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Wednesday, September 14, 2011

Europe heading for all out implosion, 2008 style

America led the world into the first major wave of what I think will be a decade long crisis, back in 2008.
In 2011/2012, it is looking like Europe leading the world down rabbit hole number two.

The European banking system looks much worse than America's.
The major advantage the US has, is the US printing press for new currency has not hit any significant limitation.

Europe however doesn't have the same luxury. The Euro is basically a currency PEG among all member nations.
The Euro can't just print trillions of dollars and drop it from helicopters like Ben Bernanke.

This difference will result in a very harsh, and nasty deflationary collapse in the European union.
I suspect with Europe going down, the world will follow just like the world did with America.

Unfortunately, all of this will continue to add to the strain to the global system.

Two American banks with 4.3T dollars are at a stunning 22x leverage to capital, a recipe for disaster.
Four European banks with 4.8T Euros are at 69x leverage, and without unlimited currency printing, a sure fire collapse is fast approaching.
I had thought this would be kicked into much later 2012, but the posts I keep reading is starting to sway me that we may not make it out of 2011 without fireworks.

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