February 2021
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Don’t look down! Whatever you do, don’t look down!

(As it’s Sunday, I’ll just show a couple of pictures)

In cartoons, whenever the main character goes rushing off the cliff, all goes well till they look down. Then there’s a huge WHOOOOOSSSH! SCREEEECCCCHH! CRAASSSSHHH! as they suddenly plummet down.

The economic situation is Europe is a bit similar. Here’s a picture showing the debt levels of EU countries:

And here’s a table showing the exposure of the main countries’ banks to the debt of other countries in $bn:

If just one country wobbles, hesitates and then looks down, banks go bankrupt and the whole thing crashes. That’s why no country will be allowed to leave the Eurozone. That’s why no country will be allowed to default. And that’s why, when the next major bank collapses, ordinary savers’ money will be “bailed in” – converted into shares in the bankrupt bank. For the politicians, the financial system must be saved at all costs, even though hundreds of thousands of businesses and millions of ordinary people will be wiped out financially in the process. We’ll be told it’s all for the “greater good”.

Cyprus was just the start of this new phase of the financial crisis. We are on the brink of a massive financial implosion. But, like a cartoon character, we can carry on running through thin air as long as nobody looks down. But when someone does look down – as they always do – then WHOOOOOSSSH! SCREEECCCCHH! CRAASSSSHHH!

The challenge for each of us is how to protect our businesses, savings and pensions when the inevitable WHOOOOOSSSH! SCREEEECCCCHH! CRAASSSSHHH! happens.

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