by Phoenix Capital Research
One of the primary focal points of our research is the corruption
that has become endemic to the political and financial elites of the
world. When we refer to corruption we are referring to insider deals,
cronyism, lies and fraud. Since the Great Crisis began in 2008, these
have become the four pillars of the
financial system
replacing the pillars of trust, transparency, truth and reality that
are the true foundation of capitalism and wealth generation.
As we regularly note, corruption only works as long as the benefits
of being “on the take” outweigh the consequences of getting caught. As
soon as the consequences become real (namely someone gets in
majortrouble), then
everyone starts to talk.
This process has now begun in Spain.
MADRID — Spain’s governing Popular Party was drawn deeper into a
web of corruption scandals this past week, after the Swiss authorities
informed the Spanish judiciary that the party’s former treasurer had amassed as much as 22 million euros, or $29 million, in Swiss bank accounts.
The treasurer, Luis Bárcenas, resigned from his job in 2009,
after being indicted in the early stages of an investigation, which is
still ongoing, into a scheme of kickbacks and illegal payments allegedly
involving other conservative party politicians…
Nonetheless, the revelations have brought a fast-growing list of
corruption investigations, which have unspooled across Spain, to the
doorstep of the conservative government of Prime Minister Mariano Rajoy,
who has so far remained silent. About 300 Spanish politicians
from across the party spectrum have been indicted or charged in
corruption investigations since the start of the financial crisis. Few
have been sentenced so far.
http://www.nytimes.com/2013/01/19/world/europe/corruption-scandals-widen-in-spain.html?_r=0
The above story illustrates some key elements that all investors need to be aware of:
- EU politicians are so corrupt they make their US counterparts look clean by comparison.
- Having been put off for years, investigations into corruption are
now reaching the point at which the rich and powerful are actually at
risk of serious consequences.
Note in the above story that former Spanish Treasurer Luis Bárcenas has been under investigation since
before2009
. The
fact that the real smoking gun (his hidden Swiss bank account
containing over $29 million) is only just coming to light should give
you an idea of how corrupt the system in Europe has become (there is no
way on earth it would take four years to find this information).
That this information is coming out now also tells us that things are
getting so bad in Spain that heads are going to start to role. As we
stated earlier, corruption only works until the consequences outweigh
the benefits of being “on the take.” The above story tells us that we
have finally reached that point in Spain. It’s taken five years for this
to happen (the Crisis begin in 2008). But the system has finally
reached the inflection point at which key players will face real
consequences for their corruption.
With that in mind we can expect more and more such cases to begin to
emerge in Europe. The fallout from this will be major both for the
political class and for the financial markets.
Indeed, later in the same story we find the following tidbit:
On Wednesday, amid another property investigation, the
president of Madrid’s regional government, Ignacio González, revealed
that he and his wife purchased a penthouse last month in the holiday
resort of Marbella for 770,000 euros, or more than $1 million. Mr. González, who earns 4,800 euros a month, about $6,380, is
denying any wrongdoing, as well as any link between his acquisition and
the property investigation undertaken by a local judge.
A regional President, earning less than $80K a year just bought a $1
million penthouse in a country where youth unemployment is above 50%,
workers have gone over six months without being paid, and pharmacies are
running out of medicine due to having not been paid some €500 million
by the government.
The reason this is so important is because politics, not economics, drives everything in Europe. Please note that the entire EU
banking system
was pulled back from the brink of collapse last summer by Mario Draghi
and other EU officials promising to do whatever it takes to end the
crisis.
Since that time, the economy has actually
worsened in
Europe. Unemployment has hit a new record and the vast majority of the
EU has re-entered recessionary territory. Thus, it has been the
credibility of various EU officials,
not any fundamental improvement in things that has made the whole system work
Now that major corruption scandals are breaking out regarding key EU
figures, it’s going to be increasingly difficult for the EU political
class to continue to convince the markets that the “everything is OK.”
With that in mind, it’s only a matter of time until the EU Crisis
begins anew. We’ve already scandals roil the markets in Italy and
Spain. Sooner rather than later, this situation will spread to the point
that the ECB’s backstopping of the system is called into question. When
that happens, things could get
very ugly.
We have produced a FREE Special Report available to all investors titled
What Europe’s Collapse Means For You and Your Savings.
This report features ten pages of material outlining our independent analysis
real debt
situation in Europe (numbers far worse than is publicly admitted), the
true nature of the EU banking system, and the systemic risks Europe
poses to investors around the world.
It also outlines a number of investments to profit from this;
investments that anyone can use to take advantage of the European Debt
Crisis.
Best of all, this report is 100% FREE. You can pick up a copy today at:
http://gainspainscapital.com/eu-report/
Best Regards,
Phoenix Capital Research
PS. We also offer several other FREE reports outlining the impact of
Obama’s policies on the US economy, how and why every investor should
buy some bullion, and the ongoing threat of inflation to the financial
system.
All of these are available at:
www.gainspainscapital.com
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