A Reason For the August Stock Market Crash, Oct Pending
Our overall readings on the web suggest to us that there is a silent but sure to be deadly trending going on right now. The media is not covering it, your broker is not telling you and your financial adviser is not advising you. Only the informed blogging world is leading with this story. Also note that this will be a great chance to profit.
The deadly trend: A European wide bank run.
We know folks in Portugal, Ireland and Greece took their funds out of their banks and purchased gold, Swiss franc and Yen. But things just moved to defcon 2, Italy and Spain banks have deposits falling, the money is finding other 'non Euro' safe places to hide.
The recent growth of M2 surpasses even the explosive safe-haven demand for money that accompanied 9/11 and the financial crisis of late 2008. Something big is going on, and it can only be the financial panic that is sweeping Europe, as money flees a banking system that is loaded to the gills with PIIGS debt. In short, it looks like there is a run on the European banks, and the U.S. banking system is the safe haven of choice.
Given the lags between real time and when data hit M2, it's quite likely that Europeans already have shifted substantially more than half a billion into U.S. banks in the past two months. I suspect we haven't seen the end of this story either.
COMMENTS: We know from Felix Zulauf comments that Italy's and slow but deadly bank run has started, it now seams the pace of withdrawals is accelerating. Fear does funny things. Marc Faber said recently the stock market is a discounting mechanism, and the recent 16% sell off suggest something serious is going on. Well a European bank run would do it. The EU/Germany have been replacing lost funds from depositors with cash so far (this is why the Euro has not yet crashed), soon the cash required will be very large and require German back quarantees (ie Eurobond, fiscal union), and if that doesnt happen. POP goes the asset bubble balloon!
Important history point: The great 1930's depression started when a large bank in Austrian bank suffered exactly the same event. A bank run. Spooky.