Greece is in serious trouble and so are many other countries in the Eurozone. With Greece exiting the Euro we know there will be a run on the banks (rightly so) and with that a rippling effect of other EU countries defaulting as well. We all know that Spain, Portugal, Italy, and France are already drowning in debt and bailout after bailout will not improve the economy nor stimulate economic growth. Severe austerity only worsens the problem by strangling any chance of growth in GDP. Imposing austerity on its citizens with an unemployment rate already dangerously high is tantamount to beating a dead horse and demanding it get up and work for you. The rich investors who loan money to bailout these countries will demand more and more austerity (which frankly doesn't make any sense.....other than the fact that the borrower is slave to the lender), along with higher and higher interest rates because of fears that they will never get their money back; and those fears are real with an even higher probability they will not get their money back.
We all know this will in turn effect the United States and our already anemic growth. Signs of recovery are far and few even though the media tells us otherwise.......they do not want to cause a panic or a run on the banks. But I can assure you the only reason why the stock market is inching up is because folks are desperate to make money especially after severe inflation (or hidden tax) relative to stagnant wages. With the Fed keeping interest rates at historic low levels, no one can make any return on a safe investment such as CD's, mutual funds or T-bills. So everyone is pouring their bucks in the RISKY stock market in a desperate attempt to fund their pensions, 401(k)s, and retirements. This will only prove to be futile. Quantitative easing by the Fed clearly indicates a desperate move to finance our debt because investors are really getting nervous about our ability to repay the loans, thereby refusing to loan. And keeping interest rates extremely low only fuels the fire of predatory lending and fancy derivatives that led to the crisis to begin with.
The interest on our debt continues to soar to record amounts, even though the interest rate may be quite low. We collect trillions in taxes, yet a large chunk of those taxes fund only the interest, not the principal, on our national debt. This is one big reason the Fed is keeping interest rates near zero so the amount of interest we pay to our creditors will be "more" manageable.......but they can't keep it near zero forever. Instead of addressing the endless wars, billions of tax payer dollars given to the banks, corporate welfare, and fiat money from the Fed, they will try to impose austerity on those with the least amount of power. In other words, they will blame our entitlement programs as the cause of our national debt.
In lieu of the recent JP Morgan 5 billion dollar loss (which must be noted that they are the originator of the infamous "credit default swap"), and clear evidence that these so-called too big to fail banks are even larger than before, thanks to the nearly 16 Trillion dollars that was printed globally to bail out all the banks, and the fact that they are all still trading those "fancy" derivatives and/or credit default swaps, we are given a "pretty" lucid picture of a fiscal tsunami when these countries begin to default. It is profoundly similar to the Indian Ocean tsunami that hit the coasts while many unsuspecting and unassuming people enjoyed their elaborate vacations........over one quarter of a million people were wiped off the earth. These banks never should have been bailed out and because they were, they have been given more incentive to take even bigger risks with other people's money, even though they are supposed to be mitigating and managing that risk as a responsible, reputable bank with about 2 Trillion in assets. The banks' CEO, Jamie Dimon, walked away with 35 million in bonus (from a board of directors probably related to him) even after this loss of 5 billion of investors money.
All of these so-called solutions have simply kicked the can down the road. And if these bailouts have not worked thus far, why would they think more stimulus and more bailouts will work now. Yes, many economists always like to mention cyclical markets and that we are just in a downturn but you do not have to be a rocket scientist to understand basis economic facts..........you cannot sustain an economy on fractional reserve banking because you have nothing to back it up, but an illusion of compound interest. It may work for the rich, the top 1% who we know keep getting richer, but for the rest of the global population it is extremely sad and disproportionate. I should mention that these banks help finance nuclear weapons or just about any weapon of war to evil dictators for their only goal is to make money. To not understand that would be naive.
The economic crisis of 2008 is being compared to the Great Depression of the 1930's (probably worse) and we know that that Great Depression lastly nearly 10 years. The ONLY event that took the United States out of the Great Depression was the advent of World War II and our enormous production of military goods that had a immediate stimulus on our economy. Those without work were suddenly put to work. As horrible as that seems, it was a world war that saved our economy! But understand too that even though many are saying we got out of the great depression so we will get out of this slump, the looming problem that makes this crisis far more severe than the 1930's Great Depression is that we did NOT have a 16 Trillion dollar debt like we do today! Now you tell me.......how is that for progress?
Many folks did not think the gigantic, magnificent Titanic would sink. But it did! And it seemed only the rich survived much like the big banks with trillions of dollars in assets. We may have seen a recovery in the banks (1st class) but much like the rest of us (2nd and 3rd class), we are still drowning. In the end, bailing out country after country with printed fiat money is like trying to redecorate the parlor in the Titanic. One day "mushrooms" will be sprouting all over and those greedy 1% who have amassed for themselves untold riches will lose it all anyway, including their souls because they will have met their eternal destiny in Hell.
Please watch this movie by clicking on the link:http://www.youtube.com/watch?v=yOjq1oww3FA&feature=relmfu
Also for updated inflation news visit trendsresearch.com and inflation.us