The political crisis in Italy may not be unfolding exactly as I expected but it’s pretty damn close.  President Sergio Mattarella will go down as the Man That Broke the EU, with his idiotic justification for nullifying the coalition government formed by The League and Five Star Movement.

Mattarella announced this on Sunday in order to try and lessen the market reaction to the news given that both the U.K. and the U.S. markets were closed on Monday for the holiday.


“Mario, We’re Going to Need a Bigger Boat!”

I hate to be a smart-ass about this but, I’m going to be a smart-ass about it.  The leadership in Europe are getting a real lesson this morning in the limits of their power to make edicts and create reality.

People simply don’t act only out of fear of reprisal.  They act in their own best interest after weighing the potential drawbacks to action.  And in a full-blown constitutional crisis engendered by political stupidity, they will sell first and ask questions later.

The EU will threaten anyone who shorts EU sovereign debt with jail time.  Bonds will continue to be sold.

The ECB will monetize more debt, as they are doing literally as I type these words.  Traders will sell into the buying.

I’m not the only one who could see this coming.  In fact, this morning Martin Armstrong again proved his worth to the world by reminding us that politics, not philosophy, governs the behavior of many bank analysts and traders.

I was asked to do a short documentary of the crack of the Euro a few months back. I agreed. They could not find a SINGLE analyst in Europe willing to join me. Not that they disagreed, but for political reasons, they did not want to stand up and say the Eurozone dream was coming undone. No analysts at the top banks would dare come out and say what I have said and still hold a job. The ECM [sic ECB] would have been on the phone and that analyst would be fired. Banks have to play the game and cannot rebel for if they do, the ECB will shut them off.

But, those that the ECB cannot control will do what they should.  Watch last night’s livestream as I show people the charts of what was unfolding then and then look at the chart above.

My biggest surprise is how well gold is holding up.  Right now, this is contained to Europe.  That will change over the next few days/weeks.  The contagion will spread outside of Europe and put real pressure on dollar liquidity.  But, gold will be your bellwether as to which forces are winning, the short-term needs for dollars or the need to preserve capital as faith in all debt is vaporized.

Gold will rise at some point, the question left to us is, will it drop $200 first or just blast off from here.  I bet you Putin’s and Xi’s minions are in the futures markets right now supporting the price to put maximal pain on U.S. banks exposed to this European insanity.  What’s a few dollars in profit now when you can gut the balance sheets of your adversaries’ banks?

The EU Strikes Back, Italian Coalition Struck Down

The EU Strikes Back – Italy Coalition Rejected

Italian 5-year Debt Explodes

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