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Mainstream economist predicts sovereign collapse within 18 months

By Catholic Online (NEWS CONSORTIUM)
June 4th, 2012
Catholic Online (www.catholic.org)

There is no shortage of grim economic indicators in the news today. Depressed job markets, failing IPOs, mounting unrest and fiscal crisis in Europe, all serve to make the business section read like a soap opera. Unfortunately, some experts believe the soap will soon turn to epic tragedy. 

LOS ANGELES, CA (Catholic Online) - Former hedge fund manager, Raoul Paul is predicting the "biggest banking crisis in world history" Raoul Paul retired from managing hedge funds at age 36 and now lives in Spain where he manages the Global Macro Investor, an independent research publication. Paul is now predicting a worldwide banking collapse.

What makes Raoul Paul unique is that he is a professional, and not one of the doomsday prophets of apocalypse that have always been around to predict the downfall of civilization regardless of the economic climate. More importantly, he's not trying to steer people into buying gold, a survival handbook, or anything of the sort. He is simply sharing his professional observations backed by research.

So what does the research say?

Paul predicts the first major bank will collapse within the next 18 months. Banks are holding large quantities of troubled assets and there are no fundamentals to support recovery. Purchasing and manufacturing are slowing globally. It will be up to governments, once again, to bail out the banks. Unfortunately, this is an unpopular solution, and likely impossible. 

Governments and banks are already leveraged to the maximum, there simply isn't any room to make more money without devaluing the currency. Sooner or later, a major bank is simply going to have to fail. The most likely candidates are in Europe. 

The failure of a major European bank can also signal the end of money for central governments. And without those loans (typically high-interest) from the banks, a country cannot operate.

Government will be forced to choose between a complete shut-down and default, and since the former is unacceptable, a default is likely. 

In a default situation, a government stops repaying its debts. That means people who purchased government bonds and other investments that relied on those payments have now lost their money. They in turn won't have money to invest (lend) to others - their fortunes have evaporated. 

This of course starts a domino effect because many of those investors are actually other countries. So when Greece goes, so will a number of other countries in succession. Eventually even the United States could suffer it's greatest economic disaster - ever.

Paul does not simply blame debt, which is the traditional culprit in most doomsday scenarios. What he identifies is that there is $70 trillion in debt serving as collateral for $700 trillion in derivatives. And that $700 trillion is now 1200% of global GDP!

Paul says this is the beginning of a reset. Paul predicts that bonds will fall to 1 percent and short selling stocks and bonds will be banned along with a number of other common financial practices.
 
Ultimately, no investment could be safe as governments work out new ways to manage their operations and a new system emerges. He predicts the end of fiat currency and fractional reserve banking. 

Paul thinks we have only about 6 months left of trading in the West before things turn for the worse and he is advising investors to seek safe haven for their investments before then. 

 

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