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You Can't Inflate Your Way Out of a Bubble You Inflated Your Way Into - Can You?

April 06, 2012 | Comments: 0 | Views: 159

It seems unfortunate that bad policy, spending, and lack of fiscal responsibility caused the crisis in Europe and yet, they plan on bailing things out, guaranteeing re-negotiated debt, and then inflating their way out of it. Even if the EU charter gets completely re-written and the ECB becomes a super bank like no other, and gets help from the Federal Reserve, and China follows suit with currency floating to prevent the terrible trade imbalances, if, if, if, and really all that is never going to happen, and let's not forget the need of the PIIGS to agree to massive austerity - one could still ask if continually kicking the road, playing the same game is really the answer.

It seems as if things are just rolling along until that fateful day of an EU breakup, a failed experiment, perhaps a noble cause, but failed nevertheless. Everything will work out, just keep everyone talking, maintain stability, and keep everyone calm. That's not the answer, although in the mean time it is better than chaos. Let's open this discussion a bit shall we?

On April 5, 2012 the Wall Street Journal had another article on the EU crisis titled; "ECB Chief Stresses Euro-Zone Inflation Risks - Draghi Puts Onus on Governments to Stimulate Growth, Signaling Central Banks Reticence to Take Further Steps to Help," by Brian Blackstone. Indeed, the day before that same week the CFR or Council on Foreign Relations had a talk with the Maurice Greenberg Center for Geoeconomic Studies titled; "World Economic Update," with the following description;

"Experts analyze the state of the U.S. and world economies, discuss how emerging markets have been affected by the financial crisis, and offer predictions on what the preeminent economic risks will be in the coming months. Speakers included; Lewis Alexander, Joyce Chang, Vincent Raymond Reinhart, and host; Sebastian Mallaby."

Unfortunately, those who've called the EU crisis as a slow motion train wreck are correct. Even if you could make Greece work in the group of PIIGS, you still get PIIS - do you see what I am saying here, it's just pissing on the whole parade. Anyone who thinks this is going to all work, well, I have some ocean front property to sell you in Kansas along the yellow brick road board walk - or can I interest you in some new Greek Bonds?

The Future 2013 Slump and Global Decision Makers Inflating Their Way Out of It

In an interview on CNN Money Jim Rogers noted that there were some 40 major elections going on World Wide in 2012 including the US, Germany, France, Mexico, and anyway it's a really long list. In election years economies typically do well, and even if they aren't breaking any speed records, they often play it up as if they are, thus, as he stated;

"You are going to see a lot of good news in the financial sector which helps consumer confidence thus, the economies of the world," but he also warns the problems still exist in Europe, the US, China, and around the world, those are not going away, and the day of reckoning cannot be postponed indefinitely.

Wow, you know what, I totally concur with what he's saying here. He thus, warns of the "2013 Slump" and 2014 more debris will hit the fan, but 2012 looks great so far, while the "debt goes through the roof," he says, "higher than he can reach." He also warned about inflation in China and the housing and real estate market. He says buy farm land, best place to put your money right now?

It's perhaps time to face the music, and understand what's going on in Europe and not get sucked into that vortex, without a serious leadership role and big time guarantees - and there is a trust issue with the EU as they've worked hard to control our nation's power and growth against our best interests. If they are looking for the Federal Reserve to be their bank of last resort, that doesn't really make a lot of sense for us, especially looking at how our Federal Government just cannot seem to stop spending money. If you'd like to discuss all this more, shoot me an email sometime.

Lance Winslow has launched a new provocative eBook on Future Economic Challenges. Lance Winslow is a retired Founder of a Nationwide Franchise Chain, and now runs the Online Think Tank;

Source: EzineArticles
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Inflate Your Way Out Of A Bubble




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