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Axel Merk: Making Sense Of The Impact Of Brexit

A special edition podcast
Monday, June 27, 2016, 8:22 PM

A very sleep-deprived Axel Merk joins us for this special edition podcast. Axel and his team have pulled late nights over the past few days following the Brexit vote results in real-time and the ensuing aftermath.

Axel, CEO and founder of the Merk Funds, is originally from Europe and one of the best experts we know on the currency markets, as well as monetary policy. In this podcast, he explains why he sees the Brexit as a sea-change in sentiment that will have far-reaching implications for Britain, Europe, and the rest of the world -- though it may take years before they are fully recognized and expressed. He expects the post-Brexit future to more market volatility, more populism as political stability weakens, more (ineffectual) fiscal spending to goose economic growth, and likely more armed conflict around the world. » Read more

Insider

Where Will the Minsky Moment Occur?

Which country will start the next crisis?
Tuesday, June 25, 2013, 5:36 PM

Executive Summary

  • Spain: after tens of €billions in bailouts, its banks still need more
  • Germany: its largest banks are ridiculously levered
  • France: its banks are deteriorating fast with the sinking French economy
  • UK: bail-ins are now on the table

If you have not yet read Part I: Europe's Precarious Banks Will Determine the Future available free to all readers, please click here to read it first.

Spain and Bankia

The true state of the Spanish economy (i.e., it is in depression) should be uppermost in our minds when we consider recent developments at Bankia, the Spanish mortgage bank formed only thirty months ago out of the wreckage of Spain’s regional mortgage banks. Bankia underwent a subsequent bail-out only a year ago and has been a continuing disaster, as shown by the share price in the chart below.

Having fallen from an adjusted €106 to only 68 cents as recently as last November, the share price tells us that Bankia is simply bust. The new G20 bail-in rules cannot have helped Bankia hold on to its deposits; the only deposits left should be those of the small depositors prepared to rely on government insurance.

The Cyprus bail-in precedent has undoubtedly made Bankia’s position worse than it would otherwise be. At March 31st Bankia... » Read more

Daily Digest

Image by Dan4th, Flickr Creative Commons

Daily Digest 4/24 - U.K. May Have Slipped Into Third Recession, Pensions In Danger

Wednesday, April 24, 2013, 10:41 AM
  • U.K. may have slipped into a third recession
  • Police Warn Budget Cuts Could Lead to Fewer Officers
  • Meals on Wheels faces Federal cuts
  • Time for Growth: Austerity Has 'Reached its Limits,' Barroso Says
  • Utah cancer clinics turning away Medicare patients
  • San Francisco official probes whether Nevada is 'patient dumping'
  • MU sees 866 percent debt increase over past 10 years
  • City remains knee-deep in more than 7,000 abandoned properties
  • Call for new U.S. crossing fee at land borders criticized in both countries
  • Indian Jewelers Offer Premium on Gold Imports as Demand Surges
  • Parents cutback on food for kids to cope with rising prices
  • Bernanke Gets Japanese Assist in Helping Homebuyers: Mortgages
  • Sanford facing $20 million shortfall; pensions in danger
Daily Digest

Image by jessicareeder, Flickr Creative Commons

Daily Digest 3/19 - Detroit And Cyprus Offer Budget Lessons, Is The "Buy to Rent" Party Over?

Tuesday, March 19, 2013, 12:06 PM
  • Should We Own Our Washing Machines?
  • S&P warns of ‘socially explosive’ situation in Spain, Italy and France
  • China's Gold Reserves: Watch What They Do, Not What They Say
  • Hudak’s PC party would revamp Ontario pensions by raising retirement age
  • Culture shock for Amazon chief's son who left rainforest for New York
  • Is The "Buy to Rent" Party Over?
  • Matt Gurney: Want your education paid for? Take something useful
  • Detroit and Cyprus offer debt lessons for budget
  • Silver and Gold Purchases: Domestic and Offshore Storage
  • Tanker rout reversing as U.S. buys more Middle East oil
  • China's Suntech Power in $541m debt default
  • Russia, Saudi Arabia hope to emulate U.S. shale boom
  • Coal Is the Fuel of the Past and the Future
  • Lockheed slashes energy required to desalinate water
  • Pentagon weapons-maker finds method for cheap, clean water
  • Mike Holmes: Water makes the world go around
Daily Digest

Image by Digitalmoneyworld, Flickr Creative Commons

Daily Digest 3/13 - U.K. Faces Growing Vulnerability, German Bank Doubles Reserves

Wednesday, March 13, 2013, 9:18 AM
  • Spain unveils $4.6-billion plan to get young back to work
  • Portugal in worst recession in 37 years
  • Duty hike on gold expected to reduce imports: Minister
  • France's Francois Hollande admits to miss deficit target
  • Students Rally Against Proposed Tuition Hike
  • Military tuition assistance another casualty of the sequester
  • Abe’s Weak Yen Policy Erodes Japanese Tourist Spending in Korea
  • Local Lawmakers Lead Fight To Ban Traffic Cameras in Ohio
  • German Central Bank Doubles Reserves
  • U.K. Faces Growing Vulnerability
Daily Digest

