Today Egon von Greyerz spoke with King World News about the gold and silver smash, and the disturbing reality of what is happening in various troubled countries around the world. Investors have also seen some shocking moves in global markets recently and below is what Greyerz, who is founder of Matterhorn Asset Management out of Switzerland, had to say in this powerful interview.
Greyerz: “On a day like today investors have to put aside the short-term action in gold and silver and look at the fundamentals. It’s hard to know where to start, Eric. There are fires burning everywhere in the world, and these fires can’t be extinguished.
Therefore, all governments and central banks will do is put more fuel on the fires because they don’t have any other tools to rectify these massive problems that we have in the world….
“Any of these fires could be the catalyst for the next major crisis, and the next crisis in the world will be much more severe than in 2008. I’ve previously stated that Japan is a basket case that can never be saved. And of course Japan is the world’s 3rd biggest economy.
When you look at China, its financial system and economy is a bubble. The bursting of this bubble will likely have a massive effect on the world economy and global trade. Therefore, both Japan and China will continue to expand credit and print money. That’s the only thing they can do to save their economies. Of course the consequences will be inflationary, and most likely hyperinflationary.
If you look at Europe, we just had two central banks confirming that their economies are in real trouble. The ECB just had a press conference where Draghi stated that rates will stay low for an extended period. The ECB is under tremendous pressure. It’s balance sheet is full of toxic debt from its member countries.
These debts are guaranteed by the member countries, and some also by member country banks, and these debts are held on the ECB balance sheet at par. These assets are not worth par. Some of it is worth less than 50% of par. So you have a potential write off for the ECB of hundreds of billions of dollars, or maybe even one trillion dollars. And even though the member countries and some banks are guaranteeing the money, they don’t have the money to pay the ECB. So the ECB will be forced to print a lot more money.