Per Agora Financial's 5 Minute Forecast last Friday: The number of voices concerned about a new financial crisis grows...
You should be scared, says Neil Barofsky, who was inspector general of the $700 billion TARP program to bail out the banks until last spring. I am scared.
You can't not be scared, he tells Dan Rather in a new interview. You can't look at what happened in the run-up to 2008 and see how it is not going to repeat itself, given what we have done.
Also, here is how they think the dominos are going to fall:
So we have a scenario that looks something like this:
- Greece defaults
- The market value of the French banks' commercial paper is downgraded
- Money market funds refuse to fund new issuances of that commercial paper
- Suddenly, the French banks don't have enough liquidity to meet their obligations
- Meanwhile, European banks hit up U.S. banks for their credit default swaps, putting said U.S. banks, in Mr. Greenspan's words, up against the wall.
Oy... There's no news we see today that indicates this is close to being fixed before the European Central Bank's self-imposed deadline of July 11.
And, Barfosky (who in my opinion should know) said the following about the next crisis: The largest banks are now 20% larger today than they were going into the crisis, Barofsky told Corporate Crime Reporter last week. Standard and Poor's estimated that the upfront costs of another bailout could be up to $5 trillion.
And when you think about the focus on our budget issues, our deficit and our debt — what happens with the next crisis and we have to come up with another $5 trillion to bail out our system once again?
It's a terrifying concept.
As the folks of the 5 Minute Forecast say: Oy. Oy is right. And July 11th is only 20 days away. Are you stacking your gold coins yet? I am. Gold supply and demand - that's right! I'm demanding gold in my portfolio! Demand your gold coins today at Lear Capital !