Image by danxoneill, Flickr Creative Commons

Daily Digest 3/12 - Wild Arabia, In Search of Energy Miracles

Tuesday, March 12, 2013, 7:27 AM
  • Best Game In Town
  • Wild Arabia
  • Former Mayor of Detroit Guilty in Corruption Case
  • In Search of Energy Miracles
  • Mayor of London to Invest £1 Billion in Bicycle Infrastructure
  • Scottish independence: Scottish government predicts 'oil boom'
  • Why Are the Big Financial Institutions Selling Oil BIG? 
Daily Digest

Image by mikebaird, Flickr Creative Commons

Daily Digest 3/11 - Cuts Show Path To Leaner Military, 'Superbugs' Pose Dire Threat

Monday, March 11, 2013, 11:38 AM
  • U.S. vs. China: D.C. Dysfunction Gives People’s Republic an Edge
  • Silver: Keep It Simple
  • Cuts Give Obama Path to Create Leaner Military
  • Pre-sequester jobs numbers, unemployment rate better than expected
  • “We Gained Hope.” The Story of Lilly Grossman’s Genome
  • UK Vulnerable to Price Spikes Due to Reliance on Norway’s Natural Gas
  • New wave of 'superbugs' poses dire threat, says chief medical officer
  • To at Least One Earthling, Siberia Meteor Proved That Science Is Vital
Insider

Europe: Welcome to the Domino Effect

Expect EU economies to topple with accelerating rapidity fro
Monday, March 4, 2013, 3:52 PM

Executive Summary

  • France:  Bet on a bankruptcy of the French government
  • Italy:  Will not be able to fund its debt obligations without external help
  • Spain:  The best outcome at this point is years of grinding financial repression 
  • UK:  At growing risk of a big upward spike in price inflation, leading to a currency crisis

If you have not yet read Part I, available free to all readers, please click here to read it first.

Individual States

France

Perhaps the cameo event that best describes French attitudes was the recent correspondence between Maurice Taylor Jnr, head of Titan International, the tire manufacturer, and Arnaud Montebourg, France's Minister for Industrial Renewal. While it was good theatre, the serious points were that on average a French worker at an industrial plant works for three hours a day, and that the Minister resorted to threats that any Titan products imported into France would be “inspected by the relevant authorities with extra zeal.” That is the way things are done in France: Upset the Minister or a government functionary and none of your product gets to market, as Mr Taylor will shortly find out.

France has an official unemployment rate of about 10.5%, which would be somewhat higher if it were not for three-hour days in many of the factories. Taxes on employers are among the highest in Europe, and employment legislation is so onerous that employing an extra hand is the last option for all private sector employers.

Large companies, such as Peugeot-Citroen, generally tolerate poor labour productivity and sub-standard quality products partly because the unions are strong, and partly because senior managers look to government to “help” by providing subsidies and by other means. Consequently, private-sector manufacturing is not competitive, and sales in the troubled Eurozone are collapsing. Peugeot’s share price says it all.

Decades of government protection have left France’s industrial sector in the weakest position of the larger Eurozone economies. Smaller businesses, outside the major cities, are heavily reliant on agricultural produce and hospitality, much of which is undeclared, untaxed, and untaxable. Furthermore, France’s farmers have long been beneficiaries of the EU’s agricultural subsidies, and have never had to be efficient. » Read more

Blog

Europe is Drowning Under Too Much Government

Its banks are being increasingly propped up by the U.S.
Monday, March 4, 2013, 3:52 PM

The Christmas and New Year's break, when Europe shuts down and stops thinking, is now well and truly over, and we are reawakening to the same old problems: Greece, Spain, Cyprus, Portugal, Italy, France…all with their hands out for money from Germany, Holland, Finland, and Austria.

The holiday from the banking crisis, which was the result of the determination of the ECB to put a lid on it, is also over, with yields on the supplicant countries’ debt rising again.

However, joining the bad news list is the United Kingdom. Ominously, the pound is sliding in the foreign exchange markets, providing a very tricky background for Chancellor Osborne’s budget on March 20th. I shall examine the UK’s position later, but first let’s update ourselves on developments in the Eurozone.

The reality is that all the problems of the Eurozone are still with us, despite the fall in bond yields and their modest subsequent recovery. There is now the likelihood that we are about to enter the final phase of the end of the Eurozone experiment, with far wider consequences. So we need to pick up the story where we left off. » Read more

Podcast

Alasdair Macleod: Europe is in Worse Shape Than Everyone Thinks

EU governments are getting desperate
Saturday, March 2, 2013, 1:18 PM

From his perch in the United Kingdom, Alasdair Macleod provides an update on the ongoing economic crisis in Europe, which -- while largely absent from headlines in the US of late -- continues to worsen.

Due to bloated state-run programs and extreme malinvestment, EU governments find themselves in a box. Economic growth has stalled, and no amount of intervention seems able to get it going again. So in order to keep their economies moving forward, they are becoming increasingly rapacious in extorting tax revenues from wherever they can find them.

Click the play button below to listen to Chris' interview with Eric Sprott (34m:40s): - See more at: http://www.peakprosperity.com/podcast/80989/eric-sprott#sthash.ok7RFfsH.dpuf