“Stark” prospects

Posted | 27/05/2014 / Views | 1761
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We read regularly of the dangers to the global economy perpetuated by the money printing and zero interest rates of our largest central banks.  But when the former vice president of Bundesbank (Germany’s central bank) and chief economist of the European Central Bank, Mr Jurgen Stark describes the current economic system as “pure fiction” you sit up and take notice.  In a rare speech since he resigned in 2011, Stark said that central banks, including the ECB, "have completely lost all ability to control, and perspective on, the economic situation." He said monetary authorities have been groping since 2008 to avoid a second Lehman Brothers collapse, but if it happens, "the system will not survive".  

When you consider that Deutsche Bank, reportedly the second largest holder of the estimated $1.4quadtrillion derivatives still in the system, last week had to raise over $10b at around 30% discount, it highlights the “Lehman Brothers” risk is alive and well.  Stark explicitly recommended putting some of your savings in gold and silver.