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Larry Edelson’s Wednesday missive, “Europe’s Crisis Over? Hogwash!” is both accurate and prescient.
So if you haven’t read it yet, I think you should do so now.
Larry is one of the very few who not only forecast the crisis well ahead of time, but also accurately predicted how it would impact the U.S. dollar, commodities, inflation/deflation and U.S. stocks.
His main points:
Point #1. Greece isn’t the only European country suffering under the heavy weight of severe austerity measures. In fact, their vulnerability to Greek tragedies is now worse than ever. Larry writes …
“The proof is in the numbers. Before the Greek crisis flared up, debt-to-GDP in Greece stood at 113%. Today, Greece’s debt-to-GDP stands at a tad north of a whopping 177%.
“In Spain, pre-crisis debt stood at 40% of GDP. Today it’s more than 97%. In Italy, it was 106%. Now it stands at 132%. In France, it was 68%. Now it’s 95%. Even Germany’s debt-to-GDP is worsening, leaping from almost 67% in 2008 to almost 75% today.
“In each and every case, debt-to-GDP is worse than it was at the beginning of the crisis — and the austerity measures are literally causing the entire European continent to implode.”
Point #2. Austerity and climbing debt are slowing Europe’s economy. GDP is abysmal, missing expectations almost across the board.
Point #3. Despite — or, arguably, because of — all the bailouts, Europe’s unemployment is still among the worst in modern times.
Point #4. Commodity deflation is picking up momentum. And never forget: Deep deflation and big debts are an explosive mix. When prices decline, governments and businesses take in less revenues. Moreover, with less revenues, sustaining debts can suddenly be far more difficult.
Now comes the next phase of this sad saga …
The Grand Greek Bailout #3, the third major attempt in recent years to pull the country out of the abyss, is now a done deal.
We have ever-more Draconian austerity legislation — passed in Athens … all the needed European approvals in place … and new debt money already flowing into Greece’s coffers.
Very strange.
Because just two months ago, nearly everyone — both lenders and debtors alike — seemed to agree that piling on more debt with still another major wave of austerity was a terrible idea.
* Greek Prime Minister Tsipras denounced the demands by the lenders as “blackmail.” He made the case that the required austerity measures would destroy the Greek economy. In fact, he was so confident in his position, he called a referendum and persuaded the Greek people to overwhelmingly vote against the deal. (Postscript: Yesterday, he resigned.)
* Most Germans, led by German Finance Minister Schäuble, argued that another Greek bailout would be disastrous for Greece, the euro and all of Europe. The only rational solution, they said, would be to eject Greece from the European Union.
* The International Monetary Fund published a landmark report that effectively denounced the entire austerity-and-bailout plan. They argued it could never work unless Greece got major debt relief — something that was never granted and probably won’t be.
No one was able to substantially refute these arguments.
No one was able to explain how this third major attempt to bail out Greece was any different from the first two failed attempts.
Nearly everyone realized that it was insane to try the same exact prescription and expect different results.
Yet they did it anyhow.
All for the sake of political expediency. All because they lacked the collective wisdom and courage to do what they knew (or should have known) was the right thing — to bite the bullet and surgically remove the cancer.
Bottom line:
They failed to surgically remove the debt cancer.
They failed to stop its spread.
And they have left Europe — plus much of the world — even more vulnerable to the next debt crisis.
This is one of the reasons why we have avoided long-term government bonds like a plague.
This is why we have insisted investors should maintain huge amounts of cash in their portfolio.
And this is why capital preservation should remain, as before, one of your paramount goals.
Good luck and God bless!
Martin
Dr. Weiss founded Weiss Research in 1971 and has dedicated his entire career to helping millions of average investors find truly safe havens and investments. He is Chairman of the Weiss Group, which includes Weiss Research and Weiss Ratings, the nation’s leading independent rating agency accepting no fees from rated companies. His last three books have all been New York Times Bestsellers and his most recent title is The Ultimate Money Guide for Bubbles, Busts, Recession and Depression.
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what about a 702 or 707 account???,william
how about a 792,707 account??,william
Those poor people that listened to your hype and bought the QQQ’s SPY and DOW. Don’t worry about them they’ll probably hang themselves today as the U.S. market bubble goes “POP”.
My biggest problem with Larry’s predictions is his timing. I and many others asked about China in his interactive webinar he never mentioned China going bust first. He was hell bent on all the Euro investors comming to the US market The DOW, S&P etc. If the average middle class investor had put substantial $ into these they would have got crushed in the past week. It looks to me like Japan is going before Europe. 8/25/15
FTSE 100 6,077 +178.4 NIKKEI 225 17,807 -734.0
Larry please comment. I was very close to joining your Supercycle glad I did not
The EURO has improved 10% since mid April and mitigates the stock market decline. . Also the US stock market is falling just as fast as the European markets which is contrary to what Larry has been preaching.
wrong roger. larry predicted in july that a correction was due in the us markets. today, he is proven correct. credit where credit is due. larry hit a grand-slam home run on this call. thank for the heads up larry! i went to cash last month and now i’ll buy back in this fall.
That’s right. Larry said a correction was due in the U.S. markets.
Dear Dr. Weiss,
while I fully share Your and Larry’s concerns about the world financial situation I however find very difficult to accept Larry’s forecasts for the next five years at face value. In my experience nothing really happens exactly the way it was predicted because too many variables usually enter into the equation and too often totally unpredictable events that change the whole picture do happen. No mathematical and cyclical model can really encompass what may or may not happen. Having said all this I do not ignore Larry’s warnings and have taken precautionary measures. Regards. Giorgio Raccah,
Ramat Gan, Israel
Monday, 8/24/15: IT’S TIME NOW TO BUY STOCKS!!!
