The People Have Spoken and Precious Metals Will Soar
Tuesday, 22 May 2012
The elections in Greece and France have shown that in democratic societies the people are the ultimate deciders of how well the best-laid economic plans will work out in the long run. In this exclusive interview with The Gold Report, Leonard Melman, veteran precious metals analyst and publisher of The Melman Report, talks about the implications of the recent European elections on the prospects for the gold and silver markets. He also discusses the huge rebound he anticipates for the metals markets later this year.
TGR: It seems that economists can plan and recommend, and politicians can negotiate and maneuver, and pundits can analyze and predict all they want, yet when the people don’t want to play along, it can all mean nothing. Of course, we’re talking about the elections in France and Greece. What’s going on?
Leonard Melman: What’s going on is that the monetary authorities in Europe have decided that austerity is the only way out of the financial dilemma, which I find kind of amusing, because it is their Keynesian activities that created those policies in the first place. Their decision now is that austerity, which is cutting back government programs, is the only thing that will work. The problem is that the public doesn’t want their government benefits cut back. So, the message from the French people was that Nicolas Sarkozy, with his austerity, was no longer their friend and François Hollande, with his promise to end austerity, is now the new President. In Greece it’s even more dramatic. Greece has been a funny culture for about 40 years living in a dreamland, thinking that nobody has to work and nobody has to pay taxes, which is sort of their national sport.
TGR: Not paying taxes is a national sport?
LM: It’s a high art with the people in Greece. Yet they still expect their government to give them early retirement, generous unemployment benefits, etc. That has been supported for the last 40 years by massive government borrowing. And, that’s the reality after this election. The people voted out those politicians who, at least on paper, wanted to cut back the size of government. Now there could be a real crisis directly ahead of us.
TGR: Does that mean the Eurozone is going to blow up?