The End of The Great Bailouts is Approaching

Friday, June 25, 2010
By Paul Martin

Bob Chapman
International Forecaster.com

Broke central banks, UK must monetize or collapse, 20 major countries on the edge of insolvency, No way but down for the Stock markets, defaulting on bailout payments, Fed audit going through Senate, shrinkage of high-end properties, VAT coming.

The devastating results of Keynesianism didn’t take hold of the western world until after WWII. Cycles were created for the accumulation of wealth. A boom occurs and you get wealthy from investments on the way up and even wealthier on the way down, because the elitists are controlling the supply of money and credit and interest rates. That is the real underlying mission of the Fed, which is owned by banking and Wall Street. All the power to control markets and create inflation and deflation lies with the Federal Reserve. Politicians do not create monetary policy, the Fed does. The politicians do as they are told. They know from time to time there will be economic pain, but the payoffs are so good they learn to live with it.

This time the damage is so bad that the Fed has been forced to monetize trillions of dollars of debt. The disease this time has spread to Europe with the ECB, using, quantitative easing by simply creating money out of thin air. That is something they said they would never do. The only real liquidity in Europe is emanating from the ECB and the Fed. We believe that eventually countries will fail, as Iceland has. You know all the possible victims. There are presently 20 of them including the US and UK. Three-card Monte games do not last forever. If liquidity is that scarce then where is the money coming from? The only place it could be coming from is the Fed. Not only is a $2 trillion bailout in process, but also as banks and thrift institutions fail stress tests some will be bailed out by being absorbed by other supposedly solvent institutions. When that option is gone then governments must bail them out. When the monetization hits the entire system collapses. After 50 or more years in this business we believe the system is definitely going to fold.

All the central banks involved are broke or virtually broke. If they are not broke why is their condition a big secret? The Bundesbank told Spain last week that we do not want stress test results made public. The reason obviously was because of the sad condition German banks are in and their penchant again to keep everything secret. These are the same people who want a one-world currency in the form of an SDR, which is worthless, because it has no backing. It is just another fiat currency. They all are in such bad shape they cannot even sterilize their interventions. The new trillions we see in the system in Europe and the US cannot be sterilized.

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