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Europe is smoldering like a fine cigar. It will take a while to burn to the end, but make no mistake, the whole Eurozone is burning.
The latest news is that Greece’s massive debts will be written down "no more than 65-70%," according to a story from the Fiscal Times.
Remember, it was just this past summer that creditors were willing to go no further than a 21% haircut. And then it shot up to a 50% loss they were willing to take by the end of the year. Now it’s 65-70%… and I’m guessing it won’t stop at 70%. European nations are broker than they’re willing to admit, and if they actually had the funds to fix their debt woes, they would have shot those bullets a long time ago.
Remember also that ANY haircut is technically considered to be a default. Just a 1% write-down is a default.
If you or I are short 1% on our bills, those bills are still considered unpaid. And that’s exactly how it goes in world bank finance as well.
Today, the Financial Times also announced that Portuguese debt rose to record highs. Looking for yield?
Portuguese 3 year bonds now yield 19.43%!
That’s absurdly high – and it signals a default is in the works for Portugal. The dominos continue to fall in Europe. What country could afford to finance such high yields?
These developments just aren’t hitting the main headlines of the media because they’re not big enough to cause waves. I’ve said it before, but new crises arise every day. We’re now conditioned to crises. We’re building up a tolerance to endless toxic crisis – and just like a tolerance to alcohol, we’ll soon reach a point where we are so overloaded with toxins that all major systems will shut down.
Even though our minds are used to the crisis, it doesn’t change the fact that these crises have lasting, severe and damaging effects.
Take these headlines seriously. Without major writedowns and massive money printing events, every major Western power has no practical way of unwinding their debts.
As you may know, I’m strongly leaning towards the likelihood that these debts will be unwound with endless bouts of money printing – which will ultimately be seriously inflationary.
I’m preparing myself and my portfolio with a good amount of physical precious metals. I’ve opened a foreign bank account, I’m keeping my finances liquid, and I’m paying down debt.
I’m also launching a brand new research service, called Resource Prospector Pro, dedicated to commodity investments.
I’ll publish the first issue of this research service on the last business day of this month – just 6 days from today.
Click here to find out how to take a trial subscription for just $5.
Good investing,
Kevin McElroy
Editor
Resource Prospector Pro