seemingly random pattern and that it will be impossible to forecast where the next crises will start.But although we will not be able to predict in what order events will take place, we can expect much of what is outlinedbelow to happen.
Already back in 2007 we warned about the very high risk of the CDS (credit default swap) market. This is now one of theprimary instruments used by the Wolfpack (expression coined by the Swedish Finance Minister Borg). The Wolfpack,speculators with enormous fire power such as hedge funds and investment banks, use the CDS market to attack any weak financial sector, be it a country, a bank or a company. The combination of the leverage of the CDSs and the massive capitalavailable to the Wolfpack makes it possible for them to bring down or badly maul whatever they attack. It was not theWolfpack that caused the problem in for example Greece but they can bring down a weak victim quickly and profitimmensely and immorally from it.There are so many weak potential victims that the Wolfpack can attack and they will start with the most vulnerable oneslike, Portugal, Spain and Ireland etc. But when the time is right they will also attack the US and the UK.So in the coming year we will see country after country coming under attack from the Wolfback which will lead toacceleration in money printing and higher interest rates.
Iceland – Ireland – Greece – Who is next?
The EU support package of $ 1 trillion is supposed to be sufficient to protect the rest of Europe from another Greek tragedy. The dilemma with such a massive EU commitment is that no government expects to have to pay the money out. Ithey did the voters in the respective EU countries would throw out their government. Why should the German people, whoare also having hard times, pay for the Greeks, Portuguese or the Spaniards, especially since these loans will never be paidback.Greece is bankrupt but is still taking on additional EU loans of € 140 billion. In addition, their austerity measures aresupposed to bring the deficit down from 12% of GDP today to 3% in a few years time. But who can be so stupid as to lendto a bankrupt nation which will sink into the Ionian and Aegean Seas in the next few years. With massive cuts ingovernment expenditure, with major falls in output, with unemployment rising fast, with tax revenues collapsing how canGreece possibly be expected to improve the economy and pay a high interest rate on their exploding debt? In addition, aslong as they have the Euro they will be totally uncompetitive. So if they couldn’t manage their economy in the so calledgood times, it is absolutely guaranteed that they have no chance of surviving in bad times. So Greece will default and soill Portugal, Spain, Italy, France, the UK, the US and many more. But before that there will be the most colossalorldwide money printing exercise which would have used up most of the trees in the world but for electronic fiat money.So, if virtually bankrupt nations don’t cut their deficits, they will definitively go under and if they try to cut, they will alsogo under due to collapsing output and tax revenues and colossal debts.
Thus whatever actions governments take ordon’t take, they are damned.
The table below shows debt as a percentage of GDP for various OECD countries. The official debts (in red) are massiveand unlikely to ever be repaid in real money. Total debts (grey bars) include unfunded liabilities such as pensions andhealth care. Spain has the
total debt to GDP of 250%.
Germany and the UK have around 400%, the US over500% and Greece over 800% debt to GDP.
These figures are absolutely astronomical and prove that most governmentsin the world will be totally incapable of repaying their debts or funding the pensions or medical care which they havecommitted to. It doesn’t matter however much governments cut expenditure or raise taxes, all these countries are insolventand nothing can save them.