Join Mike Maloney as he gives a much anticipated breakdown of the events in Greece and what might be coming next.
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hi I just wanted to talk about Greece a
little bit because so many people are
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asking about Greece in what’s happening
there
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they want to know about the bank runs
the bailouts the potential for Bailin
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spurted political consequences
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and the potential for civil unrest and
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you know must’ve all could it happen
here
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or in other countries I’m you know that
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first I wanna stay it’s a how grateful
for technology that I am
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right now my director producer
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I day and Reebok is on vacation in
Thailand
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and I’m sitting in Los Angeles
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the California at my home and
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so he’s halfway around the world
recording this
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and is going to be posting it on youtube
shortly
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and and so I’m just and so grateful
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to live in this modern world
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where things like this can be
accomplished so easily
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first i want to talk about the euro back
in 2005 when I was writing my
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a book rich dad’s guide to investing in
gold and silver
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I stumbled across the CIA Factbook well
I was doing my research
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and it is an absolute wealth that
information that they have a section in
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there about the euro and in it
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they said that the euro1 last food and
so
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I started investigating this stuff for
myself
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and in prison stations since 2009
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I’ve been saying that the euro is doomed
and here’s why
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I’m the euro zone as its
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now nineteen countries sharing one
currency and one central bank
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but they’re all able to issue their own
levels of debt the only issue their own
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bonds
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and this can’t possibly work because it
rewards recklessness and it punishes
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prudence
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I’m insert one here you can see
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the the level does Greek public debt
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is almost up to a hundred eighty percent
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as their GDP so the size of their
economy
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the amount that they owe is one point
eight times
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greater that the size of their economy
then annual
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GDP I’m now
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who they’ve been able to live beyond
their means for quite a while because
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they’ve been able the issue
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I love this debt and part of the reason
that their debt to GDP ratio exploded
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though is because
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their GDP has contracted their economy
has slowed down
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and when the GDP contracts even if you
don’t take on new debt
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the ratio the debt burden becomes that
much greater
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so that’s a a portion of the reason why
a bit
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biggest reason why is politicians
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a because they’re loud to the country’s
lead to
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cell their own bonds even though they’re
using
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the euro as currency the they sell these
bonds
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and they run the deficits of a bit so
politicians
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can promise a free lunch they no
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promise everybody free stuff they do a
budget deficit spending
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they sell bonds denominated in euros to
cover it
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it but it’s its Greek debt it’s not the
ECP is dead
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now the EC be by some of this debt and
when they do
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euros are created and that dilutes the
purchasing power
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love all euros including the euro’s
there in countries
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such as a stony a which only runs a
five-percent
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debt to GDP so they they’re very prudent
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and responsible the Greek government has
been a shambles for
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a long long time that’s been mismanaged
for decades
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and I you know there
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today the pie they have to pay the piper
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area the the debt is
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coming do basically I but
