Special EU & EURO Warning – December 14, 2011

Executive Summary – We are writing this mostly because the European Union and or the EURO is about to break up. There was an effort to get a new treaty in place but the UK vetoed it. The UK does not want to subject themselves to financial controls set by the Eurozone. There is a serious crisis there. There is a cry to impose serious limits on debt to reign in the offending nations. It seems like this is a house built on sand and they are trying to add more stories to this house (restructured debt) which already has a seriously eroding foundation. The UK has been using their own currency, the Pound all along. They seem to be positioned well to leave the EURO but will still suffer an economic depression if the EURO goes. If the Euro fails Willem Buiter, the Chief Economist for Citigroup says the world's GDP will go down by 10%. Unemployment would go over 20% in the west. There are several nations will too much debt to restructure. France and Italy have too much debt to refinance – 180 billion euros each nation. Central banks in Switzerland, Greece, England and Ireland are preparing for a EURO collapse.

Banks Prep for Life After Euro

Latvia which is in the EU has had runs on two banks in one month. You can scan the news yourself for more news articles.

Latvian bank fights off deposit run

Now the ECB (Their Central Bank) has begun quantitative easing. Printing money so the central banks can buy up sovereign debt. Same junk the USA does. The ECB is well on it's way to partial nationalization of European banks as it take equity stakes in them. Bet you never thought the EU would be that stupid?

Europe using US as model to fix debt crisis: Analyst

The European nations are going to be raising taxes to pay for all these quantitative easing measures. The people in the EU are scared and not happy. We are hearing of a food tax, emissions tax, transactions tax and all sort of creative taxation. Doom and gloom.

CNBC still think the EU is going to break up. They think the member states need a much weaker currency to make it. I agree. The ECB quantitative easing is going to cheapen the EURO. They are still building a house on sand.

For Europe, Only Way Out Is to Break Up: Kyle Bass

Chairman of the US Joint Chiefs of Staff General Martin Dempsey said the EU faces potential breakup and civil unrest. I believe him.

US General: EU may face Breakup, Unrest

Endangered Bank List in EU – The ones at the bottom of the list are the worst off. The percentage exposure as a percentage of Common Equity is the most meaningful indicator. It shows you that they owe many times more than they are worth.

Royal Bank of Scotland - Exposure: $146.42 billion

Market Cap: $60.96 billion

Common Equity: $83.58 billion

Exposure as % of Common Equity: 175%

Landesbank Berlin - Exposure: $13.11 billion

Market Cap: $5.60 billion

Common Equity: $7.31 billion

Exposure as % of Common Equity: 179%

Barclays UK – Exposure $123 billion

Market Cap: $43.91 billion

Common Equity: $65.510 billion

Exposure as % of Common Equity: 189%

Landesbank Baden – Wurttemberg – Exposure $32.05 billion

Market Cap: $11.27 billion

Common Equity: $13.94 billion

Exposure as % of Common Debt: 230%

DZ Bank (German) – exposure $25.69 billion.

