Obama Sin Laden On the Road to Destruction
PIM of SPAIN | September 3, 2009 at 07:23 amby
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There will be no genuine recovery, not now… never ever in the foreseeable future. The world economy is not doomed to continuous darkness and misery. The world will under go a long period of adjustment, with high unemployment, on-again, off-again recession, and desperate efforts by the feds to return to the good old days of the bubble years.
But there's no going back. Recovery? Forget about it. The old economy isn't going to bounce back; it's dead.
The feds are fighting the correction every step of the way. They're propping up brain-dead companies, and keeping zombie banks going by feeding them the blood of taxpayers.
Everywhere the feds look there's a campaign contributor or a lobbyist or a voter, and they all want the A-positive blood of taxpayers. They look to the feds for a transfusion in order to keep living in the style to which they became accustomed.
With so much debt in the system, the feds are desperate to raise inflation levels. They must increase the CPI to persuade consumers to spend money rather than save it. Otherwise, the nation risks falling into a deflation trap - the very thing Ben Bernanke has pledged to avoid. So they'll continue going down that road - towards inflation - until they finally get there. And they'll keep pressing harder and harder on the monetary accelerator until they finally run into a tree of stagflation or even hyperinflation – the beginning of the 2nd Great Depression.
The world economy is on the road to destruction; that's clear. But it may be a much longer road than most people expect.
The London's Telegraph: "'The current financial crisis is unlike any others,' says the Bank for International Settlements. Lasting damage has been done. The 'cumulative output loss' is likely to reach 20pc of GDP in the major economies.”
The message is the same at the International Monetary Fund. “The world is not in a run of the mill recession. The crisis has left deep scars. In advanced countries, the financial systems are partly dysfunctional,” said Olivier Blanchard, the Fund's chief economist.
"It has certainly alarmed US retail tycoon Howard Davidowitz. 'As a country we are out of control, we're in a death spiral,' he said.
"Jeff Wenniger from Harris Private Bank says an army of baby-boomers have seen their old age plans shattered by the housing bust. Their nightmare is here. They will have to spend less, and save more. 'Generational destruction of a society's balance sheet will not rectify itself in a matter of months.' "'How about a quarter century?'"
Fewer people have money to consume. And those who do are keeping their money in their pockets. The Wall Street Journal reported, “People are cutting their own hair to save money.
From national income statistics comes a report that “the typical US household has less discretionary spending than at any time in the last 50 years.” Why? Americans have no money to spend because they already spent it! Now they're paying the price. And it will take years - maybe 10 years, maybe even longer - before they've paid down their debts to more comfortable levels. In the meantime, they are poorer than they've been since the Eisenhower era.
The economic recovery that so many economist and investors pretend to see rarely seems to make an appearance in the real world. This illusion of recovery never seems to produce any actual economic recovery. It just is wishful thinking to get consumers back into the Shop.
Karl Gotthardt - albertacowpokeThese members have powered this story: