The Next Stage in the Global Monetary Crisis…

The Next Stage in the Global Monetary Crisis…

BY BILL BONNER, CHAIRMAN
BONNER & PARTNERS
bill bonner

London, England – Over the weekend… it rained!

As we predicted, the Greeks voted against their creditors’ conditions for further aid.

When you ask a debtor if he’d prefer not to pay, what else would you expect?

And imagine what would happen if he had never gotten the money in the first place. When government elites borrow, the money rarely gets to the voters. Small wonder they don’t want to pay the bills.

So, Europe holds its breath, waiting to see what will happen next. We are sitting in the lounge at the Hilton Hotel in London, having just flown over from the U.S. An airport TV tells us “Markets Fall.” (More on this below in Market Insight…)

And in China, the stock market has lost nearly 30% in the last three weeks – wiping out $3 trillion in “wealth” that never really existed.

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Pulling Strings and Plotting Chicanery

Earlier in Baltimore…

A drum-and-fife group marched up Charles Street in the pouring rain.

Dressed in 19th-century military uniforms, they made their way to the crowd waiting at the Washington Monument in the heart of Baltimore’s Mount Vernon district.

It was Independence Day. Young and old gathered under umbrellas. Banners proclaimed the bicentennial of the monument.

The day before the celebration we had gotten a private tour. The monument is a marvel of masonry. A vaulted foundation of brick and stone supports the central shaft. There are 225 steps from bottom to top.

Recognizing the contributions of his trade, the head of the local Masonic lodge was handed the microphone to blab the usual felicitations. He was dressed in a black outfit, with medals aplenty and a top hat. Having no familiarity with the Freemasons, we weren’t sure whether his garb was current or antique.

“You’d never see anything like this in France,” whispered Elizabeth.

“You mean his uniform?”

“No… I mean a Freemason at a government event.”

The Freemasons are feared and despised in France. They are believed to be in league with the devil… or worse – the Anglo-Saxons!

Like the Bilderberg Group or the Council on Foreign Relations, in France the Freemasons are thought to be pulling strings and plotting chicanery. How that distinguishes them from Democrats and Republicans, we don’t know.

But when the hidden danger stepped down, the obvious one took the podium: Baltimore’s mayor, Stephanie Rawlings-Blake.

Mountains of Debt

“She so completely mishandled the riots,” said a friend. “She’s working hard to redeem herself.”

Politicians ensure reelection by giving away things that don’t belong to them. They dedicate a bridge, built with stolen money. They promise lavish pensions to firemen and policemen – and pay for them by squeezing the pensions of bakers and bricklayers.

But political redemption is based mostly on amnesia… and debt. After a few years of dedicating monuments and bribing public employees, most people will have forgotten the dirty dealing and civic disasters.

And heavy borrowing allows them to push the cost onto people with no memories at all – many of whom aren’t even born yet. By the time the bills come payable, most people have forgotten who contracted them or what they were for.

The renovation of the Washington Monument takes place once every 100 years. This was the first monument built to honor George Washington. Built in 1815, it was begun with private financing; later, the state of Maryland helped out.

As far as we know, no debt was involved.

But today, debt is everywhere… mountains of it. And the more it rains bad news, the greater the danger of mudslides and avalanches.

“Governor pushes for bankruptcy as default could still be a reality,” USA Today informed us last week.

It was not talking about Greece, but about another small economy – this one under the protection of the United States of America.

Puerto Rico has plenty of debt too. Here’s how colleague Chris Lowe described it last week:

The situation in Puerto Rico is 100 times more worrying for U.S. investors than Greece.

The governor of Puerto Rico says the island’s $73 billion in debt is “not payable”… and that it’s in a “death spiral” as a result.

That amount is more than 70% of Puerto Rico’s GDP. For perspective, there’s not a single state in the U.S. with debt of more than 20% of its GDP.

Also, Puerto Rico’s debt load is about half of the entire debt of the state of California… even though the population of Puerto Rico is only one-tenth the size.

Small potatoes?

So is Greece. But that’s the problem with a mudslide. You never know which drop of rain will set it off.

Regards,

Signature

Bill

Further Reading: ATMs out of cash… banks locking their doors… and people desperate to access their life savings.

It may sound crazy… but this could happen in America. And Bill believes it could happen sooner than you think. For the full story – and details on how to prepare – check out this special webpage.

