1) how to prepare for bank holidays

2) which banks to avoid

3) how much bullion to own

4) how much cash is needed to get through systemic crises

5) how much food to stockpile, what kind to get, and where to get it

And more…

To take out an annual subscription to Private Wealth Advisory now… start profiting from the market’s gyrations (again we haven’t closed a losing trade since JULY)… and gain access to all my Special Reports…

Click Here Now!!!

Best Regards,

Graham Summers

Stocks broke down in a big way last week as the situation in Europe has become truly dire. I’ll be addressing that situation in greater detail tomorrow, but for now, you should know that there are truly only two possible outcomes for the Euro:

1)   The ECB prints money and Germany leaves the EU

2)   Germany remains in the EU but moves to kick other countries out as the defaults start coming fast

The market has already proven that the EFSF won’t save the Euro. And Italy, the third largest bond market in the world, is creeping towards a default by the minute. So the above outcomes are the only realistic options that are left. And both of them will send the Euro, and stocks, lower in a big way.

On that note, the S&P 500 broke down last week as the descending trendline (black line) from the July top proved to be too much for this latest rally to overcome. We’ve now taken out the lower trendline (green line) that supported stocks since October as well as critical support (red line) formed by the trading range that dominated the market’s action from August through October.

Once we get a definitive move below the red line in the chart above, then the door is open for us to test support at 1,175 and possibly even 1,125 in short order.

This is a holiday week so trading volume will be light. However, recall that it was during Thanksgiving 2009 that the sovereign defaults first started when Dubai asked for an extension on $60 billion in debt it owed. Will we get a European version of the Thanksgiving day collapse this time around with Italy? It’s definitely possible as the ECB is now intervening on a daily basis to slow down the bond implosion over there.

On that note, both Gold and Silver are looking deflationary… or at least undergoing liquidations.

 

Remember, defaults are deflationary in nature, and given that Europe is literally on the brink of systemic failure, Gold and Silver’s recent action may be hinting that we’re about to see another round of defaults/ deflation in the markets.

After all, when you combine the situation in Europe, along with the ongoing Depression in the US, MF Global’s bankruptcy, and the fact that most institutional investors remain heavily invested to the long-side (opening the door to intense selling pressure as everyone has gone “all in”), you’ve got a recipe for a REAL collapse.

So, just be aware that if things get messy, the markets could get downright UGLY fast. Leverage levels today exceed those of the Tech bubble. And we’ve already had one player taken out by bad bets (MF Global).

If you’re an individual investor (not a day trader) looking for the means of profiting from all of this, then you NEED to check out my Private Wealth Advisory newsletter.

Private Wealth Advisory is a bi-weekly investment advisory that uses stocks and ETFs to profit from the dominant market trends.

Every two weeks I outline what’s REALLY going on behind the scenes in the markets, as well as which investments will profit best from these developments.

Case in point, Private Wealth Advisory subscribers caught the initial market Collapse in August. They’ve also profited beautifully from the ongoing turmoil in Europe as well as the volatility in the US Dollar.

In fact, we just closed out our 20^th and 21^st straight winners last week. And we haven’t closed a single loser since the END OF JULY.

But don’t worry that all the profits have already been made. We currently have several trades open that are primed to explode higher in the coming weeks. By subscribing today, you’ll immediately be given access to them.

You’ll also gain immediate access to my Protect Your Family, Protect Your Savings, and Protect Your Portfolio Special Reports outlining how to prepare these areas of your life for the coming Great Crisis.

These reports outline:

 

1) how to prepare for bank holidays

2) which banks to avoid

3) how much bullion to own

4) how much cash is needed to get through systemic crises

5) how much food to stockpile, what kind to get, and where to get it

And more…

To take out an annual subscription to Private Wealth Advisory now… start profiting from the market’s gyrations (again we haven’t closed a losing trade since JULY)… and gain access to all my Special Reports…

Click Here Now!!!

Best Regards,

Graham Summers

Graham’s note: The following is an excerpt from my most recent Private Wealth Advisory newsletter. In it I explain how the Fed’s moves have changed investor appetite for various asset classes. To find out more about Private Wealth Advisory… Click Here!

For much of the 20^th century, sovereign bonds, particularly US Treasuries were considered the least risky assets to own. The idea was that while corporations and other entities might default or go bust, the US , which is the largest economy in the world, will always be able to meet its debt obligations by virtue of its economic strength or, at a minimum, printing money to pay back its creditors.

However, when the Great Crisis first erupted with Round One in 2008, the Governments and Central Banks of the world chose two policies to combat debt deflation.

The first was to move private sector debts, particularly toxic mortgage backed assets and derivatives, onto the public or sovereign balance sheets. This was most common in developed countries such as the US, UK, etc.

The second policy that Central Banks and Sovereign Governments chose to enact was printing money/ providing capital injections into their respective economies in an attempt to promote economic growth.

Both of these policies put sovereign balance sheets at risk/ damaged their trustworthiness. The first policy didn’t actually involve dealing with the debts via default or restructuring. Rather, the toxic debts and derivatives were merely moved from the private sector onto the public’s balance sheet. At the same time, the second policy (monetary intervention) ballooned both public debt and fiscal deficits.

As a result of this, the “risk profile” for all asset classes has changed dramatically.

Let me give you an example.

Who do you trust more from an investment perspective: Exxon Mobil or the US?

Historically, the common thought would have been the US. The US offered a better yield and was the largest, strongest economy in the world. Also, Treasuries are backed by the full faith and credit of the US Government, which has a printing press to insure you get your money back in one for or another.

Today, the issue is far more murky. Take a look at the following numbers:

 

	Exxon Mobil	The US of A
Debt to Market Cap/ GDP	37%	100%
Earnings/ Receipts to Market Cap/ GDP	8%	15%
Cash on Hand	$7.8 billion	$73 billion
Credit Rating	AAA	AA+
Two year annual yield	4.8%	0.31%

 

From a balance sheet perspective, Exxon is more attractive with less debt and a higher yield. It also has a higher credit rating and a history of increasing its payout to investors (the company has raised its dividend every year for 26 years).

