Portugal

Jim Rogers Warns ‘We Are Going To Have Serious Problems In 2016 And 2017’

Last time I blogged about the well-known investor, author, and financial commentator Jim Rogers, I said:

It’s been interesting watching him lately attach timeframes to some of his forecasts.

I quoted a March 4, 2016, piece on the Bloomberg website where it was reported:

The famous investor said that there was a 100 percent probability that the U.S. economy would be in a downturn within one year

(Editor’s note: Blog added for emphasis)

The former investing partner of George Soros just shared another forecast- with a timeframe- in a recent interview with The Korea Times. Kim Jae-kyoung wrote on March 13:

“We are going to have serious problems in 2016 and 2017. It will be worse than 2008”

I expect markets to collapse like they did in 2008. It started in the middle of 2014 and that has been going worse and worse. I don’t know when the market will hit rock bottom but probably next year will be the worst.”

(Editor’s note: Blog added for emphasis)

Jae-kyoung added later:

Rogers said that situation is much worse now than in 2008, when the epicenter of the crisis was the U.S. But this time the crisis will be uibiquitous, he said, expecting that major economies, including the U.S., Japan and Europe, will all suffer further setbacks.

“It’s going to be the U.S. again because America is the largest debtor nation,” he said, “but this time, Portugal is going to go bankrupt, Italy is going to go bankrupt and the U.K. is going to collapse. It’s going to happen in a lot of places.”

(Editor’s note: Blog added for emphasis)

In the insightful Korea Times interview, the Singapore-based Rogers went on to share investment advice with readers, which you can read all about on the newspaper’s website here.

Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; a qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. The creator/Editor of this blog is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information contained herein.)

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Behold The Golden Bear: Russia Now World’s Biggest Gold Buyer

For years I’ve heard the term “Russian Bear” being used to describe Russia and its might.

For example, “NATO better not put too many missiles in Eastern Europe, or they’re going to anger the Russian Bear.”

After reading this morning about Russia acquiring literally tons of gold over the last ten years, perhaps they should be referred to as the “Golden Bear” going forward.

Scott Rose and Olga Tanas reported on the Bloomberg website this morning:

When Vladimir Putin says the U.S. is endangering the global economy by abusing its dollar monopoly, he’s not just talking. He’s betting on it.

Not only has Putin made Russia the world’s largest oil producer, he’s also made it the biggest gold buyer. His central bank has added 570 metric tons of the metal in the past decade, a quarter more than runner-up China, according to IMF data compiled by Bloomberg. The added gold is also almost triple the weight of the Statue of Liberty.

(Editor’s note: Italics added for emphasis)

I’m starting to see what legendary investor Jim Rogers was getting at regarding Russia.

While a number of “developed” countries are selling the precious metal these days- including economically-troubled France, Portugal, and Spain- “developing” nations are acquiring it with a fervor. Rose and Tanas added:

Quantitative easing by major economies to support financial asset prices is driving demand for gold in the emerging world, said Marcus Grubb, head of investment research at the World Gold Council. Before the crisis, central banks were net sellers of 400 to 500 tons a year. Now, led by Russia and China, they’re net buyers by about 450 tons, Grubb said by phone from London, where his industry group is based…

“That’s a very significant switch, and obviously a very positive one for the gold market,” Grubb said.

(Editor’s note: Italics added for emphasis)

Meanwhile, the price of paper gold is taking a hit this morning. Barbara Kollmeyer and Myra Saefong reported this morning on the MarketWatch website:

G-7 nations could release a statement this week reaffirming a commitment to “market-determined” exchange rates, responding to heated talk about a currency war…

The Group of 20 nations will meet later in the week, with currencies expected to be at the top of the agenda.

As gold has benefitted from currency devaluations, traders are wary of these developments.

In addition, light volumes due to Asia’s observance of the Lunar New Year and a lack of economic data being released today are fueling downward pressure on the gold price.

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

Sources:

Rose, Scott and Tanas, Olga. “Putin Turns Black Gold to Bullion as Russia Outbuys World.” Bloomberg.com. 11 Feb. 2013. (http://www.bloomberg.com/news/2013-02-10/putin-turns-black-gold-into-bullion-as-russia-out-buys-world.html). 11 Feb. 2013.

Kollmeyer, Barbara and Saefong, Myra. “Gold hit on worry of possible G-7 currency salvo.” MarketWatch. 11 Feb. 2013. (http://www.marketwatch.com/story/gold-edges-higher-as-dollar-weakens-2013-02-10). 11 Feb. 2013.

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Switzerland Holds Military Exercise For Civil Unrest, Eurozone Refugees

Not only is the global economic crisis that reared its ugly head in 2008 still alive, but its presence is clearly visible in Europe these days, where sovereign debt crises and civil unrest in places such as Athens and Madrid make the news on a regular basis.

