Articles NewsFlow Gold & Silver Prices Market Briefing

Recevez notre Marketbriefing

In the same category
Now Let’s Get Rid Of The Income Tax Nathan Lewis The Current Account Deficit Nathan Lewis The Current Account Deficit #2: Savings and Investment Nathan Lewis The Current Account Deficit #3: Complete Nonsense Nathan Lewis

overtheedge
Member since May 2012
680 commentaries - 6 followers

6 followers

has posted a comment on the article :

The ECB to Open Liquidity Spigots

- Philippe Herlin - GoldBroker

"... credit for non-financial businesses is down 5.7% (by October 2013, year-to-year) for the italian banks and 19.3% for spanish banks! Consumer loans and mortgages are also down."

The above quote is the meat and potatoes.
Production is the only way to generate new wealth. Production is a non-financial business.
Very few producers have adequate liquidity to immediately pay for inputs. They depend on the financial sector for operating loans to make payments while they are waiting for inventory to sell and money change hands.

Consumerism grows and shrinks depending on the perception of future wealth aka job security.
Consumerism is best described as "taking in one another's laundry."
Nothing is produced, no new wealth generated and every transaction carries a government surcharge in the form of taxation.

Ergo, continued declining wealth generation WILL result in eventual bankruptcy.
So the big question is, "What will be the spectrum and magnitude of the collateral damage?"
Can you and will you firewall your assets from the coming economic shit-storm?
I'm betting the effective answer is a resounding, "NO."

First, last and always, the financials will protect the financials. The CBs will back-stop the subordinate banks if it might be profitable or in self-defense.
Bail-in strategy is nothing new. It existed prior to the creation of central banks and deposit insurance.
And like all forms of insurance, deposit insurance is an actuarial Ponzi scheme.
Do you really think the deposit insurers have a more than adequate pile of money sitting in the vault ready for disbursement?

I'll leave you one last truism. When the economy is rising, the banks are best buddies. Willing to loan you monies to buy a house, a car, a wide screen TV, etc. But once the economy starts declining and you start having trouble making payments, the bankers are equated with vampires.
Might I suggest re-reading "The Pied Piper of Hamelin."

Commented 3996 days ago

Send

Beginning of the headline :As we’ve explained before in this article, LTROs, those gigantic loans, totalling $1 trillion euros from the ECB to the european banks, are akin to the Fed’s quantitative easing plans or, in other words, the use of the printing press. A large part of that money cannot be reimbursed, and the ECB will have to « roll over » the debt, e.g. to propose another gigantic loan. Terms are approaching. LTROs are three-year loans that were issued in December 2011 and in February 2012. So they are due in D... Read More

Reply to this comment

You must be logged in to comment an article

8000 characters max.

	RSS feed		24hGold Mobile
	Gold Data Center		Gold & Silver Converter
	Gold coins on eBay		Silver coins on eBay
	Technical Analysis		Fundamental Analysis