Inflation and Bailouts Go Hand in Hand
Pick a financial fire and you can be sure the U.S. government will hose it down with gallons of money. AIG, General Motors, Chrysler, insolvent states, FDIC, Fannie, Freddie and all the banks are just a few of the blazes Uncle Sam has sprayed money on.
Now, the Federal Reserve is printing up another $105 billion to send to Greece to help with its debt problem. Is the bailout cycle getting ready to take another turn bailing out the Banks? You know, the ones we were told had little exposure to sour European debt? Check out this article from Bloomberg last week: JPMorgan Chase & Co., the second- biggest U.S. bank by assets, has a larger exposure than any of its peers to Portugal, Italy, Ireland, Greece and Spain, according to Wells Fargo & Co. JPMorgan’s exposure to the five so-called PIIGS countries is $36.3 billion, equating to 28 percent of the firm’s Tier-1 capital, a measure of financial strength, Wells Fargo analysts including Matthew Burnell wrote today. Morgan Stanley holds $32.4 billion of debt in the region, which equates to 69 percent of its Tier 1 capital, Burnell wrote.”
I guess now we know why Ben Bernanke is supplying Greece with $105 billion in bailout money. It looks like he actually is bailing out U.S. Banks—again! I wrote about the Fed admitting to massive money creation 3 weeks ago in a post called “Bernanke Admits Printing $1.3 Trillion Out Of Thin Air.” It also looks like we are not going to stop this money printing train wreck because the bailouts seem to be never ending. This is the main reason we are facing a head-on collision with very big inflation.
In the latest report from John Williams of shadowstats.com, the inflation picture looks dire and definite. Williams wrote, “My outlook for a hyperinflationary great depression in the United States is unchanged; all that is unfolding now is some of the detail that should lead to that ultimate financial/economic disaster. Gold remains the best long-term hedge here, along with some silver, and cash outside the U.S. dollar and the United States. I still like the Canadian and Australian dollars and the Swiss franc. Again, the outlook is for the long haul, irrespective of any near-term extreme volatility in the various markets. As to the U.S. stock market, the term “insanity” comes to mind as I watch some of the day-to-day movements.”
Williams also thinks there are “mounting systemic risks.” On that issue, the Global Europe Anticipation Bulletin is in agreement with shadowstats.com. GEAB writes, “The fuss made over Greece by the English and US media in particular tried to hide from the majority of the economic, financial and political players the fact that the Greek problem wasn’t a sign of an upcoming Eurozone crisis (2) but, in fact, an early warning of the next big shock of the global systemic crisis. . . one mustn’t forget that the current crisis has its origin in the collapse of the world order created after 1945, of which the United States was the support, assisted by the United Kingdom.” (Click here for the complete GEAB report.)
I keep trying to find ways to explain the scope of what is going on in the world financial markets to friends and readers of this site. I told an acquaintance at dinner last night the money printing going on “has never happened on this scale in human history.” The guy just looked at me and said that he thought it was a good idea to invest in municipal bonds! How are broke cities and states going to pay the interest, let alone the principal, back. If the cities and states are bailed out, massive inflation will render the bonds worthless or near worthless.
People just do not understand the calamity that is upon us, but what do you expect when the mainstream media keeps broadcasting that we are in a “recovery.” I do not know exactly how this is going to end, but for the unprepared, it will end badly.