Not surprisingly, the Swiss have taken notice.

And the wealthy nation of 8 million people that’s noted for its armed neutrality is preparing just in case things “go south” with their neighbors. And within.

Matt Clinch wrote on the CNBC website yesterday:

Switzerland launched the military exercise “Stabilo Due” in September to respond to the current instability in Europe and to test the speed at which its army can be dispatched…

Swiss newspaper Der Sonntag reported recently that the exercise centered around a risk map created in 2010, where army staff detailed the threat of internal unrest between warring factions as well as the possibility of refugees from Greece, Spain, Italy, France, and Portugal.

The Swiss defense ministry told CNBC that it doesn’t not rule out having to deploy troops in the coming years.

According to Clinch, some 2,000 troops took part in the exercise that included eight different towns across the country.


“M&N PICTURES Video 149: CH Manöver ‘Stabilo Due 2012’”
YouTube Video

Alex Newman wrote on the website of the biweekly magazine The New American earlier today:

“The Swiss are famous for preparing for everything and having an absolutely huge army, relative to their population, to deal with any eventuality,” observed U.S. Naval War College national security affairs Professor John Schindler, adding that Switzerland was “clearly on to something” as evidenced by its history. “The Swiss have stayed out of the EU — one more thing the very prosperous Swiss are gloating about these days — and they certainly don’t want EU problems spilling over into their peaceful little country.”

“Switzerland was ‘clearly on to something’”

As should we be.

Sources:

Clinch, Matt. “Swiss Prepare Army for Euro Zone Fallout.” CNBC. 15 Oct. 2012. (http://www.cnbc.com/id/49385502). 16 Oct. 2012.

Newman, Alex. “Swiss Military Preparing for EU Meltdown Scenario.” The New American. 16 Oct. 2012. (http://www.thenewamerican.com/world-news/europe/item/13234-swiss-military-preparing-for-eu-meltdown-scenario). 16 Oct. 2012.

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60 Minutes Segment About Eurozone Crisis, Potential Impact On United States

We’re in a debt crisis. Eurozone countries have way too much debt. We have gorged on debt. We are living beyond out means. And after 10 years of booming economic times- it is now payback time. We are paying back our credit cards, and that will prove very painful and costly…

Well, the U.S. is doing terribly well at the moment. However, clearly if the Eurozone has a really bad time of it this year, which it could well do, then America will not escape unscathed.

-Louise Cooper, Senior Financial Analyst at BGC Partners, talking to Steve Kroft in a recent interview that appeared on the CBS show 60 Minutes this past Sunday. Cooper has been called “The Downturn Diva” by the British press.


“An Imperfect Union: Europe’s debt crisis”
CBS News Video

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European Central Bank Attempts To Shield Spain And Italy From Debt Contagion

I’d be willing to bet most Americans thought Monday’s carnage on Wall Street was the direct result of Standard & Poor’s downgrade of the United States’ credit rating. However, developments across the pond related to the lingering sovereign debt crisis may have contributed to the sell-off as well. From the Wall Street Journal’s Brian Blackstone and Charles Forelle today:

The European Central Bank delivered on its promise to purchase Italian and Spanish bonds on a large scale, calming investors who had grown increasingly worried that euro-zone leaders might sit idly by while the debt crisis engulfed Spain and Italy.

Government bond yields of Spain and Italy plunged Monday, as did their yield spreads over safe German bonds. Italy’s 10-year bond yield fell to around 5.3% from just over 6%. Spain’s fell even further, to 5.15%.

The ECB bought those countries’ bonds for the first time since creating its debt-purchase program 15 months ago, said traders. The ECB didn’t say how much it bought or confirm what bonds it purchased, but estimates range from around €3.5 billion ($5 billion) to as high as €5 billion. In an interview with German broadcaster ZDF on Monday, ECB President Jean-Claude Trichet said the central bank’s actions “undoubtedly were significant,” and necessary to ensure that its interest-rate policies functioned smoothly…

The ECB’s purchases of Italian and Spanish bonds were no help to European equities, which tumbled along with the rest of the global markets Monday. Bourses in London, Paris and Frankfurt all traded lower; German and French indexes each shed more than 4%.

Well, if anyone still believed Spain and Italy were strong enough economically so as to be somehow immune to the debt contagion that’s already claimed Greece, Ireland, and Portugal, these actions by the European Central Bank demonstrate otherwise. And due to the size of their economies, such a condition is worrisome. Blackstone and Forelle noted:

Italy and Spain, the region’s third- and fourth-largest economies, have a combined gross domestic product of nearly €2.7 trillion, almost 30% of the euro zone total. Royal Bank of Scotland economists estimate the ECB and Europe’s bailout fund will eventually have to own €850 billion of Spanish and Italian bonds to safeguard those countries.

