Collapse of the Euro

Not Sustainable!


Nowadays, investors hope and pray for a new government rescue from 

Washington or Brussels. 


They wait with bated breath for each official sign of money printing, interest-rate cuts, or financial bailouts.


In other words:  Government Intervention.


When these short-term “Band Aids” are rumored to be implemented, stocks rally – sometimes massively – then, when the rumors subside, we witness a big time crash (sell off) – time and time again.


The bottom line:  No entity (global governments, international banks, etc.) are more powerful than the free market.  Attempting to control the free market has proven throughout history to result in a miserable epic failure (see “Importance of Free Market” page).


 

This is volatility never seen before in the US and Global equity markets – as 80% technical traders, we know that this volatility takes place at MAJOR MARKET TOPS!


The Euro Zone WILL fall apart – it’s just a matter of how soon – here’s how we know:

Unlike stock market investors, insurers (sellers) of specialized insurance contracts that insure against sovereign debt defaults must be able to see through the “hype” of government bailouts 

and rescues. 


If the danger of debt default is rising, they charge a higher premium for the default insurance. 


If the danger of debt default is subsiding, they charge a lower premium for the default insurance. 


In 2008, to insure a $50-million portfolio — allocated equally among sovereign bonds of Belgium, France, Germany, Italy, and Spain — the total cost (insurance premium) was a meager $28,649 per year.


Care to venture a guess as to how much it costs now?


As far back as late 2011, the cost of insuring the same $50-million portfolio is an astonishing $2,258,200 per year, or 78.8 times more!


In other words, based on the market for these insurance contracts, the danger of a wholesale European debt disaster — with the potential to melt down the global banking system — is now nearly 79 times greater today than it was four years ago!!!


The very continued survival of these sovereign debt default insurers depends on how accurately they assess risk – obviously, from the numbers shown above, they are VERY nervous about the future stability / existence of the Euro currency!


Panics do not destroy capital—they merely reveal the extent to which it has previously been destroyed by its betrayal in hopelessly unproductive works. 

– John Stuart Mill (1806 -1873)


This is what is currently occurring:

The ECB (European Central Bank) is lending printed / artificially created Euros

to the Central Banks of the struggling Central Banks of Italy and Spain in order to keep their lending / interest rates below the unsustainable 7% level, that is Spanish, Italian, etc. bonds yielding over 7% are thought to be the tipping point at which finance becomes effectively unavailable.





European Shell Game

Similar to the U.S. financial system, the Eurozone has become a gigantic shell game.

   

While still in motion, a shell game can be mesmerizing to watch, but when it ends, things can get ugly fast!  


A shell game is a gambling game – in reality – it’s a confidence trick used to perpetrate fraud.  


That is what’s happening in Europe and the U.S. today.  The IMF (International Monetary Fund) in conjunction with the ECB (European Central Bank) and ESM (European Stability Mechanism) are like a con artist that is desperately trying to stay one step ahead of everyone else.  


They know that the debt they have accumulated is not sustainable and will eventually collapse (read: Ponzi Scheme).  


They also know that the Euro will eventually become worthless until and unless they impose Fiscal changes – i.e. public sector intervention (lowering taxes, lending to small business for expansion and unemployment reduction, and cutting spending) as opposed to the current Monetary manipulation that they’re currently doing by printing more Euros (out of thin air) lending out the money to banks to purchase more toxic bonds /  loans – and the currency destruction is simply delayed – the underlying systemic problem still remains – and grows worse and worse.


So now, we have the IMF, ECB, ESM, etc. are putting on a grand show and are trying to keep everyone believing that the game is fair and legitimate – which as most now know – isn’t!


Next, we have:

The Ever Important TED Spread



Short selling in the Euro currency is at a record high - fueled by investors who are concerned that the PIIGS could take down the whole region's currency!


Adding to that, global investors fear that a default on Europe’s sovereign debt could destroy the banks that own huge positions in eurozone bonds, many of which are American banks!
 

We’re witnessing that play out in the TED spread, which is simply a measure of the perceived health of commercial banks. 


The TED spread is the difference between the interest rates on interbank loans (also known as Eurodollars) and on U.S. Treasuries:


When the difference is large, it indicates that investors are factoring in bigger risk to the financial system.


Right now, the TED spread is the highest it's been since the height of the financial crisis! 


That tells us that investors are more anxious about the financial system than they've been in years.  And that's carrying over to the behavior we're currently seeing in the stock market.


Even though stocks have been trading relatively flat, investors should be preparing for things to get worse (possibly much worse) before they get better — the financial system can’t be as risky as it is right now without some consequences.

And since the TED spread measures interbank credit risk, those consequences are going to be reflected in the financial sector. 


Even though the TED spread tells us that risk is increasing {"behind-the-scenes"}, we haven't seen that risk get priced into financial stocks by nearly the same amount.


Trader Screen utilizes an Exchange Traded Fund (ETF) that tracks three-times (3x) the inverse of the financial sector’s performance.
 

In other words, for every 1% that financial stocks fall, this ETF will rally by 3%.  While leveraged ETFs hold additional risks, it still makes a lot of sense for traders who approach this as a short-term, aggressive bet.


To use options on top of a highly leveraged ETF can create HUGE PROFITS  in a very short period of time -  IFF (If and only if) the timing is correct!
 

Trader Screen's proprietary technical trading system "nail" these immense profit potential trades consistently!


You can be in the majority that gets financially slaughtered by this approaching systemic global financial collapse 


OR


You can be in the minority that not only protects what you have, but makes HUGE profits from this once-in-a-lifetime opportunity to prosper.


Trader Screen utilizes several ETFs that increase in value as the Euro Currency and European Stock Markets fall in value!


Retire early with a HIGHER STANDARD OF LIVING!


Most of the biggest fortunes in the last several centuries have been made in times of financial crisis!