Monday, April 08, 2013

Eurocrash: Portugal's "national emergency"

DWN 008-cas.jpg

Here we go again - another day, another crisis. This time it's Portugal, which has had its constitutional court chuck out part of its "austerity" budget.

According to Handelsplatt, prime minister Pedro Passos Coelho says spending on social security, health and education would be cut. If the country does not save to meet the requirements of the international sponsors (Geldgeber), it faces bankruptcy. 

Meanwhile, DWN is effectively saying that we should get our money out of the banks. It uses American economist and investor Doug Casey, who avers that the crisis in Cyprus and the de factocollapse of the Cypriot banking system was the beginning of the end of European banks as we know them today.

Cyprus will remain no other choice than to return sheep farming, the cultivation of olives and serving ouzo to tourists, says Casey. "For a very long time, nobody in the world will deposit money in Cyprus".

But the events in Cyprus are more than the failure of a national banking system, he adds. "It could be the spark which explodes the barrel of dynamite on the Global Financial System". The whole world is bankrupt and has been for years, he goes on to say, then declaring that: "The banking business is corrupt from top to bottom". This is something with which few, other than bankers, will disagree.

Nowadays no one knows who really is creditworthy, he says, referring to the trillions in value of derivatives. It is impossible to assess the actual risk of default on these derivatives", Casey warns.

The states themselves have supported this development, according to Casey, with the central banks of each year pumping billions into the markets . "The result is logically a gigantic financial industry which has to deal with these trillions." But", he warns, "there will be a very bad end … There will be a big crash, it is only the question of whether it will be later this week, the next one or not for a few months".

I may be wrong here, but one gets the impression that he is not entirely a happy bunny.