In contrast, lending money to the US means receiving next to nothing in yield (0.31%). It also means you’re even more likely to see your investment lose money as Treasuries are in a bubble that will end as all bubbles do.

Other issues to consider are that the US is currently running a deficit of $1.5 trillion, sports a Debt to GDP ratio of 100% (300+% when we consider unfunded liabilities). And shows no indication of reining in these policies.

Thus, even by a quick back of the envelope analysis, we find ourselves in an environment in which a single corporation such as Exxon is actually more trustworthy (from an investment perspective) than the US Government.

This represents a complete reversal from the mentality that dominated investing for most of the last 80+ years. During that time, stocks were widely held to be riskier assets while Government bonds were considered safe: investment advisors would urge younger investors to invest heavily in stocks for “growth” while older investors who were closer to retirement were urged to invest in bonds, particularly Government bonds for “income”.

This is why the Greek default is so important for the financial world: if a sovereign nation’s bonds can lose 50% in value in a single day, the entire “risk spectrum” among asset classes has changed dramatically.

Folks, when we’re talking about entire countries going bust, then you KNOW that we’re in for a rough time. The reality is that the powers that be (the Federal Reserve and ECB) are fast losing control of the system. Bernanke’s already admitted he hasn’t got a clue how to solve the financial system’s problems. The Bank of England says we’re facing the greatest financial crisis in history. Even the IMF has warned that we’re heading towards a global financial meltdown.

The reality is that 2008 was just the warm-up. And we’re now heading into the Second Round of the GREAT CRISIS: the Sovereign Default round in which entire countries will go bust. By the time this mess ends, we’re facing systemic failure, bank holidays, debt defaults, and more.

So if you have not already taken steps to prepare for systemic failure, you NEED to do so NOW. We’re literally at most a few months, and very likely just a few weeks from Europe’s banks imploding.

If you’re an individual investor (not a day trader) looking for the means of profiting from the European Crisis, then you NEED to check out my Private Wealth Advisory newsletter.

Private Wealth Advisory is a bi-weekly investment advisory that uses stocks and ETFs to profit from the dominant market trends. Every two weeks I outline what’s REALLY going on behind the scenes in the markets, as well as which investments will profit best from these developments.

Case in point, Private Wealth Advisory subscribers caught the initial market Collapse in August. They’ve also profited beautifully from the ongoing turmoil in Europe as well as the volatility in the US Dollar.

In fact, we just closed out our 16th straight winner yesterday. And we’ve only closed ONE LOSING trade since JUNE!

My clients include executives at many Fortune 500 companies as well as strategists at Morgan Stanley … Merrill Lynch … Wachovia … and the Royal Bank of Scotland … as well as numerous hedge funds.

I’d love for you to join us in profiting from the ongoing market volatility.
To take out an annual subscription to Private Wealth Advisory now… start profiting from the market’s gyrations (again, we’ve only closed ONE LOSING trade since June)…

Click Here Now!!!

Best Regards,

Graham Summers

 

Without trust, the financial system cannot work. The regulators and Federal Reserve have done nothing to assuage these concerns. Instead they’ve shifted all trust onto their own shoulders: the defining bull argument for the market and economy is that “the Fed will save us”, or “don’t fight the Fed.”

As powerful as it may be, the Fed is not the market. And since the Fed failed to restore trust in the system by forcing all bad debts to light, the financial world has grown increasingly volatile and broken as investors grow increasingly distrustful of the system and begin to pull their money from it: investors have pulled $266 billion from stock based mutual funds since January 2008.

Nowhere is the lack of trust more apparent than in the financial sector. Indeed, it was a lack of trust between banks (inter-bank lending) that caused the credit markets to jam up in 2008, which resulted in the Crash.

That lack of trust continues to this day. In the post-Lehman collapse, instead of forcing real derivative and credit risk out into the open, the Federal Reserve and regulators instead suspended accounting standards and allowed financial firms (and other corporate entities) to continue to lie about the true state of their balance sheets.

As a result of this, the financial sector remains rife with fraud and impossible to accurately value (how can you value a business that is lying about its balance sheet?).

Those times in which a company was forced to value its assets at market prices have always seen said values losing 80%+ value in short order: consider Washington Mutual, which sported a book value north of $70 billion right up until it was sold for… $2 billion.

This type of fraud is endemic in the system. Indeed, we got a taste of just how problematic a lack of transparency can be with MF Global’s bankruptcy, in which a firm with $42 billion in assets lost over 80% of its value since August only to reveal in bankruptcy that it had stolen over $700 million worth of clients’ money.

Report: MF Global Exec Admits to Using Client Money

MF Global, the futures brokerage that imploded this week after facing a run on the bank, reportedly admitted to regulators it used client money in an apparent violation of government rules and Wall Street practices.

According to The Associated Press, an unnamed executive from the New York-based firm that is led by former Goldman Sachs chief Jon Corzine made the admission Monday morning after regulators discovered some $700 million went missing.

http://www.foxbusiness.com/industries/2011/11/01/report-regulators-probe-missing-cash-at-mf-global/#ixzz1cU1reIJt

That MF Global engaged in fraud and stole clients’ money is noteworthy. However, the far more important issue is:  HOW did this company receive primary dealer status from the NY Fed this year?

The Primary Dealers are the banks that actively engage in day to day activities with the New York Fed regarding the Fed’s monetary policies. Primary Dealers also participate in US Treasury auctions.

Put another way, Primary Dealers are the most elite, well-connected financial firms in the world.  They have unequal access to both the Fed and the US Treasury Dept. In order for MF Global to have attained this status it must have passed through a review by:

1)   The New York Fed

2)   The SEC

This is not a quick nor superficial process. According to the NY Fed’s own site:

Upon submission of a formal application, a prospective primary dealer can expect at least six months of formal consideration by the New York Fed. That consideration may include, among other things, on-site reviews of front, middle, and back office operations, review of compliance programs and discussions with compliance and credit risk management staff, discussions with senior management about business plans, financial condition, and the ability to meet FRBNY’s business needs, review of financial information, and consultation with primary supervisors and regulators.