It might be a good idea to keep monitoring the sovereign debt situation over in Europe. Investors may be easing up after the ECB’s actions, but keep in mind that no intervention would have been necessary if the rosy pictures that had been painted recently of these two major European players were really true.

Source:

Blackstone, Brian and Forelle, Charles. “Italian, Spanish Bond Yields Decline.” Wall Street Journal. 9 Aug. 2011. (http://online.wsj.com/article/SB10001424053111904480904576496363709187284.html?mod=googlenews_wsj). 8 Aug. 2011.

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Dennis Gartman Predicts ‘All The PIIGS Will Go Bankrupt’

Yesterday I discussed the potential impact on the United States should Greece and Portugal default on their debt. As most of you might already know, these two European states belong to a group of nations referred to as the “PIIGS.” From Investopedia.com:

An acronym used to refer to the five Eurozone nations, which were considered weaker economically following the financial crisis: Portugal, Italy, Ireland, Greece and Spain.

And one veteran investor who correctly-called the 2008 commodities pull-back thinks each of the PIIGS will soon be going bankrupt. From Lee Brodie on the CNBC website yesterday:

Will the EU ever corner the problem?

According to strategic investor Dennis Gartman the short answer is ‘No.’ He tells Fast Money it ain’t gonna’ happen.

Although he concedes problems will probably be contained in the short-term – in the long-term he doesn’t see the situation playing out terribly well, at all.

In fact he tells us that he expects “all the PIIGS will go bankrupt.” And not 10 or 20 years from now. Gartman says prepare for it to start happening “sometime over the next year and a half. But they’re all going to go.”

Stay tuned…

Source:

Brodie, Lee. “Dennis Gartman: PIIGS Will Go Bankrupt Within 18 Months.” CNBC. 6 July 2011. (http://www.cnbc.com/id/43656127). 7 July 2011.

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How Americans Could Be Impacted By Defaults In Greece Or Portugal

Despite the persistent claims of Pollyannas worldwide that the global economy is humming along just fine these days, it seems as if there’s no end to the number of destabilizing factors popping up. Even as I watched the financial news late last night, CNBC Europe reporter Rebecca Meehan astutely-noted that as it concerns Europe, as soon as one crisis seems to be brought under control (Greece), another one is quick to pop up (Portugal). MarketWatch’s John Kell explained the situation on the Iberian peninsula yesterday:

Moody’s Investors Service issued a four-notch downgrade on Portugal’s rating, placing the European nation into junk as the ratings agency expressed concern about the growing risk of a second round of financing before it can return to the private market.

The woes surrounding Portugal come as Greece, another flailing European nation, continues to worry international markets about possible default on its debt. Like Portugal, Greece was also told to cut its budget deficit sharply, but has been unable to do so. Portugal is aiming the cut the deficit to 5.9% of gross domestic product this year, from over 9% in 2010, and then to 3% by 2013.

(Editor’s note: Italics added for emphasis)

If you’re like me, you may be curious about what kind of impact a Portuguese or Greek default might have on the United States. Well, the Los Angeles Times’ Walter Hamilton wrote about Greece’s situation on July 2 and provided a glimpse of what could happen if one of these smaller European states defaults on their debt. From the article:

What would happen if Greece defaulted?

The biggest threat would be a drying up of credit worldwide. As banks and other lenders are hit with losses, they could drastically rein in lending activity, thus throwing a monkey wrench into the global economy.

Although Greece represents just a sliver of the overall European economy, economists worry about the threat of “contagion” spreading to other troubled economies, such as Ireland, Portugal and possibly Spain, all of which are stricken with anemic or nonexistent growth and heavy debt.

“Contagion is the real issue, not Greece per se,” said Gary Schlossberg, senior economist at Wells Capital Management.

(Editor’s note: Italics added for emphasis)

“…drying up of credit worldwide.” As if getting banks to lend these days weren’t hard enough already. Even after they’ve been showered with taxpayer money.

Sources:

Kell, John. “Moody’s cuts Portugal to junk; outlook negative.” MarketWatch. 5 July 2011. (http://www.marketwatch.com/story/moodys-cuts-portugal-to-junk-outlook-negative-2011-07-05?dist=beforebell). 6 July 2011.

Hamilton, Walter. “How Greece’s debt crisis affects U.S. investors and consumers.” Los Angeles Times. 2 July 2011. (http://articles.latimes.com/2011/jul/02/business/la-fi-greece-qa-20110702). 6 July 2011.

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Wednesday, July 6th, 2011 Banking, Credit, Debt Crisis, Defaults, Europe No Comments
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