Europe And The Rest of The World Facing Another Debt Crisis
Video of the Week
by Greg Hunter with Gregory Mannarino
Trader/analyst Gregory Mannarino says the debt crisis of 2008 is going to blow up again. The European debt crisis was never fixed; they just added more debt onto a debt issue. They maxed out their credit cards and borrowed more, and that is driving markets. They want people to believe it’s political turmoil, but some of the largest economies in Europe are once again facing their moment of truth—it’s a debt crisis.
Mannarino says the Fed isn’t magic, and it doesn’t have divine powers. It has to get into the market; it has to buy bonds. Quantitative easing has never stopped. The world’s central banks are buying each other’s debt to keep things propped up. The issue in Europe has the potential to start a tsunami of a correction to fair value around the world. It’s not a crash, however; it’s a correction, because everything has been distorted. Central banks have been on a buying binge unlike anything ever seen before.
“We are going to face a moment when bonds are going to sell off rapidly, and no action by world central banks is going to be able to stop the bleeding,” said Mannarino. That means yields will spike rapidly, and there will be a sell off in the bond market. A sell off in the stock market means money will flow to suppressed assets, things that have been rigged for a decade. How can world debt explode and certain assets (gold and silver) not also explode to the upside? This is all being done to prop up the markets, and there will be an awful price to pay.