MF Global passed through all of these reviews to became a primary dealer in February 2011. Today, a mere nine months later, the firm is in Chapter 11 and has admitted to stealing clients’ funds to maintain liquidity.

These developments reveal, beyond any doubt, that financial oversight in the US is virtually non-existent. This returns to my primary point: that trust has been lost in the system. And until it is restored, the system will remain broken.

A final note on this: the NY Fed is the single most powerful entity in charge of the Fed’s daily operations. How can any investor believe that the Fed can manage the system and restore trust when the NY Fed granted MF Global primary dealer status a mere nine months before the latter went bankrupt?

If the NY Fed cannot accurately audit a financial firm’s risks during a six month review, then there is NO WAY an ordinary investor can do so.

With that in mind, the banking system remains at HUGE risk as NO ONE, not even the Fed, knows the true exposure on financials’ balance sheets. The Fed couldn’t even accurately assess MF Global, a $40 BILLION company. How could it assess JP Morgan or the TBTFs!?!?!

The reality is that 2008 was just the warm-up. And we’re now heading into the Second Round of the GREAT CRISIS: the Sovereign Default round in which entire countries will go bust. By the time this mess ends, we’re facing systemic failure, bank holidays, debt defaults, and more.

So if you have not already taken steps to prepare for systemic failure, you NEED to do so NOW. We’re literally at most a few months, and very likely just a few weeks from Europe’s banks imploding.

If you’re an individual investor (not a day trader) looking for the means of profiting from the European Crisis, then you NEED to check out my Private Wealth Advisory newsletter.

Private Wealth Advisory is a bi-weekly investment advisory that uses stocks and ETFs to profit from the dominant market trends. Every two weeks I outline what’s REALLY going on behind the scenes in the markets, as well as which investments will profit best from these developments.

Case in point, Private Wealth Advisory subscribers caught the initial market Collapse in August. They’ve also profited beautifully from the ongoing turmoil in Europe as well as the volatility in the US Dollar.

In fact, we just closed out our 16th straight winner yesterday. And we’ve only closed ONE LOSING trade since JUNE!

My clients include executives at many Fortune 500 companies as well as strategists at Morgan Stanley … Merrill Lynch … Wachovia … and the Royal Bank of Scotland … as well as numerous hedge funds.

I’d love for you to join us in profiting from the ongoing market volatility.
To take out an annual subscription to Private Wealth Advisory now… start profiting from the market’s gyrations (again, we’ve only closed ONE LOSING trade since June)…

Click Here Now!!!

Best Regards,

Graham Summers

There are two primary stories for the markets today. They are:

1)   The political/ financial reality facing Europe

2)   The US stock market rally

Regarding #1, it is clear as day that the EU in its current form is finished. I’ve been saying this for months, but now even the mainstream media is picking up on rumblings that Germany wants to exit the Euro or at least restructure the entire EU.

DEATH OF THE EURO: SECRET PLOT TO WRECK THE CURRENCY

Ministers are understood to be deeply concerned that French President Nicolas Sarkozy and Germany’s Chancellor Angela Merkel are secretly plotting to build a new, slimmed down eurozone without Greece, Italy and other debt-ridden southern European nations.

Well-placed Brussels sources say Germany and France have already held private discussions on preparing for the disintegration of the eurozone.

http://www.express.co.uk/posts/view/283060

 

FRENCH AND GERMANS EXPLORE IDEA OF SMALLER EURO ZONE

German and French officials have discussed plans for a radical overhaul of the European Union that would involve setting up a more integrated and potentially smaller euro zone, EU sources say.

“France and Germany have had intense consultations on this issue over the last months, at all levels,” a senior EU official in Brussels told Reuters, speaking on condition of anonymity because of the sensitivity of the discussions.

“We need to move very cautiously, but the truth is that we need to establish exactly the list of those who don’t want to be part of the club and those who simply cannot be part,” the official said.

http://www.reuters.com/article/2011/11/09/us-eurozone-future-sarkozy-idUSTRE7A85VV20111109

 

The reality of the Eurozone is as follows:

1. Germany cannot and will not permit debt monetization to take place and so will back out of the Euro rather than foot the bill for other countries. With Weimar still present in the public’s conscious, the German populace simply will not stand for inflation of any kind.
2. The leveraged EFSF has already failed. It’s already failed to auction even 3 billion Euros’ worth of bonds… and it’s supposed to raise over 1 trillion!?! Add to this the fact that no G20 countries want to support it and the EFSF is FINISHED.
3. Greek will default again. Italy will default. Spain and the other PIIGS will default. The Euro will collapse.

These are the facts. Everything else (political elections, austerity measures, etc) is just a distraction. The whole mess is just like 2008 when the plain simple truth was in front of all of us though 99% of the pundits focused on the various distractions (Wall Street CEOs saying the worst was over, Hank Paulson’s Bazooka, etc).

Europe can, at best, hope to replicate what happened to the US in 2008.

As for the other story in the markets today: the stock market rally which is based on fantasy and dreams. I’ve heard every excuse for this move ranging from “QE 3 is just around the corner” to “the leveraged EFSF will work,” but I’ve yet to hear anything that justifies this move as being something more than short covering and the usual bear market rally.

Let’s take a look over what’s happened since the market bottomed:

1)   Greece defaults

2)   Italian bonds implode

3)   The EFSF fails to raise even 3 billion Euros

4)   French/German bond spreads hit all time highs

5)   The Fed re opens swap lines to Europe AND the Bank of Japan

And stocks have rallied 14% on these developments?

Do people forget that during the 2008 debacle the market rallied 11%, 17%, even 20%?

Having said all of that, stocks look to have formed a triangle pattern, which presents the possibility of a final thrust up, possibly to 1,300 on the S&P 500.

This move will likely be followed by a very sharp sell-off. With stocks tracking the Euro, it’s worth noting that a head and shoulders pattern is forming in the European currency.