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you can’t have all these different
countries sharing one currency and one
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central bank it but it and then allowed
to issue their own levels
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debt just can not possibly work
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the so I’m it now
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if you recall this all got fixed back in
2011 and 2012 let you know if you
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remember
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but there was a first round of bailouts
back then
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now agree said it officially pledged
that he would not default
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or restructure any other its debts and
then right after it said that
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it filed the biggest sovereign debt
default in history
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and up private investors in Greek bonds
had to take a 53 percent haircut
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now countries holding Greek bonds and
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the big banks didn’t have to take the 53
percent pair
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cat anyway what’s the worst that had to
do
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was exchange the bonds that they were
currently holding
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for new bonds that we’re a 53.3 percent
less valuable
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and they paid lower interest rates so
the total losses could add up to as much
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as seventy-five
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percent for some investors a
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now and the EC be an IMF bailout
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was a 110 billion and then it was
followed
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shortly thereafter with another 130 be
billion
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and I’m the great bond default
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then cuz say at the Cypress financial
crisis
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is there were Greek bonds in some other
Cyprus banks
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and so those banks became insolvent
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and they closed for a week and a clear
the bank holiday
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the IMF in the EC be arranged a ten
billion dollar
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bailout if the banks did a bail
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in so good the banks were required to
take
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summers there depositors funds
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in order to be able to receive the $10
billion dollar bailout from the IMF in
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his
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he CD now I just find it interesting
that the first Greek
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at crisis the repercussions the echoes
the shock waves that go around the world
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caused the Greek default the day I mean
I’m sorry cause the
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Cypress the crisis
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and which caused a bank holiday
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in Cyprus and a lately
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the banking crisis in Greece that
developed cuz bank runs
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just like in Cypress they were having
backgrounds and
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and didn’t need another bailout
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that the austerity measures were just
too much for them to agree to
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and on Sunday June 28 Greece Greece
announced their own bank holiday
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but and depositors since then can only
get sixty dollars per day
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other the ATM’s I’m sorry 60 euros it’s
about sixty six dollars
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and so I read something recently
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I’d like to i’m just paraphrasing the
Aegean Bruno
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from Doug cases international man he had
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a very nice article I needed to shorten
it up here
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and so I’ve rearranged it move some
other paragraphs around and made it much
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shorter
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but it goes like this: for the
unprepared
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it happens like a mugging when you hear
central banker a politician denying that
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something is going to happen
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you can be almost certain that it will
and probably soon
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coming from a government a government
official
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the real meaning of no absolutely not
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is well it could be tomorrow the reason
for this dishonesty
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is that government needs to take the
public by surprise
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otherwise they won’t get the results
they want for the past month
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Greece’s government has been denying
that it intends to impose capital
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controls
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and on Sunday June 28 the greek Finance
Ministry
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repeated denial yet again then on that
same day just a few hours later
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a week long bank holiday was declared
and they would impose