Over the years, I’ve noticed that anytime the DJIA closes down 200 pts or more for 3 consecutive days, and especially when it goes sizzling down on the 3rd day and then reverses course mid-day, it’s time to get into the market!
It will at least go back up to the level where it started breaking down, and in many cases, will set new highs. Dow 31,000 as these fellows have predicted…? Dunno…jury’s still out on that one. BUT, UPRO and/or UDOW for a trade….ABSOLUTELY!!!
there’s also the SPXL which is a 3x leveraged s&p etf.
The only way to sell subscriptions is based on a fear factor. Once they have sold a ton, then it does not matter what the market does. Nobody says that China has gone from 2000 to 5000 in 1-year. That was crazy fools buying. Now of course it crashes. Nothing goes 2.5x in a year. Now everybody blaming china for the crash of everything else. Well, while china was going up the oil was going down, now that china is going down the oil is going down. No correlation. The world maybe over as we think it is (only thing i agree with Weiss reports) but no one can predict what will fall first. If they could, they would not be telling us. A quick disruption in the middle east and oil will spike 20% in a day. Weiss did not predict china. We are all focused on Europe, while China was the obvious bubble to pop. Anyway, I know nothing but i have trusted once who claims to know and lost subscription money and investment money… both at once!
I appreciate”some ” of your comments that seems serious and uninterested. On some others I question it. Why if you and Larry are so right whith your predictions is no one of the economist(in the world )are comenting on the same things.For me it looks likje a commercial pitch and I hate that.Plus I check the credential of Larry !!!???
Claude
And what did you find when you checked Larry’s credentials?
The best investors don’t make predictions, especially when their position jumps from one extreme to the other and the when one of them pans out the say I told you so. The only advice I give family and friends is some basics the experts all agree on. Investors should be in for the long haul and if not buy lottery tickets. No matter what market or markets you are invested in always buy low and sell high and remain patient and calm no matter what. Resorting to Dinosaur brains will only result in making very bad decisions and losses that cannot be recovered. I use common sense,my past education and experience as an engineer and financial manager, and have the utmost belief and confidence in history repeating itself in all life processes and human behavior varies from using common sense to dinosaur brains. There is a vergood book called dinosaur brains that I read while taking psychology courses and then management courses three decades ago. All you have to do is figure out every key word and phrase I used above on your own and you will be as successful as me. What do I mean by successful. Well, my wife and I can live very comfortable until we are over 100 and still leave our estate to our children who are already becoming as smart as their parents. Our family finances were based on one person working and the other taking care of the children as our main priorities. I am the oldest of 10 children from a poor Irish Catholic family. I served my country most of my life and I have been married only once for the past 37 years. I have street smarts and graduate level education in both engineering and engineering management. I do my own home and auto repairs, my own and family income taxes as well as our persona financial and retirement planning. I value advice from many, but have the insight to weigh input from the many and make my own decisions. Lastly I make constant adjustments from lessons learned and my plans are dynamic and not static. Plans are made to be changed for improvement purposes. Making errors is human and only a mistake when repeated. I read everything I have time to do so, and have learned a lot from the investors on this site as well.
I guess all the hype sells newsletters. People buy into optimism or voyeurism, plain and simple don’t sell. That’s why we have all the hype. Amazing how so many people called the housing crash and market crash. Funny think is I’ve been investing for over 30 years and don’t recall all these people at the time calling for it. Kudos to you for probably the best strategy, buy solid companies and stick with them over the long haul.
8/29/15: New lows disappeared at the end of last week. Chuck Butler writing in the Daily Pfennig last week gave a concise definition of the Plunge Protection Team (PPT):
“PPT stands for Plunge Protection Team, but their real name is: The President’s Working Group on Financial Markets. This group was created by executive order in 1988 by President Reagan. It consists of the U.S. Treasury Sec., the Chairperson of the Fed, The chairperson of the SEC, and the Chairperson of the Commodity Futures Trading Commission (CFTC), and they were created after the bloodbath that is otherwise known as Black Monday, or the October Crash 1987, in order to shore up the markets, and some say to even manipulate them. But I won’t go there, I’ll just say what the Forbes said yesterday. “U.S. Plunge Protection Team Out In Force This Morning”. There was apparently an intervention on Monday and the sellers went home. This period of weakness needs to resolve itself, but it is going to take a little longer than it would have if the market was allowed to crash. I expect the major averages to be lower on Friday September 4 than they were on Friday August 28.
Why are you silent on reserve fractional banking, this is the problem.
Take Greece 560 billion loaned, rf banking 12 trillion lent out, if Greece goes bankrupt 12T in loans have to be called in, Eu collapse, the banks in the eu are allowed to borrow 23 times what is in there vault.
Martin there is only one investment and that is gold and silver, the rest is going tits up.
I am a big sceptic so it took a lot of research and soul searching to decide to sign up for the Supercycle trader. So far Larry has been spot on and my portfolio is up 11% on just a few trades. We shall see how it goes. I am not a shill, just tired of watching my investments stagnate. Just sharing my experience. I have a mind of my own and I am not looking for anyone’s opinion on my choice.
Why Larry Edelson Is Right, Global Meltdown! Breadth, Profitability, China, and Greece All Add Up, China Fires Its “Bazooka†… Markets Tank Anyway!
Then you have the statement that printing money will not push metals higher, this is ignoring everything else. Everything else as in why exactly central banks are printing money.