Folks, here’s the deal: the EU is out of options and out of time. Yes, we’ve seen some symbolic shifts in the political landscape, but the reality is:

1)   The EFSF CANNOT raise the funds it needs to bail out Europe

2)   Germany WILL NOT monetize the PIIGS’ debt

3)   Greece will stage an even greater default, as will the other PIIGS nations

The powers that be know it. Why do you think China is importing a record amount of Gold… because they believe in the Euro? Weren’t they the ones who were supposed to save Europe?

The reality is that the powers that be (the Federal Reserve and ECB) are fast losing control of the system. Bernanke’s already admitted he hasn’t got a clue how to solve the financial system’s problems. The Bank of England says we’re facing the greatest financial crisis in history. Even the IMF has warned that we’re heading towards a global financial meltdown.

Folks… these organizations don’t issue warnings like this just for fun. They’re the ones who are SUPPOSED to SAVE the system. Do you think they’re issuing these warnings because everything is fine?

So ignore stocks. I know, I know, they’ve made a huge move to the upside. But that huge move was just 14%… and we had rallies of 17% and 20% in 2008. How did those work out? Were they a good time to buy stocks?

Again, the EU will be broken up in the coming weeks. When it is this market rally will collapse. And the ensuing carnage will make 2008 look like a joke.

So if you’ve not already taken steps for what’s coming, the time to do so is NOW before the real mess begins.

On that note, I’ve already alerted my Private Wealth Advisory clients to open 12 CRISIS trades in anticipation of the next leg down. Already several of them are up. And I fully expect we’ll see ALL of them in the double digits in the coming weeks.

We’ve also taken steps to prepare our loved ones and personal finances for systemic risk with my Protect Your Family, Protect Your Savings, and Protect Your Portfolio Special Reports.

With a total of 20 pages, these reports outline:

1) how to prepare for bank holidays
2) which banks to avoid
3) how much bullion to own
4) how much cash is needed to get through systemic crises
5) how much food to stockpile, what kind to get, and where to get it

And more…

I can do the same for you. All you need to do is take out a subscription to my Private Wealth Advisory newsletter.

You’ll immediate be given access to the Private Wealth Advisory archives, including my Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports.

You’ll also join my private client list in receive my bi-weekly market commentaries as well as my real time investment alerts, telling you exactly when to buy and sell an investment and what prices to pay (we’ve recently closed out 14 straight winners including gains of 7%, 8%, 9%, 9%, 10% and more… all in a matter of days (using stocks and ETFs).

To join us in profiting from this next leg down (it’s going to be the BIG one)…

Click Here Now!!!

Best Regards,

Graham Summers

 

 

 

 

 

During Round 1 of the Crisis, the US tried to combat the collapse of the private banking sector (especially the TBTFs) by shifting debt onto the public’s balance sheet and printing money to buy Treasuries so we could maintain a massive deficit (north of $1 trillion).

Put another way, the powers that be attempted to solve a MASSIVE debt implosion by issuing more debt. Aside from the fact this is outright insane, the problem with this is that we’re at a point of debt saturation in the system.

Kyle Bass of Hayman Advisors notes that from 1917 to 1952 each new Dollar of US debt brought on roughly $4 worth of GDP. From 2000-2010, you got seven cents of GDP growth for every $1 in new debt issued.

Put another way, each new $1 in debt issued today is producing less and less returns. By some estimates we’ve even reached the point at which new debt issuance is actually a net drag on the economy as interest payments eat into growth.

Ben Bernanke knows this, and has started to hint at it in his recent speeches and Q&A sessions with the public. Indeed, if you read between the lines of his statements starting in May, it’s clear that he has realized he cannot solve the US’s debt problems and that QE has failed.

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/

Pessimistic Bernanke Fed Admits QE Has Failed In FOMC Statement

In its latest FOMC statement, the Bernanke Fed has admitted the economy continues to remain depressed, essentially admitting that both programs of long-term asset purchases, or quantitative easing, have failed to prop up output after what has been the worst recession since the Great Depression.

http://www.forbes.com/sites/afontevecchia/2011/08/09/pessimistic-bernanke-and-fomc-practically-admit-qe-has-failed/

“Monetary policy can do a lot, but monetary policy is not a panacea.” — Ben Bernanke 9/29/11

U.S. “close to faltering,” Fed ready to act: Bernanke

Asked whether another round of bond purchases, known as quantitative easing, was in store, Bernanke was noncommittal.

“We never take anything off the table because we don’t know where the economy is going to go. We have no immediate plans to do anything like that,” he said.

http://www.reuters.com/article/2011/10/04/us-usa-fed-bernanke-idUSTRE79337C20111004

Central banks may need to burst bubbles: Bernanke

Federal Reserve Chairman Ben Bernanke said on Tuesday that central banks may need to resort to monetary policy to combat asset bubbles, although regulation should be a first line of defense.

http://www.reuters.com/article/2011/10/18/us-usa-fed-bernanke-idUSTRE79H5IR20111018

 

Look at the progression there. As far back as May 2011, Bernanke admitted the benefits of QE were less attractive. Now he’s not only admitting that asset bubbles exist (something Greenspan never admitted) but that Central Banks may even need to “burst” them!?!?

In plain terms, the Fed will NOT be launching another round of QE or major policy changes until the next round of the Great Crisis hits in full force. And by that time it will be pointless anyway as once the defaults begin, the leverage in the global banking system will implode rapidly.

It is no longer a matter of “if” for defaults, it’s a matter of “when.” And we are going to be seeing defaults in the individual, corporate, banking, and sovereign space. This is going to be the Great Debt Reset: the time when the market calls out the global debt bubble and we enter a period of severe economic contraction accompanied by soaring interest rates.

The worst-case scenario is that everything comes to a head in the next six months. Remember, the slow motion train wreck that is Greece has been playing out since the end of 2009. The market is already pricing in a Greek default. And Germany has even alluded to the fact that it’s preparing for a Greek default that will feature at least a 60% haircut. Heck, France has even announced plans to nationalize 2-3 banks “just in case.”