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the capital controls after %ah but don’t
worry the Greek prime minister promised
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your deposits are completely safe the
term bank holiday
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is a politician’s euphemism
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when one happens you won’t be
celebrating you’ll be very worried
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you won’t be able to access your bank
account how you get by
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how long will the lockout last and when
it ends
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will your money still be there will any
of that remain
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bank holidays in capital controls
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are all about maximizing the amount of
money available for the government to
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confiscate
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pan up the sheet and their easier to
shear
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once the banks are closed
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or on holiday the politicians are free
to help themselves to as much as your
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deposits as they want
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it’s like an all you can steal buffet
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calling the experience a holiday it is
like calling a street mugging
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a surprise party so now I’m gonna move
on to church to
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and show you just how inept
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these government agencies all are is the
IMF projections
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up for the greeks public debt so it’s
their debt to GDP again how much they
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owe it to the size their economy
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and you can see that there actually is
up here
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100 eighty percent well on March
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in March of 2012 they
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a made a projection did said is the gray
line it starts right underneath the word
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actual
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and descends and the st. ready measures
that they had to agree to
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we supposed to get I Greece’s government
spending under control to bring
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the debt burden down to just wait to
under 120
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percent of GDP by I 2020
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and then in June of 2014
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they basically go we were on I
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now the prior projections are that
you’ll be able to make it down to that
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120
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percent level by 2022
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and then one year later June 2015
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for his say well you’re wrong again it’s
not so each time they think that this
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new projection that they’ve come out
with is the right one
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and this is going to work
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and this is just like following the US
government’s
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the their annual consolidated financial
statement at the United States
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and the congress’ projection a
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does the the debt into the future
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and it always looks like it’s going
going to go down
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is the way their projections are that it
always ends up going up
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next I wanna go to church three and
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this one is dealing with a country’s
ability
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to pay off its debt and whether you’re
an individual or a country
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the bill is the ability that you have to
pay back a loan
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is totally dependent on your debt to
income ratio
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it’s how much you gotta pay each month
compared to how much you’re making each
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month it’s that simple
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and less like the United States here
legally
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permitted to counterfeit the currency
the loan is denominated here
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and then you can just bring it up and
pay it back
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good the foremost I’ll your
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income has to be far greater then
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the amount of paint debt service that
you’ve got each month on the debts
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and if you look at this chart you can
see
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that I’m Greece has about
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the seven times the amount of
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debts that then they have as annual tax
revenues
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I’m but the United States has about nine
times so is staying in japan has almost
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twenty times
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00:12:09,008 –> 00:12:12,357
the amount of debt and then they have
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00:12:13,149 –> 00:12:18,660
those annual income to pay that debt the
other countries that are in trouble
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Portugal Italy and Ireland are