Common Equity: $10.34 billion

Exposure as % of Common Equity: 239%

KBC Bank Belgium – Exposure $39.70 billion

Market Cap: $9.05 billion

Common Equity: $16.09 billion

Exposure as % of Equity: 247%

Credit Agricole (France) – exposure $192.06 billion

Market Cap: $29.97 billion

Common Equity: $65.50 billion

Exposure as % of Common Equity: 293%

Deutsche Bank – Exposure $140.61 billion

Market Cap: $49.73 billion

Common Equity: $43.02 billion

Exposure as % of Common Equity: 327%

BNP Parobas (France) – Exposure $280.96 billion

Market Cap: $79.91 billion

Common Equity: $78.43 billion

Exposure as % of Common Equity: 358%

Commerzbank (Germany) – Exposure 67.38 billion

Market Cap: $18.45 billion

Common Equity: $14.60 billion

Exposure as % of Common Equity: 462%

Dexis (Beligium ) - Exposure $132.95 billion

Market Cap: $5.229 billion

Common Equity: $10.34 billion

Exposure as % of Common Equity: 552%

Banco Santander (Spain) – Exposure $567.20 billion

Market Cap: $92.08 billion

Common Equity: $59.51 billion

Exposure as % of Common Equity: 953%

Unicredit (Italy ) - Exposure $541.54 billion

Market Cap: $34.41 billion

Common Equity: $50.59 billion

Exposure as % of Common Equity: 1,070%

Bank of Ireland – Exposure $102.43 billion

Market Cap: $1.39 billion

Common Equity: $7.40 billion

Exposure as % of Common Equity: 1,385%

BBVA (Spain) – Exposure $552.90 billion

Market Cap: $52.80 billion

Common Equity: $35.39 billion

Exposure as % of Common Equity: 1,566%

EFG Eurobank Ergasias (Greece) – Exposure $76.01 billion

Market Cap: $2.07 billion

Common Equity: $4.74 billion

Exposure as % of Common Equity: 1,601%

Intesa Sanpolo Group (Italy) - Exposure $607.03 billion

Market Cap: $51.06 billion

Common Equity: $37.07 billion

Exposure as % of Common Equity: 1,638%

BancoPopular Espanol (Spain) – Exposure $182.94 billion

Market Cap: $6.91 billion

Common Equity: $9.49 billion

Exposure as % of Common Equity: 1,927%

Banca MPS (Italy) - Exposure $290.98

Market Cap: $7.96 billion

Common Equity: $6.24 billion

Exposure as % of Common Equity: 4,666%

Allied Irish Banks (Ireland) – Exposure $129.02

Market Cap: $2.00 billion

Common Equity: $0.387 billion

Exposure as % of Common Equity: 33,352%

To get a more complete look at how upside down the European banks are look at the chart below. The shortfall column show you how upside down the bank is.

Implications – First off do not be banking in the EU at this time. If you have bank accounts there close them and pull out your funds. Avoid staying in Euros. Some are thinking the UK pound will do well. Perhaps briefly for psychological reasons with amateur investors but they are seriously messed up economically. The EU problems will reach out and hurt the USA to some extent. The EU clearly intends to tax their people out of economic existence. Of course declaring the debt void and defaulting would hurt the 1% and the 99% would thrive. Of course they prefer to extort taxes out of the 99%. Never miss a chance to do the most evil thing is the way they work. It is a good time to leave the EU and also the USA. Feel free to inquire for options regarding residencies, citizenship and banking.

Currencies – What you will see in the very short term is the USD rise in value. The USA will do all they can do to drive the value of the USD down after a brief period. The idea is to be in USD short term and hit it right and go out of the USD. The best thing to do is to go into local currencies in part at least. Avoid any currency tied to the USD like HK dollar and Swiss Franc. Avoid any dollarized nations. Stay out of European currencies. Think about how you are going to get access to your money if the IBAN and SWIFT systems are down for the count. Get ready for a real storm ahead, nothing like what you have seen in past. Things are not comforting in the middle east are they?

Gold & Silver – We are going into uncharted waters. Metals may start to climb fast as people jump out of fiat money. The EU crisis will affect much of the world mostly Europe, Russia, China and North America. If you have metals stored in Europe be careful. Civil unrest is probably going to become a real concern there. The storage facilities could be at risk if riots get extreme. The EU doesn't have much of a military. The other risk is talk of all these additional taxes in the EU. They might tax the gold nicely. Then there is the risk of confiscation. Now that the EU and USA are both desperate the concern of a forced buyback is magnified.

New Rules – The rules are changing faster and faster now aren';t they. Do not follow the crowd. People did that with the Swiss Banks didn't they. Feel free to call or Skype us with questions. We are at a point where the economic deterioration will begin accelerating to a much more rapid pace. You will need to astute, watching and listening to keep what you have. This is the reality.