Nobody knows where the tipping point lies on public debt, though anything above 100pc of GDP in a currency union is courting fate. Some are already there. The European Commission says Italian debt will jump to 116pc in 2010. Greece is vaulting back to 109pc, Belgium to 101pc, France to 86pc.
Even German finances are falling apart. After screwing down spending to balance the books, discipline has broken down. Berlin says the deficit is heading for 6pc next year, taking debt to 82pc. This is happening all over the world, of course. But the ECB is compounding the effect, whether for reasons of politics, Bundesbank fetishism, or misjudgment. By refusing to join the US, Japan, Canada, Britain, and Switzerland in quantitative easing (QE) the ECB has allowed a contraction of private credit this summer. The M3 "broad" money supply has shrunk since February.
Ignore M3 at your peril. It flashed awarning signal in the US months before the collapse of Lehman Brothers last September; it is flashing the similar warning signals in Europe now.
Professor Tim Congdon from International Monetary Research said the eurozone money figures are "horrifying" and portend a serious crunch ahead. "My verdict is that the senior people in the ECB [and the Fed] have little organised understanding of the debt-deflationary processes initiated in late 2008," he said.
Ireland's M3 contracted at a 30pc annual rate last month, a death sentence for a hyper-indebted economy. The wreckage will be evident just in time for the Irish to vote again – under extreme duress – on the EU's Enabling Act in October. This should make for interesting political chemistry.
In Germany, the Mittlestand lobby (BVMW) says half its members are facing a liquidity squeeze, while the strutting finance minister, Peer Steinbrück, has assumed a ghostly pallor. "We must take seriously the threat of a credit crunch in the second half of this year," he said.
Link
>"My verdict is that the senior people in the ECB [and the Fed] have little organised understanding of the debt-deflationary processes initiated in late 2008," he said.<
ReplyDeleteThe guy simply doesn't get it. The senior people over at ECB and Federal Reserve know very well what they are doing. They are looting their people. As simple as that. How many times do I need to post the same quote from Thomas Jefferson before people actually begin to comprehend what the quote says:
"If the American people ever allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered."
This applys to every nation, Europe is not an exception. In a few simple words Jefferson managed to describe what is going on in the Western world now.
Fools with Harvard degrees either cannot get it or participate in the same looting process as cover ups.
The only way to stop the theft of American wealth is to stop paying into the system through Federal taxation. Cut off the head of the serpent and you stop the theft. Unfortunately the average American is too afraid to take that step (by design of using the IRS as a constant fear of retribution).This whole theft issue just amplifies Thomas Jefferson's quote:"When the people fear their government, there is Tyranny; When the government fears the people, there is Liberty."
ReplyDeleteThats exactly it, US citizens fear the Government and the Government does not fear the citizenry.....Until this changes If it ever does we are just like free labor slaves to be looted at will......Tooooo many at the top are only about themselves like a cancer which eventually kills its host!!!!
ReplyDeleteOf course the people fear a government that would callously commit an act like 9/11 to force them into enslavement.
ReplyDeleteThe US and its dollar are going down because it is a parasite capitalist economy that makes no profits.
ReplyDeleteThat’s the first thing to understand in this debt crisis a capitalist country that borrows its profits.
These capitalists can make no profits from exploiting , or employing if you like americans despite the much vaunted delusions of the US super productive workers.
So, where did the US “profits’ comer from in recent years ?
“New figures for 2007 show that dividends paid out were $785.8 billion. Meanwhile, the trade deficit was $731 billion and net capital inflow was $768 billion. The Economic Report of the President explains that foreigners financed the trade deficit. “
http://mimdown.wordpress.com/2009/08/09/economic-report-of-the-president-2009/
Without borrowing to finance its consumption its import trade deficits there would be no profits!
The US has been running Ponzi/style on foreign investments with the banks scamming fees and bonuses
off the top. As soon as the supply of foreign funds for bonds and property investments were threatened , staring with Sub-prime bonds ,the US began collapsing into a whining heap whingeing about its taxes paying for the banksters bailout .
That is because it has no productive capital or productive workers for capital just military deficits debts and more debts.
Times up Maddof times up US ! Pay your interest bills and socialise the banksters losses like good little americans should .
And stop whining.you made your own bed.
10:37 - no kidding. Anyone who doesn't show caution or fear when dealing with such ruthless killers are foolish. They will stop at nothing. No, not the puppets we call President or Senator - their puppet masters.
ReplyDeleteWe are hampered by morality and limits, they are not.