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Europe: A State of Collapse?

Europe: A State of Collapse?

Dear Reader,

Some days it is hard to write and today is one of them.  Our heartfelt thoughts go to all those affected by the awful events in Brussels yesterday.  To any of our readers who have family or friends directly affected, our prayers go out to you.  The situation is so close to home, we can all so closely imagine the pedestrian moments waiting for a flight, just before all hell broke loose. Buying a Starbucks at a modern airport should not end in carnage.  What is more shocking? That this Islamic terrorism occurs in a modern European country? Or that we are beginning, just beginning, to expect this unimaginable horror?  In addition, the images of the Belgium metro terrorist attack were shockingly similar to the images Londoners suffered on 7/7. Like many of us, I have a acquaintances who work in the EU, one only of whom emailed me last week asking if I was going to a conference in Brussels in 3 weeks time. Thankfully I am not.

Enough.  Something has got to change.

I have read some haunting pieces about the current state of Europe today, one obviously written so early yesterday morning that its author did not yet know of the terrorism already unfolding in yet another northern European city: 

"Angela Merkel is once again taking charge of the refugee crisis. And once again, it's to disastrous effect. Last year, after a summer of stories about refugees dying in the Mediterranean or abused by smugglers, the German chancellor stepped up and said her country would welcome one million refugees. They got them. Since then, terrorists have used the migratory flow as cover to move about Europe and kill well over a hundred people in Paris. Cologne and other capitals have had high-profile, mob-like incidents of mass sexual assault in public. And the reign of Merkel — popularly called "Mutti" or Mother — has come under challenge from both left and right in Germany. Whenever the European Union has faced a crisis caused by the rickety, undemocratic structure of the European Union itself, the political class offers one solution: "More Europe." More integration, more coordination, more diplomacy, more consensus. Now Merkel, in trying to save herself and her party, perhaps even the Schengen arrangements of Europe, has made a deal with Turkey. She will solve one short-term crisis of mass Muslim migration into Europe by promising a similar crisis later."  (The Week, 22 March 2016)  The highly erudite author, Michael Brendan Dougherty continues, "Turkish President Erdogan has played the refugee crisis for all it is worth in his dealings with Europe. "Erdogan keeps locking and unlocking the door as it pleases him," said Marta Dassu, a foreign Italian deputy foreign minister. Finally, Europe squealed and desperately revived the idea of membership. Imagine that, a Europe that includes cities like Gaizentep, less than 100 kilometers from Aleppo."

And here is another voice that rings truer in retrospect than it almost certainly did at the time. This piece was written on 28 December 2015 in The Telegraph, just before the start of this new year, that has brought economic crashes and more terrorism in Europe:  "Arrogance, stubbornness and complacency have characterised the response of Brussels to David Cameron’s strategy for renegotiating Britain’s relationship with the European Union. In advance of the British referendum on membership, which must be held by the end of 2017, the Prime Minister has asked for only the most modest package of reforms. Yet the unbending EU leaders have refused to concede any ground. Even a minor change in migrants’ rights to claim welfare has been rejected. Such a defiant stance could be seen as supreme confidence in the European project. British calls for change are dismissed out of hand because nothing is allowed to challenge the drive towards “ever closer union.” In the dogmatic mindset of the EU’s ruling elite, the ultimate triumph of the federal superstate is an inevitability.

But this mood of self-assurance is grossly misplaced. The reality is that, despite the dismissiveness towards Cameron’s modest plan, the EU is in desperate trouble. The creators of the European Union promised to bring peace and prosperity. But through their grandiose folly, they have fuelled only debt, despair and disintegration.

"2016 could be the year that the EU falls apart, making the British referendum an irrelevance"

Of course, it is possible to find commentators who disagree, George Soros being one of them.  He states an alternate view, while being interviewed by Gregor Peter Schmitz last month, but to anyone who is familiar with Soros world view, that is hardly surprising:

Schmitz: Merkel used to be very cautious and deliberate. People could trust her. But in the migration crisis, she acted impulsively and took a big risk. Her leadership style has changed and that makes people nervous.

Soros: That’s true, but I welcome the change. There is plenty to be nervous about. As she correctly predicted, the EU is on the verge of collapse. The Greek crisis taught the European authorities the art of muddling through one crisis after another.  The EU now is confronted with not one but five or six crises at the same time.

 

This is classic Soros double-speak.  He doesn't disagree that Merkel's handling of the migrant crisis makes people nervous, neither does he state whether that is a correct assessment by a rational public.  He just states that he welcomes the change in her leadership style.  It's like listening to a bad salesman. He then states that Merkel is correct in predicting that "the EU is on the verge of collapse." But listen to what he attributes this to;

"It is unfortunate that when Lehman Brothers went bankrupt in 2008, she was not willing to allow the rescue of the European banking system to be guaranteed on a Europe-wide basis because she felt that the prevailing German public opinion would be opposed to it. If she had tried to change public opinion instead of following it, the tragedy of the European Union could have been avoided."

