A RECIPE FOR DISASTER

Take the following ingredients:

1. A banking system which is on the verge of collapse
2. Add a few $ trillion of government liquidity and guarantees
3. Inject $ 100’s of billions in loans and capital
4. Keep all the bank management that have caused the crisis
5. Pay them astronomical bonuses because otherwise they might be snapped up by a bankrupt competitor (more…)

A RECIPE FOR DISASTER

“Don’t tell me what to buy, but tell me when to buy”!

Back in 2002 we told investors to buy physical gold for up to 50% of their liquid assets. Since then gold is up between 220% and 280% depending on base currency.

Thus it was very clear to us back then what the effect of the disastrous mismanagement of the world economy would be. But it is even clearer what will happen next. We are now going into the phase of recognition. This is the phase when the world at large is slowly waking up to the fact that printing unlimited amounts of money will make many currencies – and in particular the US dollar – worthless. (more…)

A RECIPE FOR DISASTER

We have told investors that the rating of US and UK sovereign debt is a farce and that they both will be downgraded.

Today the UK is on its way to joining the PIGS countries as Standard and Poor’s lower the UK’s AAA outlook from “stable to negative”. The PIGS countries are the hopelessly weak European countries (Portugal, Ireland, Greece and Spain) which have all been downgraded this year. The UK government deficit is estimated to reach £175 billion in 2009 (it will probably be a lot higher). This represents 12.4% of GDP.  Total UK government debt is forecast to reach £800 billion or 57% of GDP. (more…)

A RECIPE FOR DISASTER

Or, we could say  “Goodbye Paper Money  – Hello Real Money”.

We have for some time warned investors that the era of the dollar as a reserve currency is coming to an end soon and that the strongest and safest currency is gold. All currencies are hopelessly declining in value against gold and this trend will accelerate in the next few months and  years, starting now.

Voltaire’s statement from 1729 that “All paper money eventually returns to its intrinsic value – ZERO” is now ringing as true as ever. We show in the graph below the decline of major currencies against gold since 1900. (more…)

A RECIPE FOR DISASTER

Gold outperformed most assets in the first quarter of 2009.

On the Matterhorn Asset Management website the  Gold charts pages show that  gold gained between 4% and 7% against major currencies  in Q1 2009. In spite of being well off the highs for the quarter gold still showed an excellent return.

But even more importantly the Dow Jones declined 17% against gold in the first quarter with similar falls for most major stock markets against gold. (more…)

A RECIPE FOR DISASTER

Gordon Brown has really surpassed himself in creative alchemy. He has turned $100 billion of G20 new commitments into $5 trillion of air!

Take $100 billion of committed new money, add $500 billion of already committed money, add non-committed but discussed amounts of $500 billion and you present a headline lie of $1.1. trillion. But it gets worse, Gordon Brown then claims the largest fiscal stimulus in history of $5 trillion. This is another lie. The $5 trillion contains no new funds but only the IMF’s estimate of the rise in the G20’s government borrowings between 2008 and 2010. (more…)

A RECIPE FOR DISASTER

This week there will be a meeting between G20 leaders and central bankers in London to save the world economy.

Let us make it very clear – the meeting is bound to fail. There is no chance that the G20 leaders will reach an agreement that will save the world economy. Even two world leaders can’t agree on how solve the biggest global financial crisis that the world has ever encountered, never mind twenty.  Each one of twenty leaders has a different political agenda and they will all blame each other, so there is no possibility whatsoever that the meeting will result in more than the normal platitudes about cooperation  to solve the crisis. Both Merkel and Sorkozy have already rejected Gordon Brown’s proposed stimulus package and that is before the meeting has even started. (more…)

A RECIPE FOR DISASTER

In our February Newsletter we discussed the bankrupt UK econony. MEP (Member of European Parliament) Daniel Hannan makes a scathing attack on Gordon Brown and his failure in running the UK economy,  in the video clip below. This is an outstanding and extremely articulate speech accusing a devalued Prime Minister for having run the UK out of money. A MUST SEE! (more…)

A RECIPE FOR DISASTER

by Egon von Greyerz

The incitement to violence is gaining momentum and the latest example is an article in the Daily Mail:

Seize their Porches and throw them in jail! Shameless bankers are worse than Train Robbers (more…)

A RECIPE FOR DISASTER

by Egon von Greyerz

The Fed decided yesterday to spend another $ 1.15 trillion to try to save the financial system. They will spend $ 750 billion to  buy mortgage backed securities and $ 300 billion to buy long term Tresuries.

These purchases will make the Fed’s balance sheet baloon to $ 4 trillion. Most of their assets will consist of worthless and unmarketable paper. (more…)