Market Insight
Originally Published at Diary of a Rogue Economist.

BY CHRIS LOWE, EDITOR
BONNER & PARTNERS
The Greek drama is taking its toll on European stocks…Between the start of the year and April 13, the Euro Stoxx 50 Index – Europe’s equivalent of the Dow – rose 22%.But as Greece stole the headlines once again, European stocks started to sell off.

Since its peak for the year, the Euro Stoxx 50 has lost 13% of its value.

That’s a loss of €360 billion ($397 billion) – or about two and a half times Greece’s GDP.

Featured Reads
The Greek Crisis in 12 Charts
Greece is insolvent. Its creditors have been stiffed. And the European Union is facing an existential challenge. Here’s the whole mess explained in 12 charts.Investors Are “Walking into a Trap”

Billionaire activist investor Carl Icahn warns that the investing public is “walking into a trap again as they did in 2007.” Here’s why he believes the U.S. stock market is heading for a “dramatic pullback.”A Devastating Disaster for Europe Is on the Horizon
Greece isn’t the only problem for Europe. It also has to deal with the rise of the populist political parties and trouble in Ukraine. These three factors could converge into a devastating disaster.

RECOMMENDED LINKS
Incredible new banking system has the Feds rattled…

I haven't seen anything like this before…An entirely new way to bank is exploding around the world.

It's completely independent of the government and the central banking system.

Best of all its being run entirely by ordinary people just like you…

I call it the “underground banking system.”

As you can imagine, Wall Street, the Fed and Congress are freaking out at the benefits this is offering people.

Not only are people getting an unprecedented level of privacy and security… many who have stuck with it had the opportunity to make as much as 5,000% on their investment.

One U.S. senator even asked if this might “replace the Swiss Bank account.”

The truth is… it could be much bigger.

You need to see this before they try to shut it down.

Click here now to learn how to take advantage of this incredible new banking system.

Mailbag
We’ve gotten a bunch of feedback on our recent report on Jim Rogers’ bullish call on Russia.

I think Jim's point is valid. Long term, I don't see Russia staying in the basement.

As oil goes, so goes Russia… and they have a big neighbor [China] whose appetite for oil and gas is merely in a digestion phase. Huge trade treaties and urbanization will fuel future demand, and then you will see the rise in Russian stocks.

Putin isn't lying on the tracks… he's getting tied up, but he's not going down… for long!

– Rick T.

Don't look for the answer in the world of finance. The answer is in the world of politics.

And in that world, Putin is far superior to the top guys in the West (Europe and USA). He is guiding his nation and its allies (China, India, Iran, among others) with a strong hand and the long view. In contrast, the West has the jerks in the E.U., and the U.S. (the latter being guided by the neocons). Bill, it's a no-brainer.

– William S.

I must confess that I have been considering a small position [in the Market Vectors Russia ETF (NYSE:RSX)]. Thus far, I like ERUS better, but while either ETF may be somewhat akin to being at a rodeo… long term, I only see good things here.

– David C.

Readers are also keen to find out more about “structuring” – the criminal offense the feds are using to charge former House Speaker Dennis Hastert.

I inherited a relatively small amount of money from my mother's estate, which is presently deposited in a federal credit union savings account.

I am aware a withdrawal greater than $10,000 will cause that institution to report it on a form that is sent to the federal government. Further, that withdrawing increments just under that amount is considered “structuring” by the federal government.

How does one withdraw one’s own money (to purchase precious metals) without creating problems?

– Anthony G.

Chris Comment: The government bureau responsible for monitoring your financial transactions is called the Financial Crimes Enforcement Network (FinCEN). It’s part of the Department of the Treasury.

According to FinCEN, structuring is “the breaking up of transactions for the purpose of evading the Bank Secrecy Act reporting and recordkeeping requirements.”

So withdrawing cash amounts smaller than $10,000 is not illegal unless the feds can prove you made them to avoid your bank reporting those transactions to them.

But just because they’re not illegal doesn’t mean your bank or credit union won’t consider certain types of transactions “suspicious” and report them to the government.

Because even if you’re not using the money for illicit purposes, simply trying to avoid the reporting requirement is a federal crime. And that’s something you probably want to avoid…

Have you had problems withdrawing money from your bank? Are you concerned about the feds snooping around your financial transactions?

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