By Mike Larson – Weiss Research
Earlier this year, both in Orlando, Florida, at the World MoneyShow and here in Money and Markets, I said that five “Great Deceptions” threatened the wealth of investors everywhere. The fifth and most important of those? That “European officials are truly ‘solving’ the European debt crisis.”
I said I couldn’t believe anyone was peddling that ridiculous argument. And I said Greece was going to default despite all its bailouts, and the risk from a European calamity was high.
One month ago, I ramped things up, saying that “Europe is mired in recession. Asia is slowing as well.” I added that “If I’m right, and the U.S. is set to slow further like the rest of the world already is, earnings and stock prices could suffer!”
Then just last week, I really ratcheted up my warnings, saying “Ignore Europe at your own peril … What happens in Europe WILL impact our companies and markets here … so please make sure you have select downside hedges in place.”
Wall Street investors tried to laugh off my warnings for a while, driving U.S. stocks up in the face of all these threats. But hopefully you heeded them and took the protective steps I recommended. Because Wall Street isn’t laughing anymore!
U.S. stocks are now getting hammered. Commodities are imploding. Bank stocks are falling worldwide, and some markets in Europe are at multi-year … and even MULTI-DECADE lows!
This is what happens when you only paper over a problem, rather than cure it!
How can this be happening? Didn’t central bankers print trillions of yen, euros, pounds, and dollars in the past couple of years to prevent and “cure” these problems? Weren’t we told repeatedly by both European and U.S. policymakers that the problems in the debt markets were contained?
Yeah, we were.
But hopefully, you’ve learned your lesson from the U.S. mortgage debacle. Some policymakers will outright lie to keep you from selling stocks, bonds, or otherwise taking steps to protect yourself from the fallout of a serious debt crisis. Others are just woefully ignorant of the severity of the underlying problems.
Think I’m off base?
Then look at what former U.S. Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke did during the subprime meltdown! They gave speech after speech saying the problem was “contained” and that it wouldn’t have a major impact on the U.S. economy. But you don’t need me to tell you those predictions weren’t just off by a small degree.
They were 100% dead wrong!!
Now we’re getting the same song and dance from Europe. The ESM. EFSF. LTRO. We’ve been told that all of these whiz-bang money printing and bailout programs would prevent a crisis, and that the crisis itself really isn’t that bad.
But try telling that to a Greek investor, who has now lost every single penny of gains he racked up in the last TWENTY YEARS! Here’s the chart of the Athens Stock Exchange General Index. You can see it’s trading around 610, a level last seen in November 1992.
It’s not just the Greek exchange getting hammered though. Spain’s main index is now at its lowest level since March 2009, while markets across Europe are slumping fast.
This just goes to show that when you paper over a crisis, rather than try to solve it directly, you might be able to gain a week, a month, or even a quarter or two of calm. But ultimately, your efforts will prove futile if you don’t get rid of the underlying problems!
What I’m Doing — and What I Recommend You Do, Too!
So what have I been doing? What have I been recommending my subscribers do? Simple. Take steps to protect yourself — and go for profits — from this unfolding crisis!
Now, I’d like to help you do the same. So I’ve teamed up with my colleagues at Weiss Ratings to create a very special report all about the current crisis. It’s called “Winners and Losers in the Great Global Banking Crisis of 2012-2013,” and it’s chock full of absolutely critical information!
In this report, we’ll reveal …
* The multiple threats to world’s weakest banks — from the global economic slowdown to more ratings downgrades to the inability of governments to fund ever-larger bailouts!
* The growing risk of major sovereign and banking debt defaults — not just in Greece, but in much larger countries like Italy, Spain or even France
* Which global banks are most at risk of failure — and which you can actually rely on as relatively safe parking places for your money. We pull no punches, and play no favorites. Instead, we rely on data about asset quality, profitability, capitalization and more to come up with our unbiased ratings!