What happened in 2008 was literally just the warm up. The REAL DEAL is coming in the next 14 months. And it’s going to involve corporate, financial, and sovereign defaults.

This is coming. It’s no longer a matter of if but when. And those investors who position themselves for it in advance will make a killing.

I can show you how. My clients MADE money in 2008. They’re making money now too with the 12 Crisis I mentioned earlier.
Private Wealth Advisory subscribers have also taken steps to prepare our loved ones and personal finances for systemic risk with my Protect Your Family, Protect Your Savings, and Protect Your Portfolio Special Reports.

With a total of 20 pages, these reports outline:

1) how to prepare for bank holidays
2) which banks to avoid
3) how much bullion to own
4) how much cash is needed to get through systemic crises
5) how much food to stockpile, what kind to get, and where to get it

And more…

To obtain this information, as well as my 12 Crisis Trades, all you need to do is take out a subscription to my Private Wealth Advisory newsletter.

You’ll immediate be given access to the Private Wealth Advisory archives, including my Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports.

You’ll also join my private client list in receive my bi-weekly market commentaries as well as my real time investment alerts, telling you exactly when to buy and sell an investment and what prices to pay (we’ve recently closed out 14 straight winners including gains of 7%, 8%, 9%, 9%, 10% and more… all in a matter of days (using stocks and ETFs).

To join us in profiting from this next leg down (it’s going to be the BIG one)…

Click Here Now!!!

Best Regards,

Graham Summers

 

 

 

 

 

 

 

I’ve been warning for days that stocks are the last to “get it” and that this latest rally should not be trusted.

Well, by the look of things, stocks are finally waking up to what the credit and bond markets have been telling us for weeks: that the European debt-implosion has now shifted from a relatively small problem (Greece) to a MAJOR problem (Italy).

Remember, worldwide exposure to Greece is roughly $280 billion. Worldwide exposure to Italy is more than THREE TIMES this. Italy is the third largest bond market in the world (behind Japan and the US). So when it implodes, the whole financial system shakes.

Well, according to Barclay’s Italy has now gone “mathematically beyond the point of no return.” Private Wealth Advisory subscribers have been prepared for this for some time.

Indeed, just last week I alerted them the following:

[Italy] is the REAL systemic risk today. And it’s the number one reason why we’ve opened our Crisis Trades again. The Italian ten-year note just cleared 6.2% earlier this week. Once it clears 8% it’s GAME OVER for Italy.

Since I sent out that report, our Crisis trades have exploded higher. Already several of them are closing in on the double digits. And I fully expect we’ll see ALL of them in the double digits in the coming weeks,

And the stuff only just hit the fan in Europe.

Folks, we’re not out of the woods yet… not by a long shot. The same problems plaguing Europe today are coming to the US’s shores. And when they do, everyone will realize what I’ve been saying since 2009: that 2008 was the warm up… the REAL Crisis is when the US defaults and we face systemic collapse.

This is coming. It’s no longer a matter of if but when. Which is why if you’ve not already taken steps for what’s coming, the time to do so is NOW before the real mess begins.

I can show you how. My clients MADE money in 2008. They’re making money now too with the 12 Crisis I mentioned earlier.

Private Wealth Advisory subscribers have also taken steps to prepare our loved ones and personal finances for systemic risk with my Protect Your Family, Protect Your Savings, and Protect Your Portfolio Special Reports.

With a total of 20 pages, these reports outline:

1) how to prepare for bank holidays
2) which banks to avoid
3) how much bullion to own
4) how much cash is needed to get through systemic crises
5) how much food to stockpile, what kind to get, and where to get it

And more…

To obtain this information, as well as my 12 Crisis Trades, all you need to do is take out a subscription to my Private Wealth Advisory newsletter.

You’ll immediate be given access to the Private Wealth Advisory archives, including my Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports.

You’ll also join my private client list in receive my bi-weekly market commentaries as well as my real time investment alerts, telling you exactly when to buy and sell an investment and what prices to pay (we’ve recently closed out 14 straight winners including gains of 7%, 8%, 9%, 9%, 10% and more… all in a matter of days (using stocks and ETFs).

To join us in profiting from this next leg down (it’s going to be the BIG one)…

Click Here Now!!!

Best Regards,

Graham Summers

 

 

 

 

 

 

Few if any commentators understand what is happening in the US today. The reason for this is that the vast majority of investment professionals believe that what they’ve experienced in their lifetimes is the norm.

Put another way, an entire generation of investment professionals has:

1. Never witnessed a secular economic change
2. Never witnessed or invested during a bear market in bonds
3. Hasn’t studied enough history to know about either of these items

I firmly believe that what’s happening in the US today is not a cyclical recession, but a one in 100 year, secular economic shift.

See for yourself. Here’s duration of unemployment. Official recessions are marked with gray columns. While the chart only goes back to 1967 I want to note that we are in fact at an all-time high with your average unemployed person needing more than 20 weeks to find work (or simply falling off the statistics).

Here’s the labor participation rate with recessions again market by gray columns:

Another way to look at this chart is to say that since the Tech Crash, a smaller and smaller percentage of the US population has been working. Today, the same percentage of the US population is working as in 1980.

Here’s industrial production. I want to point out that during EVERY recovery since 1919 industrial production has quickly topped its former peak. Not this time. Despite spending TRILLIONS in stimulus industrial production is well below the pre-Crisis highs.

Again, what’s happening in the US is NOT a garden-variety cyclical recession. It is a STRUCTURAL SECULAR DEPRESSION. And the reason is that we are currently witnessing the collapse of the greatest debt bubble of all time.

Going into this recession, total US credit market debt was at its highest level of all time: over 350% of GDP. In comparison, during Roosevelt’s New Deal during the Great Depression we hit only of 300% total GDP.