Soros cries the exact premise as the "solution" predicted by Michael Brendan Dougherty in the first piece; "more Europe!"  

But the Europe project is bankrupt:

"Back at the end of 2008, Western central banks (led by the Federal Reserve) embarked upon the most radical, extreme, and simply insane monetary policies ever contemplated in our modern economic era as a supposed response to the Crash of ‘08. Zero-percent interest rates. “Quantitative easing.” Hyper-inflationary levels of money printing. Many readers may not fully comprehend the level of insanity (and fraud) inherent in such extreme monetary policies, so further explanation will be provided. First of all, there is no such thing as “a 0% loan” (and thus a 0% interest rate). But don’t accept the word of this writer. Just try engaging in some “0% loans” in your own financial affairs, and then see what happens when you report such transactions to the Tax Man. You will quickly be informed that your supposed “0% loans” are legally deemed to be sham transactions. The Tax Man would then immediately add that these supposed loans would legally be deemed to be what they actually are: gifts – and you would be taxed (and perhaps prosecuted) accordingly.  “Quantitative easing” is even more overt fraud. It is literally a euphemism of a euphemism. What is quantitative easing (apart from being an absolutely meaningless phrase)? It is “monetizing debt.” What is monetizing debt? It is another euphemism, which is thus also absolutely meaningless. But what does it really mean? “Monetizing debt” is when a government is so close to bankruptcy that it can no longer even borrow enough money to (temporarily) pay its bills. Thus the regime simply conjures more “money” – completely out of thin air -- and then uses this worthless funny-money to pretend to “pay its bills.”

Officially, we were told by our governments that this so-called quantitative easing was to “stimulate our economies.” Yes, it is undoubtedly more “stimulative” for an economy to continue to pretend to pay its bills than to declare bankruptcy. The entire Corporate media parroted this absurdity, proving yet again that this (illegal) oligopoly is anything but “a free press.” (Sprott Money, 6th March 2016)

And yet this is of what George Soros wanted more! His words are chillingly predictive and would be contradictory at the same time, if he ever offered a value judgement on what he says. But he doesn't, he just states facts, while rarely revealing any moral compass on what he predicts; "Merkel correctly foresaw the potential of the migration crisis to destroy the European Union. What was a prediction has become the reality." Stark words to read just one month later.

So, how is this state of affairs predicted to affect the financial safe havens of Gold and Silver?  The following was written way back in 2011 from an Austrian economist writing for The Real Asset. Now, in retrospect, we know exactly what more quantitative easing brings. If we're honest, we always did:  

"It seems most market participants wait with baited breathe to see how different policy responses in different jurisdictions will play out. In very general terms it appears the Fed is still more liquidity happy and ideologically aligned to stimulus and the Europeans, although often contradictory in their lack of consistency, are less keen on the printing press.  Simultaneous to this, it is clear that the Germans still haunted by memories of Weimar hyperinflation. Whilst we as staunch Austrians would prefer less liquidity provision and more allowance for markets to naturally self-correct and deleverage, we are not encouraged by many of the authorities. We suspect that as markets try to self-correct, the authorities generally will be forced to print more and more; it is the easiest course for them to take and the typically all too human option. Nonetheless, here we are and we face a European banking system nearly 3 times more leveraged than the US banks, and surely bereft of any remaining equity. As such we look once more at how inflationary and deflationary outcomes might affect precious metal investors."

As Eric Sprott continually reminds us, “keeping money in a bank is a risky investment”. Given the degree of leverage still at work in the banking system a domino effect is not difficult to imagine.  The depositors of the world would then increasingly have to reconsider what vehicle is more apt for holding their savings. The market will simply have to find a new savings mechanism in which to contain its money and liquidity. Where would the market turn to in this reallocation of capital? Well, the market has typically chosen gold and silver as money throughout the history of human development. As gold and silver’s almost unique properties are more widely appreciated once more, the fact that these assets are no-one else’s liability will again be greatly appreciated."

But, although my job is to focus on the economic turmoil we are facing and how Gold and Silver historically behave in such times, the hardest more human cost remains. 

Has the Europe of my summer childhood memories gone forever?  Is there still a proudly nationalistic hotchpotch of countries that provide summers of European delights to a travelling Brit? French crepes by the pool, Belgian chocolate arranged in immaculate rows behind shiny glass, canal boats through gabled Amsterdam and apple strudel in the mountain sun over-looking the valleys where Switzerland and Austria meet? Can I still find this world, without a care? Or is it a case of running the gauntlet to try to search out the Europe of yesteryear? My heart truly breaks for the world we've become. At least I hope we can recapture much of what we've lost as Great Britain, but to do that we will have to take our head out of the sand and fast.

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