Warning From Europe: “Consequences of Failure Would Be Catastrophic”
This morning we learned that, like the United States in 2011, the credit ratings of France and Austria face an imminent downgrade, once again proving that the stability of some of the world’s leading economies is in a state of extreme distress. It is our view that ‘AAA’ is still over rating France (and the United States).
Both, Europe and the U.S., have now taken on policies of reckless stimulus spending, currency manipulations and monetary easing under the pretext that a recovery is taking place and more intervention is needed to make sure we maintain stability in the system. Despite what we are being led to believe by our dear leaders, however, there is no long-term solution. All they can do now is placate the masses until such time that the system completely buckles and a can of hurt is opened up on the people of the entire globe.
For three years now, economic leaders from France, Germany and even the United States have failed to find a solution for the debt crisis in a single nation – Greece. If this debacle has shown us anything, it’s the fact that this whole situation is spiraling out of control and no one has a clue what to do.
We have literally been swinging from recovery and stabilization to collapse and catastrophe on a daily basis.
Today, amid downgrade threats, we learn that the Greece issue is (once again) unresolved and on the precipice of collapse:
“Unfortunately, despite the efforts of Greece’s leadership, the proposal put forward … has not produced a constructive consolidated response by all parties.”
Greek debt swap negotiators said earlier they were less optimistic about reaching an agreement to avert a disorderly default, warning failure to reach a deal would be disastrous for Greece and Europe.
“Yesterday we were cautious and confident. Today we are less optimistic,” said a source close to the Greek task force team in charge of negotiations.
“It is important to remind all parties that the consequences of failure would be catastrophic for Greece and the Greek people, Europe and Europeans,” the source said on condition of anonymity.
Not only would it be a catastrophe for Europe, but the entire world. As we outlined in our 2012: Predictions of a Mad Tin Foiler, the collapse of Europe is not the end game – it’s only the end of the beginning – and what will follow will be unprecedented in modern history.
You may recall that Secretary Hank Paulson warned in 2008 that the system was on the brink (and later wrote a book with the same title). The situation was apparently so serious that Representative Brad Sherman (D-CA), in a speech on the House floor, said that if the bailout legislation wasn’t passed, there would be martial law in America as a consequence of the resulting collapse of financial markets and the economy.
This was the warning in 2008 from the head of our Treasury Department!
Nearly four years on, we’re hearing the same warnings, and governments in Europe and the United States are actively preparing for such a possibility. In testimony before Congress late last year, Fed Chairman Ben Bernanke warned that a “disorderly default” in Europe would be a recovery ending event that may include runs on the banks and a “very, very bad outcome” for the U.S. economy.
As we approach yet another debt ceiling in the U.S. and require an additional $1 trillion just to keep the system afloat, we urge our readers to consider the distinct possibility that we remain on the brink, and are closer than ever before to a total breakdown in the financial, economic and social stability of the world.
A meltdown in Europe will not be isolated to just that continent. The contagion will spread to the United States, and the default of Greece and other sovereigns will be anything but orderly.
Catastrophe is in our very near future.
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Date: January 13th, 2012
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