Debt is absolutely endemic in our financial system. The average non-financial corporation in the US is sitting on a debt to equity ratio of 105%. Bank leverage, while relatively low compared to Europe (13 to 1 vs. 26 to 1), is still high enough that an 8% drop in asset prices wipes out ALL capital.

Folks, we’re not out of the woods yet… not by a long shot. The same problems plaguing Europe today are coming to the US’s shores. And when they do, everyone will realize what I’ve been saying since 2009: that 2008 was the warm up… the REAL Crisis is when the US defaults and we face systemic collapse.

This is coming. It’s no longer a matter of if but when. Which is why if you’ve not already taken steps for what’s coming, the time to do so is NOW before the real mess begins.

On that note, I’ve already alerted my Private Wealth Advisory clients to open 12 CRISIS trades in anticipation of the next leg down. Already several of them are up. And I fully expect we’ll see ALL of them in the double digits in the coming weeks.

We’ve also taken steps to prepare our loved ones and personal finances for systemic risk with my Protect Your Family, Protect Your Savings, and Protect Your Portfolio Special Reports.

With a total of 20 pages, these reports outline:

1) how to prepare for bank holidays
2) which banks to avoid
3) how much bullion to own
4) how much cash is needed to get through systemic crises
5) how much food to stockpile, what kind to get, and where to get it

And more…

I can do the same for you. All you need to do is take out a subscription to my Private Wealth Advisory newsletter.

You’ll immediate be given access to the Private Wealth Advisory archives, including my Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports.

You’ll also join my private client list in receive my bi-weekly market commentaries as well as my real time investment alerts, telling you exactly when to buy and sell an investment and what prices to pay (we’ve recently closed out 14 straight winners including gains of 7%, 8%, 9%, 9%, 10% and more… all in a matter of days (using stocks and ETFs).

To join us in profiting from this next leg down (it’s going to be the BIG one)…

Click Here Now!!!

Best Regards,

Graham Summers

 

 

 

 

 

Stocks continue to remain in la-la land. I really cannot find another way to put it. Europe has now gone from a relatively small problem (Greece) to a HUGE problem (Italy).

To put this shift into perspective, Greece is the 11^th largest economy in Europe. Worldwide exposure to Greece debt is roughly $280 billion. In contrast, Italy is the third largest economy in Europe and the third largest bond market in the world. Global exposure to Italy’s debt is north of $800 billion. It’s already taken down one firm (MF Global), others are coming too.

That’s what I mean by a BIG problem.

It is now clear that Italy would have already posted several failed bond auctions if not for direct intervention from the European Central Bank (ECB). Worse still, despite the interventions, Italian bonds continue to implode with the 10-year now yielding over 6% (Germany’s 10 year yields 1.78%).

The whole thing is quite reminiscent of 2008, when it took the market two weeks to figure out that Lehman’s bankruptcy had catastrophic implications. MF Global has now gone under, Italy is fast losing control of its bond market, and stocks look to have likely topped last week.

I believe we have likely put in a top last week. We’ve already broken back below the 200-DMA on the S&P 500. Once we break below 1,225, we’re back into Crisis mode.

Much of this hinges on the Euro which looks to have bounce up to “kiss” resistance at 138 and is now ready to roll over to 135 in short order.

As goes the Euro, so do stocks. Speaking of which, stocks are expensive based on their near perfect correlation to the Euro as well:

My general view remains as follows: we’ve had a brief final hurrah in the risk-on trade (stocks up, commodities up, Dollar down) due to rumors and hype all of which have proven to be unfounded or simply desperation from those who need stocks higher.

Meanwhile, behind the scenes the financial system continues to break down in a big way. The EFSF deal has proven to be a dud before it even passes, Merkel and Sarkozy have lost all credibility as problem solvers, and Italy lurches ever closer to providing a real systemic disaster.

Again, the issues in Europe are ANYTHING but solved. This is why the credit markets are already anticipating more Greek haircuts as well as ever increasing systemic risk.

If you think I’m over-reacting, consider that the EU is now talking about trying to use various countries’ Gold (Italy and Germany) as collateral for bailout schemes.

Folks, when countries are openly admitting that the only real capital they have is Gold, then they’re admitting that paper money, particularly the debt-based bailouts, are no longer effective at solving the financial system’s problems.

Heck, why do you think China just imported a record amount of Gold? Because they think we’re out of the woods? Weren’t they the ones who were supposed to save Europe?

The reality is that the powers that be (the Federal Reserve and ECB) are fast losing control of the system. Bernanke’s already admitted he hasn’t got a clue how to solve the financial system’s problems. The Bank of England says we’re facing the greatest financial crisis in history. Even the IMF has warned that we’re heading towards a global financial meltdown.

If you’ve not already taken steps for what’s coming, the time to do so is NOW before the real mess begins.

On that note, I’ve already alerted my Private Wealth Advisory clients to open 12 CRISIS trades in anticipation of the next leg down. Already several of them are up. And I fully expect we’ll see ALL of them in the double digits in the coming weeks.

We’ve also taken steps to prepare our loved ones and personal finances for systemic risk with my Protect Your Family, Protect Your Savings, and Protect Your Portfolio Special Reports.

With a total of 20 pages, these reports outline:

1) how to prepare for bank holidays
2) which banks to avoid
3) how much bullion to own
4) how much cash is needed to get through systemic crises
5) how much food to stockpile, what kind to get, and where to get it

And more…

I can do the same for you. All you need to do is take out a subscription to my Private Wealth Advisory newsletter.

You’ll immediate be given access to the Private Wealth Advisory archives, including my Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports.

You’ll also join my private client list in receive my bi-weekly market commentaries as well as my real time investment alerts, telling you exactly when to buy and sell an investment and what prices to pay (we’ve recently closed out 14 straight winners including gains of 7%, 8%, 9%, 9%, 10% and more… all in a matter of days (using stocks and ETFs).

To join us in profiting from this next leg down (it’s going to be the BIG one)…

Click Here Now!!!

Best Regards,

Graham Summers

 

 

 

 

Thus far, my analysis of Europe has focused on the super-leveraged banking system (26 to 1). At these levels, even a 4% drop in asset prices wipes out equity. That alone warrants concerns of systemic risk.

