When Your Entire System is Backed Only By Credibility, Corruption Scandals Can Bring the Whole System Down

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.




The above story illustrates some key elements that all investors need to be aware of:


  1. EU politicians are so corrupt they make their US counterparts look clean by comparison.
  2. 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 before2009The 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:



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:




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  • Anaxamander P. Gormlay

    You have savings???

  • Bud Butley

    The Fun Part is that Rajoy gave a press conference from which the press itself was rigorously locked out. They got to watch him on TV in another room, thus avoiding questions. AFP slung together a sort of report on the sham, er, sorry, show, and took footage from another Moment of Glory, where he wore a different tie and suit. So now we’re faking news broadcoasts quite openly.

  • hvaiallverden

    I fully agree, its Not about -isms, they are simply tools of distraction, maintained to build up an ilution of complicity to an ruling goverment.

    Elections are usaly scams, no matter where, its the present ruling people, they have created a system that makes shure that they can linger as long as possible in any way consivable inside the political arena, the real parasitt.
    Maintained largly by an even bigger parasittic entety, banks and Intress.

    One clue, look at where, and in what you actualy can build in an area, the gov. regulations have made it increasingly more and more expencive to simply build an deasent f… house. And the sizes are beyound stupidity and have no meaning what so ever other than to show how stupid bigg a house can be build. I cant even if I want to build an hyper modern house in 80 sq.m on to floors, there are some stunning arcitetual entetys with almoust no power bill, simply by reducing my present idioticly sized house, 200 sq.m. with an apart.. Butt the state and comunety gov, forbids me, its simply to small, can you imagine that. Thats why the gov. and private corps in housing sect. have steadely made it increasingly more and more coustly to build a House.

    This is the kind goverment that creates the conditions for an entety to regulate and controll our world, in to controll our f… standards. The corruption in this matter are obvious, and this kind of govenance is uuterly waisted and have no meaning what so ever, and IF people wanted to build bigg and have an homogenus nabourhood, well be my gest, but dont impose thos on others. We all can use the space to what we chuse, we all can agree to areas where rules are different, but solely based on agreements given by the hole comunety.

    No regulatury or governace needed, just an force to impliment in nesecrey, like an Constistustional cort and Police.
    They are are integratet entety and have been so, since time immemorial.

    You are spott on, in this analyse.


  • carmen

    What is happening in Spain is a great manipulation to defeat Mariano Rajoy. A exception that mr. Barcenas has € 22 million in Switzerland, he has to explain how the money has been achieved. There is no corruption in the PP though popularly believe them guilty of corruption by things like € 230 per day for expenses, and allowances of the President that in every country there in larger amounts.

    Today there is a currency war, and this attack on Rajoy, may be from abroad (USA?) Or a traitor to Spain.

    yes, in Spain there is corruption , but compared to many other occidental countries, is like comparing an apple thief with Al Capone

    Corruption is the 11-S, corruption is that U.S. subprime sent halfway around the world to poverty, corruption is killing people with drones selectively, killing children and women as colateral , pedophilia corruption is discovered in the BBC and British parliamentarians. And I not go on because no end.