Davies alerted King World News that his firm is seeing crash signals similar to those of 2008!
When asked about these signals, Davies responded,
Ben Davies continues:
Davies also noted,
The Great Super Congress Deception
Last week, Defense Secretary Leon Panetta sent a letter to lawmakers describing the potential cuts “devastating,” saying the impact would be substantial and seriously damage our defense readiness.
And so the circus begins, this week the “all so important” deadline of the super congress to come up with proposed cuts and tax increases in order to reduce deficit spending. This entire debate is a joke, the White House and Congress have shown little will to actually cut into spending or reduce the actual budget. Yet here we are facing another downgrade and circus in D.C. that will effect everyone in the world.
When it comes to the B.S. from the defense department, yesterday morning on CNN, Senator Rand Paul said,
his is called “fuzzy math” and is exactly what the entire debate is in D.C., not whether or not we should shrink government, but if we should just slow its growth. Meanwhile we will continue to borrow money from China and the Federal Reserve in order to bailout the wealthiest individuals in this country and expand our entitlement programs for everyone the banks screwed when the economy blew up in 2008.
Now when the super congress fails this week, 1.2 trillion in automatic spending cuts will start in 2013. At least that is how the debt ceiling increase was set up. Of course remember, in 2013 we will have a new congress that could possibly change the balance of power, and we could also have a new President. So in reality, even the automatic cuts aren’t really automatic, and in 2013 could totally be revised by the next congress and president who are in charge of 2013 spending.FutureMoneyTrends.com believes it is highly likely that the automatic cuts will NEVER take place and that this is simply window dressing in order to buy time before another downgrade happens. In fact, already Senator Jon Kyl of Arizonahas stated that they would look for a way “to work around” some of those automatic spending cuts.
Euro Debt Crisis
As far as this week goes, FutureMoneyTrends.com sees no real impact on the markets coming from the U.S., volume is light and may have large swings, but the reaction will not mimic what we saw in August. However, this doesn’t mean we might not see some major news, it will just come out of Europe. In Europe, we are literally looking down the barrel of a bond crisis. Right now investors are fleeing Italian bonds, literally, this is a full blown bond dump, kind of like the movie Margin Call where major hedge funds are trying to find suckers to buy bad debt, only this is the real world. Where you don’t have to find a sucker to buy Italian debt, you simply have to contact your nearest insolvent Italian bank or the ECB. Yesterday, ZeroHedge.com had a great post with the full break down, here is an excerpt:
And that’s it really right there, at some point in the very near future, like days or weeks, the ECB is going to start aggressively buying the sovereign debt of Italy and others. This is how these people think, if borrowing didn’t help, borrow more, if stimulus didn’t help, stimulate more, and if bond buying from central banks didn’t fix it, then print more money to buy more bonds. The ECB will attempt to end the bond crisis with debt monetization, however,FutureMoneyTrends.com believes that when they do, that is when the real crisis begins. Just like when the FED’s QE1 and QE2 caused price inflation, so will the ECB’s, and just like the FED, the ECB will find that the market will become dependent on this type of liquidity. This will also devalue the Euro not just through inflation, but perception as well, the ECB has always been more disciplined then the FED. The ECB’s only actual mandate is price stability, by creating trillions of Euros to purchase the worst debt, this will not only cause price instability, but rising tensions amongst the savers and nations that have been more fiscally prudent.
Remember, the Italian bond dump started after the deal with Greece. As usual, government has taken stability out of the markets, investors are now asking themselves who’s next for a voluntary 50% haircut in value of their bonds? If it can happen to Greek debt, then why notSpain, Italy, or another Euro nation. It’s now pointless owning credit default swaps, all the counter party has to do is call it a voluntary loss. Look at this chart below from the CMA, this is after the Greek deal was set up in such a way that it didn’t trigger credit default swaps due to the “voluntary” loss.
The Greek deal made the CDS market unreliable when trying to hedge European debt, which has now added even more pressure to dump bonds.
Last week Italy’s 10 year yields rose to over 7%, Spain’s traded over 6%, and the CDS spreads across Europe jumped.
To sum it up, the global financial system is dealing with epic deflationary forces and at the same time central banks are pumping out massive inflation. We guess the only question left to ask is, GOT GOLD?