EuroSummit v20.0

  Yes folks-- this Thursday and Friday the European leaders will meet to solve the economic crisis for the twentieth time since early 2010, which since the last meeting {v19.0} has seen Spain and, as of today Cyprus, sucked into the vortex. This morning Spain formally asked for a banking bailout, and as the day progressed, so did Cyprus.

  I have complete confidence a solution will be found. After all, they were the last ninteen times. The markets will celebrate; stock markets will rise; fear will ease. Dom Perignon and congratulations will be passed around like dust in a Sahara sandstorm. People will turn the channel and catch up on Jersey Shore.

  It will look something like this: Spain's banks will get a bailout loan. Cyprus, too. There will be a "stimulus package" of about $150 billion {details coming "later"} and promises of stern response to any further crisis. In short, this will be nothing more than another bandaid and hot air on a system that has just lost it's foot to a landmine.

  Today a few noted columnists sounded the alarm-- many of whom have been doing so for years. George Soros warned that if the Summit was an utter failure, it could prove to be fatal to the Euro. Paul Krugman's article today was particularly dire, comparing today to not just 1937, but the far uglier year 1931, when a very similar situation which began with an Austrian bank called Kreditanstalt of Vienna went under and got the Depression really rolling. Here's the link to Herr Krugman's latest rant: http://www.nytimes.com/2012/06/25/opinion/krugman-the-great-abdication.html?_r=1

  This bandaid will buy time-- about a month or so. By mid August v21.0 will need to be crafted when they realize the amount allocated to save Spain is probably a fifth of what they really need and Italy begins showing signs of going under. Spain's economy will show further signs of economic decline, as will Italy. Portugal's economy will be literally imploding like Greece before it. Until such time as the powers that be realize that a Grand Reset is needed, this will continue. In the meantime, watch the price of gas. As it goes down, take it as a sign that the entire system is sicker and sicker as deflation sets in and demand recedes. I'm still sticking by my prediction that gas will go under $3.00/gal this year.

  One day soon enough {2013 is my guess} this farce will end very badly and very suddenly and we will all pay a dreadful price for the greed of bankers who were allowed to shred the laws enacted after the Depression to prevent just such an occurance via our under informed and over bribed politicians.

  Solutions you ask ? Unfortunately, nothing short of an entire systemic reset is needed here. The financial system is so complex, so overindebted in so many different forms that anything central banks and governments do will only delay the inevitable collapse of this bloated, diseased beast. My next post will be on what a sound financial system should look like instead of the one we currently have. Here's an article from Simon Johnson, former head of the IMF, on the complexity of it all: http://www.bloomberg.com/news/2012-06-24/u-s-banks-aren-t-nearly-ready-for-coming-european-crisis.html