Art Cashin – Aftermath of Cyprus, Fear, Contagion & Crisis

Today 50-year veteran Art Cashin spoke with King World News about the aftermath of the Cyprus disaster and the risks investors around the world face going forward.  Cashin, who is Director of Floor Operations at UBS, also warned about the enormous danger the world now faces as we deal with potential contagion and future crises.

Eric King:  “Art, people around the world are going to want your take on the Cyprus disaster.  In the aftermath of that, and what you have seen so far, your thoughts there?”

Cashin:  “I am very, very concerned about that.  What has happened there, luckily, because it is a relatively small nation, they are finding ways to slightly defuse some of the tension, so you are not seeing it (more chaos) immediately.  But think about it, here was a nation where without a legislative vote, without an order from the judiciary, without any of the normal courses of rule of law, people saw their deposits in banks invaded and part of it wiped away.  And the amount that’s wiped away is still up for question.

So I think it will continue to lead to monetary shifts as people in Europe say, ‘Now wait a minute, do I really want to risk going to bed and waking up that I have only 70% or 50% of the money I think I have?  Or maybe no access to the money I think I have?’

So, defensively, I think we are going to begin to see currency and monetary shifts beginning to develop.  I think European leadership made a very, very serious mistake in this matter.  They violated the rule of law, and you could see it in Mr. Draghi’s press conference.  He was very quick to distance himself.  He said, ‘This was not a good idea.  This was not smart and I had nothing to do with it.’

I think he (Draghi) realized that history will tell us that this was one of the major pieces of economic stupidity we will (ever) see in a period of crisis.”

Eric King:  “Art, when they talk about this being the ‘new template’ going forward, that has people frightened.”

Cashin:  “Mr. Dijsselbloem (the Dutch Finance Minister) had to disavow that within an hour and a half of saying it.  Once he said it was a template, and we could pretty much do this wherever we want, markets started to run afoul.

He was being called by every other banking and economic leader in Europe and (they were) saying, ‘My God man, get to a microphone and tell people you didn’t mean that.  That you were misunderstood.’  Because if that were so, people would say, ‘Wait a minute.  If this is the way they are going to do it my money is not safe at all.  Where shall I put it?  Shall I put it in England or the United States?’

We’ve already seen some of the strangest things coming out of it in the sense that German banks are much more under the rule of law than the rest of Europe.  At least immediately after Cyprus people were saying, ‘You know what, your money is safer in Germany than it is even in the United States.’

Those kind of thoughts in the background can be like kerosene on a combustible pile.  When things start to go awry again they will happen quickly, and if it starts with a bank run, there is no time for reflective thought.  There will be no time for meetings and conferences.  They will have to shut down the banks in that nation immediately and hope it doesn’t spread across the borders.  The fear is that the contagion will spill over the border rapidly.”

Eric King:  “Art, you were one of the youngest traders to earn a seat on the exchange and you’ve been doing this for over half a century.  I always ask you, what are your big worries going forward?  What has you concerned?”

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Spark That Will Send The World Into A Hyperinflationary Spiral

Today James Turk warned King World News about the spark that will send the world into a hyperinflationary spiral, as well as the next banking crisis.  Below is what Turk had to say in this extraordinary interview:

Eric King:  “I have to ask you about all of the stimulation coming out of Japan?”

Turk:  “We have this horse race as to which currency is going to be destroyed first:  Is it the dollar, euro, pound, or the yen?  And right now the yen is leading that horse race.  What they (the Japanese) are planning to do is buy more government debt, which is going to be financing more government deficits.

Turning government debt into a currency is ultimately what leads to hyperinflation….

“So they are not only going to get out of their deflation, but they are also going to go into hyperinflation.  This could be the spark that sends the hyperinflationary spiral into other countries as well because people are focusing attention on what the central bank is doing in Japan, and when they start to do that they will see that the central banks in their own countries are doing the same thing.

Today was an interesting day in Japan as well because the Japanese bonds initially rose in price.  The yield fell on the announcement thinking the Bank of Japan is going to be buying Japanese government debt and that would increase the demand for the debt.

Then, when the central bank governor said, ‘They are not going to finance the government deficit,’ the Japanese interest rate soared.  Then they backtracked and the interest rates basically were unchanged on the day, but that kind of volatility is going to become more apparent not only in Japan, but also in the major industrialized countries.”

Eric King:  “James, when you discuss Japan going down, how shocking and destabilizing will that be for the financial world?”

Turk: “It could be the straw that breaks the camel’s back, Eric.  We are on this path to currency destruction.  Debt is a two-edged sword.  It can be useful but it can also be harmful.  And when you are borrowing money and turning that money into currency, monetary history shows that is how currencies are ultimately destroyed.”

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Celente – Powerful & Destructive Big Bank Holiday Coming

Today top trends forecaster Gerald Celente warned King World News that people around the world need to brace themselves for a powerful and destructive “big bank holiday,” which he now predicts will happen this year.  Celente, who had correctly forecast back in 2012 that a bank holiday would occur in Europe, is the founder of Trends Research and the man many consider to be the top trends forecaster in the world.

Eric King:  “Gerald, earlier you mentioned a ‘big bank holiday,’ what do you mean by big bank holiday?”

Celente:  “Look at what’s going on in Italy, they don’t have a government yet.  It’s been going on for two months (in Italy).  Look at their debt/GDP ratio.  It’s approaching 130%.  How are they going to pay off this debt?

Look at what’s going on in Spain, Portugal, Greece.  Those are the bigger bank holidays (that are still to come).  They called a bank holiday in the United States in 1933.  That’s not ancient history.  And what did they do?  They devalued the dollar.”

Eric King:  “Is that what you see eventually happening here?”

Celente:  “I can definitely see it happening….

“Remember, they warned about it before, and that’s after spending trillions of dollars in bailouts and nothing has improved the economy.  The money has only gone into the hands of the ‘too big to fail.’

You can see the gap between the rich and the poor has widened.  You can see that personal incomes continue to decline.  You can see job creation declining.  So yes, I can see a bank holiday, particularly if there is a false flag or real geopolitical incident that they can then use as an excuse for a bank holiday.

When you go back to the 1930s, it didn’t happen in one day.  There were runs on the banks in Michigan first.  Cyprus may be the Michigan of 2013, the test case.”

Eric King:  “As we move toward the end game, what does it tell you about where we are in the cycle?”

Celente:  “It tells us that we are getting closer to it.  As I said, you are seeing the slowdown in job creation.  We are seeing mortgage applications falling.  So even with record low interest rates you are seeing job creation declining, mortgage applications falling, and growth in unemployment claims.

So the end game is coming quick.  There is only so long they can keep pulling this off.  I believe that by the time the new year comes the game will be over.  You know what happened to me with MF Global:  My money was in a segregated account.  They stole it.  Now they call it a ‘haircut.’  Isn’t that wonderful?  They call it a haircut when they steal your money.

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