The situation is not much better at non-Financial European corporations. Indeed, the debt situation is so endemic to Europe as a whole that corporate Debt to Equity ratios for ALL of the PIIGS as well as the supposedly fiscally conservative countries of France and Germany are TERRIBLE.

What I’m trying to point out here is that Europe’s debt problems extend well beyond Greece’s debt. Indeed, the entire European banking and corporate system is over-burdened with debt.

The situation is no better for European Sovereign states themselves, which are facing their own debt roll over issues at a time when investors are rapidly losing their appetite for sovereign debt.

To wit, Spain, Portugal, and Italy have all relied heavily on the ECB to buy their debt at recent auctions. Germany actually just had a failed debt auction this morning.  And in this environment , these nations need to meet the following debt roll over obligations:

And this is just maturing debt that’s due in the near future: it doesn’t include unfunded liabilities.

Jagadeesh Gokhale of the Cato Institute puts the situation as the following, “The average EU country would need to have more than four times (434 percent) its current annual gross domestic product (GDP) in the bank today, earning interest at the government’s borrowing rate, in order to fund current policies indefinitely.”

As I said before, Europe is finished. The region’s entire banking system is insolvent (with few exceptions). European non-financial corporations are running massive debt to equity ratios. And even EU sovereign states require intervention from the ECB just to meet current debt issuance, to say nothing of the huge amount of sovereign debt roll over that is due over the next 14 months.

Again… Europe. Is. Finished.

The Great debt Implosion will hit Europe within the next 14 months and likely much much sooner. When it dues, we will see numerous debt defaults and restructuring on both the corporate and sovereign levels. We’re also very likely going to see significant portions of the European banking system collapse “Lehman-style” along with subsequent HUGE losses of capital.

The impact of this will be global in nature. The EU, taken as a whole, is:

1)   The single largest economy in the world ($16.28 trillion)

2)   Is China’s largest trade partner

3)   Accounts for 21% of US exports

4)   Accounts for $121 billion worth of exports for South America

So if the EU banking system/ economy collapses, the global economy could enter a recession just based on that one issue alone (ignoring the other issues in China, Japan, and the US).

So if you have not already taken steps to prepare for these events, you NEED to do so NOW. The EFSF deal is by no means a done deal. And should things take a turn for the worse in any way, we could see a full-scale Crash occur.

On that note, I’ve already alerted Private Wealth Advisory to 12 CRISIS trades (three for Europe, nine for the US) that will all produce HUGE profits as this mess collapses. We only just opened them this week.
We’ve also taken steps to prepare our loved ones and personal finances for systemic risk with my Protect Your Family, Protect Your Savings, and Protect Your Portfolio Special Reports.

With a total of 20 pages, these reports outline:

1) how to prepare for bank holidays
2) which banks to avoid
3) how much bullion to own
4) how much cash is needed to get through systemic crises
5) how much food to stockpile, what kind to get, and where to get it

And more…

I can do the same for you. All you need to do is take out a subscription to my Private Wealth Advisory newsletter.

You’ll immediate be given access to the Private Wealth Advisory archives, including my Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports.

You’ll also join my private client list in receive my bi-weekly market commentaries as well as my real time investment alerts, telling you exactly when to buy and sell an investment and what prices to pay (we’ve recently closed out 14 straight winners).

To take out an annual subscription to Private Wealth Advisory now and start taking steps to insure your loved ones and personal finances move through the coming storm safely…

Click Here Now!!!

Best Regards,

Graham Summers

 

 

 

 

 

 

 

One of the items few investors seem to be focusing on is the fact that while the system is awash with liquidity, there is very little capital available. Indeed, the great irony of central bank policies in the post-2008 era is that despite flooding the system with cheap easy money, they’ve not actually done anything to lower leverage or raise capital.

Case in point, the European Financial Stability Facility (EFSF) which is supposed to be the ultimate backstop for the European banking system, is in fact nothing more than a super-leveraged investment vehicle backstopped by bankrupt nations.

In plain terms, certain less insolvent nations (Germany and France) are supposed to bailout more insolvent nations such as Greece and Ireland. Common sense tells us this can’t possibly work.

So do the markets.

EFSF bond may see weak demand

Bankers have warned that the eurozone rescue fund might face lacklustre demand this week for a planned bond issue designed to finance Ireland’s bail-out.

The offering will provide a key test of investor sentiment after the announcement last week of new plans to tackle the eurozone debt crisis.

The bond from the European financial stability facility will seek to raise €3bn ($4bn) and will be in 10-year bonds rather than a 15-year maturity because of worries over demand, say bankers. A 10-year bond is more likely to attract interest from Asian central banks than a longer maturity.

Bankers familiar with the issue said the EFSF had been considering a €5bn issue. However, the EFSF has denied this, saying it had always sought a €3bn issue.

http://www.ft.com/intl/cms/s/0/cfe1b102-03d2-11e1-bbc5-00144feabdc0.html?ftcamp=rss#axzz1cNYkqllU

 

EFSF Delays 3 Billion-Euro Bond Sale

Europe’s bailout fund is delaying a 3 billion-euro ($4.1 billion) bond sale after Greek Prime Minister George Papandreou’s request for a referendum on the rescue pact for his country roiled markets.

The European Financial Stability Facility is putting off the 10-year issue “due to market conditions,” according to Luxembourg-based spokesman Christof Roche. The fund may wait for the outcome of the Nov. 3-4 Group of 20 summit in Cannes, France before selling the bonds, according to a person with knowledge of the matter.

http://www.bloomberg.com/news/2011-11-02/efsf-said-to-plan-delay-in-3-billion-euro-bond-sale.html?cmpid=bit

 

So the EFSF is supposedly going to raise 1 trillion Euros… in an environment in which it struggles to even stage a five billion Euro bond offering?  Give me a break.

Again, while the system is flooded with liquidity, actual capital that can be put to use is virtually non-existent. The entire financial system is built up on leverage and easy credit, NOT capital.

