As the G20 meets in Mexico, familiar press releases promise that global heads are urging Euro leaders to “do everything in their power to solve the debt crisis”. What they mean is everything except what needs to be done: admit the debts are too large to be repaid, and write off hundreds of billions in outstanding bonds. What the leaders mean so far is that the Euro zone should do everything in their power to further enslave the working people and real economy in order to save the banks harmless from the losses that they deserve to take. Until large-scale write offs become an accepted keystone in this restructuring process there will be no way forward to a meaningful recovery.
Meanwhile Goldman Sachs is forecasting that the US Fed will announce further measures of “easing” out of their two day meeting ending tomorrow. Maybe they will. If anyone has privileged inside information on what the Fed is likely to do it would be Goldman Sachs. But I am guessing that the Fed members themselves have no idea as yet about what they should try now. With interest rates at record lows, and cash and liquidity in the banking system at unproductive record highs, the Fed and other Central bankers are likely to have little if any lasting effect on the economy from here. The next global recession has almost certainly arrived, although it will be months still before official sources and the long-always risk crowd are forced to acknowledge this. By then unemployment will be higher, deficits will be larger, debt will be even further beyond the realm of reason and capital markets are likely to have fallen considerably. Maybe then governments will be desperate enough to make banks acknowledge their losses. It will inevitably happen one of these days.
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“Maybe then governments will be desperate enough to make banks acknowledge their losses. It will inevitably happen one of these days.”
Perhaps, but I think somewhat naive as this “tradgedy of the commons” plays out.
In the end all we really have is the truth and as individuals we will all come to understand this, but to expect the masses to understand and goverments (puppets) to govern for the good of the electorate is not realistic.
http://youtu.be/Qvp37o1jZUo
The Fed and other central thieves will do whatever is necessary to save the big banks. And never underestimate their ability to concoct new schemes. History teaches us that the only rules and laws that matter are those we are willing to defend. Otherwise governments and central banks can make up whatever “rules” they wish to fit the circumstances.
The day the banks are forced to acknowledge their losses will be the day it no longer matters. All the wealth they would have needed to steal will have already been stolen.
No matter what you hear in the media, never think that central banks work for the benefit of the people or the economy. They work for the banks. If their policies benefit the economy, it’s only because the interests of the banks happen to align with those of the people at that time. But they will sacrifice the people without compunction if it serves their purpose. As they are doing right now.
Interesting article from someone leaving his career on wall street after 15 years
http://www.marketwatch.com/story/so-long-suckers-im-leaving-wall-street-2012-06-19?link=MW_popular
Dave that was a good post.
I think the only politically acceptable way to deal with the Euro and US debt problem is inflation:
Pro growth policies imply lower taxes (and lower tax revenues in the short run), serious easing of environmental regulation and other regulation, changes to working conditions and measures to improve the mobility and skill level of the labour force.
These will either 1) take a long time or 2) be unacceptable to large swaths of population
Austerity policies imply higher taxes, lower government services and social instabilities – democracies will vote out serious austerity governments.
What is left is inflation to debase the value of the debts both public and personal.
Today’s press release from the “German ECRI” (ZEW):
The financial market experts’ expectations are a strong warning against a too optimistic assessment of Germany’s economic perspectives in the remainder of this year. The
risks of a pronounced decline in economic activity in countries with close trade ties to Germany are very clear. In addition, there is a situation in the Eurozone which continues to be precarious. The outcome of the Greek vote is a short breathing space – just that, nothing more and nothing less ,” says ZEW President Prof. Dr. Dr. h.c. mult. Wolfgang Franz.
http://www.zew.de/en/presse/