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down at the six-and-a-half in six
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times the debt so Greece’s debt
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is is very large and completely
unmanageable for them
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that the United States Spain and Japan
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should actually be in worse shape and
you know we have
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a day of reckoning coming some time or
another
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now Greece just held a referendum and so
I’m gonna go on to church for
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that and they voted on whether or not to
accept
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a new round of bailouts along with
austerity
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terms more austerity measures and
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but by an overwhelming majority the
Greek people voted to tell the INS in
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the EC be
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to Jess going to take a hike they voted
no
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by an overwhelming a majority now
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the earlier the finance minister had
said if
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there was a no vote the Greek banks
would be
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reopening on Tuesday well he just resign
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said Sep we’ll see how that plays out
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the so he said that that is no longer
responsible if it doesn’t happen
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and now I’m just gonna go to church five
in this is just a
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I’ll HR base currency in the euro zone
so
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base currency is the current sits in
circulation so the paper euros that
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exist in the clintons that it’s in
circulation
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plus reserves that the commercial banks
in all the euro zone countries
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have in their accounts that are held at
the
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00:13:57,064 –> 00:14:01,073
EC be the European Central Bank’s and
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00:14:01,073 –> 00:14:05,073
but all of those accounts can be
redeemed in paper euros
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so basically is really dad whenever
you’re measuring
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the monetary base or base currency it’s
the
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00:14:13,041 –> 00:14:16,830
measurement does the paper currency in
that country
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and what you see here is that I’m
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they’ve been incredible inflators
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it the dated inflated
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00:14:27,089 –> 00:14:30,151
by there’s three and a half times more
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00:14:31,051 –> 00:14:36,146
base euros in existence than there was
in the year 2002
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so this is mind boggling inflation
happening
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00:14:40,072 –> 00:14:43,154
but when he is one of the things that’s
very obvious is it looks like they serve
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00:14:44,054 –> 00:14:44,107
had
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00:14:45,007 –> 00:14:48,012
some semblance those control over the
situation
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00:14:48,057 –> 00:14:51,121
until 2008 and then
241
00:14:52,021 –> 00:14:55,119
everything appears to be going out of
control and you can see
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00:14:56,019 –> 00:14:59,080
did all the euro’s that were created
during the Greek
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00:14:59,008 –> 00:15:04,026
bailouts in 2000 read the beginning of
2012 there that big ruts
244
00:15:04,098 –> 00:15:08,182
the so the whole euro zone is in trouble
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00:15:09,082 –> 00:15:13,087
because at this because you know it’s a
common currency side effects every
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00:15:14,032 –> 00:15:14,095
country
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00:15:14,095 –> 00:15:18,106
that’s part of it what what will happen
with the bank’s
248
00:15:19,006 –> 00:15:23,100
on Tuesday will they reopen what’s going
to happen with Greece
249
00:15:24,000 –> 00:15:27,007
basically and it doesn’t matter that
much
250
00:15:27,007 –> 00:15:31,062
because they’re are no good choices and
there is no way out for them
251
00:15:32,025 –> 00:15:35,094
a so what is the best thing that could
change they could do
252
00:15:35,094 –> 00:15:38,095
well I’m pretty sure that
253
00:15:39,004 –> 00:15:42,057
it would be to let the free market rain
I
254
00:15:42,057 –> 00:15:45,129
its the the the best thing they could do
for themselves
255
00:15:46,029 –> 00:15:51,087
and is simple the problem is it’s the
thing that they want to do
256
00:15:51,087 –> 00:15:55,089
it would be to it Chian endure to choose
to endure
257
00:15:56,007 –> 00:15:59,085
the worst short term pain for the best
long-term gain
258
00:15:59,085 –> 00:16:03,133
but to let the free market rain in to
let everything just fall apart
259
00:16:04,033 –> 00:16:07,074
did for a government to step out of the
way and let the people
260
00:16:07,074 –> 00:16:10,138
pick up the pieces and it would be
261
00:16:11,038 –> 00:16:15,137
horrific for a few years just horrible
but you know they really need to say
262
00:16:16,037 –> 00:16:17,062
screw the euro
263
00:16:17,062 –> 00:16:20,090
and use gold orbit Korean or anything
else
264
00:16:20,009 –> 00:16:24,011
the free market chooses that eventually
the Sun will shine again
265
00:16:25,001 –> 00:16:28,037
and they will then start enjoying
maximum prosperity
266
00:16:28,046 –> 00:16:32,101
but that’s not what they’re going to do
they’re going to choose to have the
267
00:16:33,001 –> 00:16:34,065
government do something about it
268
00:16:34,065 –> 00:16:37,126