This is why the bailouts cannot work. You cannot solve a leverage problem with more cheap debt. Just look at Greece. That whole mess started in January 2010… two bailouts and a number of write-downs later the country is still broke.

And somehow this policy is going to work for other countries such as Italy or Spain? Give me a break. The Euro in its current form is finished. The credit markets are already pricing in more Greek defaults. And Italy’s now lurching towards its own default.

Ignore stocks, they’re ALWAYS the last to “get it.” The credit markets are jamming up just like they did in 2008. The banking system is flashing all the same signals as well.

So if you have not already taken steps to prepare for systemic failure, you NEED to do so NOW. We’re literally at most a few months, and very likely just a few weeks from Europe’s banks imploding.

I’ve already alerted Private Wealth Advisory to 12 CRISIS trades (three for Europe, nine for the US) that will all produce HUGE profits as this mess collapses.

We’ve also taken steps to prepare our loved ones and personal finances for systemic risk with my Protect Your Family, Protect Your Savings, and Protect Your Portfolio Special Reports.

With a total of 20 pages, these reports outline:

1) how to prepare for bank holidays
2) which banks to avoid
3) how much bullion to own
4) how much cash is needed to get through systemic crises
5) how much food to stockpile, what kind to get, and where to get it

And more…

I can do the same for you. All you need to do is take out a subscription to my Private Wealth Advisory newsletter.

You’ll immediate be given access to the Private Wealth Advisory archives, including my Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports.

You’ll also join my private client list in receive my bi-weekly market commentaries as well as my real time investment alerts, telling you exactly when to buy and sell an investment and what prices to pay (we’ve recently closed out 14 straight winners).

To take out an annual subscription to Private Wealth Advisory now and start taking steps to insure your loved ones and personal finances move through the coming storm safely…

Click Here Now!!!

Best Regards,

Graham Summers

 

 

 

 

 

 

As I have stated time and again, stocks are last to “get it.”

Well, they sure got it in the last 24 hours as it became clear that the leveraged EFSF doesn’t solve anything. Remember, the entire European banking system is leveraged at 26 to 1. Yes, 26 to 1. That’s the ENTIRE European Banking system leveraged at near Lehman levels (Lehman was 30 to 1 when it collapsed).

To put this into perspective, with a leverage level of 26 to 1, you only need a 4% drop in asset prices to wipe out ALL capital. What are the odds that European bank assets fall 4% in value in the near future, especially now that Greece has defaulted?

These leverage levels alone position Europe for a full-scale banking collapse on par with Lehman Brothers. Again, I’m talking about Europe’s ENTIRE banking system collapsing.

This is not a question of “if,” it is a question of “when.” And it will very likely happen within the next 10-12 months.

The reason that this is guaranteed to happen before the end of 2012 is that a HUGE percentage of European bank debt needs to be rolled over by the end of 2012.

Between now and then…

• French banks need to roll over 30% of their TOTAL debt.
• Spanish banks and Italian banks need to rollover more than 33% of their TOTAL debt.
• German banks need to roll over nearly 40% of their TOTAL debt.
• Irish banks need to roll over almost HALF (50%) of their TOTAL debt.

And this is going to happen in an environment in which sovereign debt auctions are failing (or would fail if not for ECB intervention)?

I trust at this point you are beginning to see why any expansion of the EFSF or additional European bailouts is ultimately pointless: Europe’s ENTIRE BANKING SYSTEM as a whole is insolvent. Even a 4-10% drop in asset prices would wipe out ALL equity at many European banks.

Also bear in mind, that the proposed EFSF expansion would only provide $100 billion to European banks for recapitalization. By my estimates, European banks need more than $1.7 trillion in capital just to bring their leverage levels down to 13 to 1 (US banking system leverage levels).

So even if the EU passes the expanded EFSF proposal, European banks are going to collapse. And those who believe it won’t spread to the US need to consider MF Global which has just gone bankrupt, having lost over 80% of its market cap since August.

Ignore stocks, they’re ALWAYS the last to “get it.” The credit markets are jamming up just like they did in 2008. The banking system is flashing all the same signals as well.

So if you have not already taken steps to prepare for systemic failure, you NEED to do so NOW. We’re literally at most a few months, and very likely just a few weeks from Europe’s banks imploding.

I’ve already alerted Private Wealth Advisory to 12 CRISIS trades (three for Europe, nine for the US) that will all produce HUGE profits as this mess collapses. Indeed, we just opened them this morning.

We’ve also taken steps to prepare our loved ones and personal finances for systemic risk with my Protect Your Family, Protect Your Savings, and Protect Your Portfolio Special Reports.

With a total of 20 pages, these reports outline:

1) how to prepare for bank holidays
2) which banks to avoid
3) how much bullion to own
4) how much cash is needed to get through systemic crises
5) how much food to stockpile, what kind to get, and where to get it

And more…

I can do the same for you. All you need to do is take out a subscription to my Private Wealth Advisory newsletter.

You’ll immediate be given access to the Private Wealth Advisory archives, including my Protect Your Family, Protect Your Savings, and Protect Your Portfolio reports.

You’ll also join my private client list in receive my bi-weekly market commentaries as well as my real time investment alerts, telling you exactly when to buy and sell an investment and what prices to pay (we’ve recently closed out 14 straight winners).

All of this, for one full year, for just $199.99… but not much longer.

Indeed, we are raising the price of Private Wealth Advisory from $199 to $249 tonight at midnight. The reason is simple: both the performance of our picks (we’ve just closed out 14 straight winners) and the quality of our research (we predicted the 2008 bust, the Euro 2010 bust, the August 2011 collapse, and more) warrant a premium price.

So we’re raising the price of Private Wealth Advisory to $249 tonight at midnight.

To take out an annual subscription to Private Wealth Advisory now, lock in the soon to be old price of $249, and start taking steps to insure your loved ones and personal finances move through the coming storm safely…

Click Here Now!!!

Best Regards,

Graham Summers