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Eric Sprott – There Is No Solution to the European Crisis

July 10, 2012 | About:

In the interview Mr. Sprott says:

I don’t think the Euro situation can be resolved. I don’t think the world situation of continuing to expand debt and trying to create economic traction, of which there is very little, by expanding debt, will have any sustainable impact. Going to to the Australian School of Business, there is one of two things that is going to happen. You are going to repudiate the debt, which was the case in Greece Federal, they repudiated a hundred billion. Or you are going to try to print your way out of it and we perhaps haven’t quite seen the mass of printing that we might expect but in either scenario, there are only a couple of safe assets and those are precious metals.”

Why so glum Eric? Are you talking your book, or should we all be buying nothing but gold and silver?

Here is the link to the entire interview:


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Rating: 3.0/5 (4 votes)


AlbertaSunwapta - 5 years ago    Report SPAM
Yeah, too much hype over the whole thing. There will be a solution.

Both the 2008/09 crisis and the euro crisis involve the bailing out or buying of time for debt holders via socialization of their losses as well as the uptake of massive socialized debt to fuel demand (slow or halt the deleveraging). These actions naturally protect the system, and large influential vested interests because they make the rules. They also indirectly protect the average and poor citizens via maintaining some jobs and thus transactional velocity, thus maintaining equity values. So, even if the euro breaks up, Greece, Italy et. al. leave, or Germany leaves, there will be a quick adjustment to exchange values on the emerging currencies and agreements on some degree of repudiation of debt.

The euro could even disappear altogether but still exists and a transnational notional currency essentially placed in runoff. It would be a "solution". Life would go on as would business and trade and and government and taxes... People would continue to eat and some might even drink and be merry.

Like peak oil people see some sort of total disappearance of commodities, products, ways of life, in these crises where as the reality is more like a drought with only reductions in some areas spurring higher prices and substitution in other areas.

So defaults may occur but they are not total defaults but instead partial defaults (governments can usually continue to pay something on some bond issuances and there is salvage value (recovery) and CDS protection and the commensurate lawsuits (i.e. shifting of wealth to lawyers who in turn buy chalets, wine, etc.).

Look at Japan, 75% loss in equity market value over two decades, and life continued there and it was still pretty good.

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