Chris re Euro -- Operation Phoenix

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Subject: Chris re Euro

Author:
Allen Currie

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Date Posted: 10:47:07 06/07/12 Thu

You might look below where I posted to Tony re the situation currently on May 18.

Essentially we have a bank run, or more accurately a currency run in progress. Bank runs are hell on wheels to stop. Essentially they fly in cash money till people shrug and say to themselves, I guess I was wrong about how shaky that bank was, and they put their money back in the bank.

This one is different. First, it started when Greeks feared that Greece would leave the ECM and return to the Drachma. They rushed to get their assets out of what surely would be a losing position in the Drachma, and turned their bank deposits, etc. into something they felt was safer. The Euro and the dollar. On that Monday alone a couple of weeks ago they pulled 700 million Euros out of the banking system. Think how many E20 bills that would come to, and it left the banking system completely to the under the mattress bank.

Unfortunately flooding the market with cash does not remove the primary reason the run started, the political system. The election results added immensely to failing confidence. Moreover it doesn't really look as if new elections will solve the problem. The fear was intensified.

Fear is like a wildfire fanned by a high wind. It just grows and grows, often for no discernable reason. Spain is woefully weak, as are its banks. Any idiot, including the pundits could see that. And the pundits were loud in their comments to that effect. Every non knowledgeable Spaniard began to think about the possabilities. The run spread. Now even the powerhouse German banks, in truth also bankrupt, are under suspicion. The run will spread. Even Greece has much further to fall as this economic whirlwind goes round and round.

Don't think the US, or Canada, is immune. Despite the fact that the US total spending under Obama has grown at smaller percentage rates than under any president since Regan, the perception is that he has spent more than any other president by far. In actual numbers this is true, but not in percentages. Add the results of a recent poll which said that very slightly over 50% of US citizens believe the US is NOW bankrupt, the weakness of American banks, the out of control spending and debt, and the elements for easy spread of the fear to jump the Atlantic are all in place. Even China is lowering its interest rates to stimulate its economy.

May God bless us all, each and every one. We're gonna need divine intervention.

Allen

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