Financial crisis

Fed Chairman Ben Bernanke’s decision to go ahead with unabated quantitative easing (QE) seems to have taken many by surprise. To such an extent that, from now on, the major market participants are saying they have totally lost faith in Ben Bernanke. True, Ben Bernanke has been saying constantly, for the last four years, he would first taper and then end his QE plans, and then, at each FOMC meeting, he has been saying the opposite. The Fed has printed over $3Trillion since 2007.

With the upcoming German national elections, the problems in the Eurozone have been left aside. Angela Merkel doesn’t want to lose some voters by talking about it. Her finance minister slipped, during the campaign, saying that Greece will have to be helped again but, not to worry, with only 10 billion euros.

We are now back to the “green shoots” era of false hope and total misunderstanding of the real state of the world economy. There are minor tidbits of good news that combined with manipulated and seasonally adjusted economic figures are giving politicians worldwide reason for spreading their optimistic gospel of recovery that has nothing to do with reality.

Mish, you write a lot of commentaries about the European economic crisis, going from bad to worse. For instance Portuguese Bond Yield Spiked to 8%, How do you see the European situation evolve in the coming months Do you expect more bail-ins in the Eurozone?

There is no recovery. But, since the mainstream media and the governments keep repeating it over and over again and since we prefer believing good news than bad news, a majority of people believe in this so-called recovery. This is why the stock market is up and gold is down.

The situation is untenable in Japan and can only be contained in the States and the Eurozone if rates go just slightly up.

Think Your Money is Safe in an Insured Bank Account? A trend to shift responsibility for bank losses onto blameless depositors lets banks gamble away your money.

Along with its public deficits going the wrong way, as we wrote about last week, France has now to contend with its banking sector. According to Euromoney, a study from the Lausanne Center for Risk Management shows that french banks represent the most important systemic risk of Europe!

France is losing its footing. It just fell to the other side of the Laffer Curve : tax increases not only did not produce any revenue, but we’re witnessing a decline in fiscal revenue.

Nikkei’s 7% plunge, last Thursday, and the way it happened, gives us a glimpse into how the next crisis will play.