again they’re going to go back to these
talks with the IMF
269
00:16:38,026 –> 00:16:40,035
and and the EC be
270
00:16:40,269 –> 00:16:44,980
and something will be done about it town
of Greece Greece is going to end up
271
00:16:44,098 –> 00:16:49,179
leaving the EU I and if it does it’ll
come out with its own currency but you
272
00:16:50,079 –> 00:16:50,748
can bet
273
00:16:51,459 –> 00:16:55,040
the government is going to try and do
everything and manage
274
00:16:55,004 –> 00:17:00,087
everything and if they’d don’t do that
it’s going to be the EC be in the IMS
275
00:17:00,087 –> 00:17:00,182
along with a great
276
00:17:01,082 –> 00:17:04,311
government trying to do everything and
manage everything
277
00:17:05,049 –> 00:17:09,390
and they’re going to pay for that for
decades to come
278
00:17:09,039 –> 00:17:12,828
it will be hunting them they will have
slow economies they’re going to have
279
00:17:13,179 –> 00:17:14,600
this huge debt burden
280
00:17:14,006 –> 00:17:18,985
we live in this crazy world where no one
is able to pay their own way
281
00:17:19,579 –> 00:17:23,626
where everyone borrows from their future
pay so they can spend it today
282
00:17:24,049 –> 00:17:28,137
but they all must pay the piper someday
in for Greece that day is two day
283
00:17:28,929 –> 00:17:34,350
so can this happen here had salute he s
284
00:17:34,035 –> 00:17:38,123
there’s no country on hers that is
completely a mutant
285
00:17:39,023 –> 00:17:43,602
from reckless deficit spending that
persists decade after decade
286
00:17:43,809 –> 00:17:47,846
we’re coming to the end a 100-year-old
287
00:17:48,179 –> 00:17:53,120
a credit ok this is this credit cycle
this debt cycle that were in
288
00:17:53,012 –> 00:17:56,086
will eventually get washed out that what
you’re seeing
289
00:17:56,086 –> 00:18:00,113
is that the levels of the debt it used
to be that you took on some debt
290
00:18:01,013 –> 00:18:04,061
and there would be economic growth from
taking on that
291
00:18:04,061 –> 00:18:07,120
debts that would help pay off the debt
that the more debt
292
00:18:08,002 –> 00:18:12,221
you have compared to the size if you’re
économie do more
293
00:18:12,419 –> 00:18:16,440
the its lows that impedes that growth
294
00:18:16,044 –> 00:18:19,136
and we’re getting to the point where we
received very little
295
00:18:20,036 –> 00:18:23,111
if if any benefit from taking on new
debt
296
00:18:24,011 –> 00:18:29,027
these days I’m going to quote a guy
named James Corbett he says
297
00:18:29,027 –> 00:18:34,028
the current financial system is founded
not in the bedrock of sound economic
298
00:18:34,028 –> 00:18:34,927
principles
299
00:18:35,179 –> 00:18:38,278
but instead upon the quicksand of public
perception
300
00:18:39,169 –> 00:18:44,150
and this is so right when people get
scared bank rans happen
301
00:18:44,015 –> 00:18:47,058
civil unrest can happen a and
302
00:18:47,058 –> 00:18:50,064
then you have all these economists
303
00:18:51,018 –> 00:18:55,086
and and I’ll secretaries of the treasury
and stuff
304
00:18:55,086 –> 00:18:58,089
all trying to cobble up some
305
00:18:58,089 –> 00:19:01,103
new world monetary system you know for
306
00:19:02,003 –> 00:19:05,022
the many many years now have been
307
00:19:05,022 –> 00:19:09,076
saying that every thirty to forty years
the world has a new monetary system
308
00:19:09,076 –> 00:19:12,170
and we’ve been tracking what I call the
309
00:19:13,007 –> 00:19:16,092
cracks in the system we’re the nails in
the coffin
310
00:19:17,055 –> 00:19:20,148
as the US dollar standard I’m the
311
00:19:21,048 –> 00:19:25,135
problem to the euro is having right now
is just some of the symptoms
312
00:19:26,035 –> 00:19:29,119
both the world about said to go a giant
313
00:19:30,019 –> 00:19:33,076
change in monetary systems
314
00:19:33,076 –> 00:19:36,090
and there will probably be who just
315
00:19:36,009 –> 00:19:39,075
Lake the General Conference those 1922
316
00:19:40,056 –> 00:19:43,124
the Bretton Woods a agreement to
conferences in
317
00:19:44,024 –> 00:19:47,091
1944 and the Washington Accord
318
00:19:47,091 –> 00:19:51,175
in phnom or the smithsonian agreement
I’m sorry is now in 1971
319
00:19:52,075 –> 00:19:55,112
I’m there’s going to be an emergency
meeting
320
00:19:56,012 –> 00:19:59,045
at the g20 finance ministers or
something like that
321
00:19:59,045 –> 00:20:02,088
to cobble together a new world monetary
system
322
00:20:02,088 –> 00:20:05,089
and is probably going to happen
323
00:20:05,089 –> 00:20:08,117
before the end of this decade I’m
324
00:20:09,017 –> 00:20:12,093
you know for a long time at then saying
that
325
00:20:12,093 –> 00:20:16,186
you know this is going to unfold nearly
very slowly until the day that it
326
00:20:17,086 –> 00:20:17,155
doesn’t
327
00:20:18,055 –> 00:20:22,121
and then it’s going to happen very fast
and what you’re seeing now with the
328
00:20:23,021 –> 00:20:27,030
crises around the world is things are
speeding up in every week now
329
00:20:27,003 –> 00:20:31,085
there is a new nail in the death of the
global financial system that currently
330
00:20:32,012 –> 00:20:33,051
exists
331
00:20:33,051 –> 00:20:36,085
and I’m this is all
332
00:20:36,085 –> 00:20:39,090
going to cause tremendous financial
upheaval that is
333
00:20:40,035 –> 00:20:43,079
actually greatest the I’m
334
00:20:43,079 –> 00:20:46,136
opportunity have your lifetime its
335
00:20:47,036 –> 00:20:49,725
its when there is turmoil
336
00:20:50,049 –> 00:20:55,084
that I financial gains can actually be
made in the shortest period of time
337
00:20:55,399 –> 00:20:58,950
but you have to be ahead of the curve
and
338
00:20:58,095 –> 00:21:01,158
know what’s happening out there now
everything that is happening
339
00:21:02,058 –> 00:21:06,107
in Greece on has affected the gold price
in its
340
00:21:07,007 –> 00:21:11,070
its not in the way most people would
think and there are reasons for that
341
00:21:11,007 –> 00:21:14,936
and so on an upcoming video we’re going
to be looking and how
342
00:21:15,629 –> 00:21:19,320
this isn’t impacting the precious metals
markets and why
343
00:21:19,032 –> 00:21:23,261
gold and silver are doing what they’re
doing in the face is all this chaos
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00:21:23,549 –> 00:21:26,600
so subscribe to our YouTube channel if
you could
345
00:21:27,059 –> 00:21:31,240
and the subscribe to the gold silver dot
com newsletter
346
00:21:31,024 –> 00:21:34,059
you’ll get the updates that i’m talking
about.
347
00:21:34,059 –> 00:21:37,278
sunny gold market and until then
348
00:21:37,809 –> 00:21:38,880
we’ll see you next time thank you
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