Off the Cuff: When The Going Gets Tough, The Tough Want Their Gold

In this week’s Off the Cuff with Mish & Chris podcast, Mish and Chris address:

• Holding the Bag in Europe
  
  • At this point, it would take a miracle to save taxpayers from getting stuck with the bill for this mess
• Got Gold?
  • All of a sudden Europe’s leaders are demanding their gold. Think it’s still a “barbarous relic?”
• Sliding back into Recession
  
  • The data on the worldwide economy looks bad and is getting uglier

The quick takeaways from this week’s podcast? Pay no more attention to what Europe’s leaders say — instead, watch what they do. Prepare for a Greek (and Spanish and Portuguese and …) default, and keep your precious metals close.

Who will be the Bagholders?

The economic tragedy in Europe looks like it may be approaching the point where the can can’t be kicked any further down the road. Whether it is called such or not, Greece is going to default on its debt (in fact, by any sane definition of it, already has) and Spain and Portugal will likely follow soon thereafter.

The big question remains: who will end up taking the losses on these bad sovereign debts? It’s looking increasingly like it’s going to be the public, the taxpayers. Which would normally be political suicide for those in power, so why do they seem so intent on making that happen? Chris and Mish present their theories why.

Got Gold?

A recent interesting development has been the growing concern for accounting for sovereign gold holdings. Both Germany and Switzerland have expressed a desire to audit their reserves and possibly repatriate said reserves back within their borders.

If the major world governments — so fond in the past of mocking gold as a ‘barbarous relic” — are beginning to hold it so tightly, what signal is that sending?

Sliding Back Into Recession

Despite the heroic liquidity efforts of the world’s central banks, most of the major world economies are mired in anemic growth or slipping into recession. Japan is looker sicker by the moment, US Q1 growth is slowing and its housing market continues to decline – even past engines like Germany and China are stumbling.