EU has brought about the first sovereign default in Western Europe since the Second World War and set a fateful precedent without actually resolving the Greek problem. <>
Posted on 07/31/2011 8:57:27 PM PDT by bruinbirdman
We have a glimmer of hope. The key indicators of the US money supply are at last firing on all cylinders, a dramatic turn for the better that would normally signal recovery or even a mini-boom within the next six to 12 months.
EU has brought about the first sovereign default in Western Europe since the Second World War and set a fateful precedent without actually resolving the Greek problem. <>
Needless to say, these are not normal times. The US and EU debt crises are feeding on each other in a dangerous synergy, with fears of a fiscal “sudden stop” in Washington causing global risk aversion and aggravating tremors in the Spanish and Italian bond markets. It is a pre-taste of the “catastrophe” predicted by the Fed’s Ben Bernanke if politicians fail to control their passions.
And yet, data from the St Louis Fed show that America’s M2 money supply grew at a 6.4pc annual rate in the second quarter, accelerating to 12.2pc in June. The compound annual rate of change has exceeded 40pc over recent weeks.
The broader M3 indicator (including large savings deposits) is growing at the optimal rate of around 5pc. It has been an uncannily accurate lead indicator at each twist and turn of our economic drama over the past five years, and is telling us now that the Fed’s kindling wood has at last begun to ignite the damp coals of the US financial system. There is no longer a 1930s liquidity trap. We can infer that the housing market may be nearing the end of its deep slump.
The economy is curing itself in time-honoured fashion. Whether this monetary cure will be allowed to run its course depends on politicians in Washington, Berlin, Rome and Madrid
(Excerpt) Read more at telegraph.co.uk ...
Normally I love this writer, but....I think here he’s being too positive.
His book about Bill Clinton is dark as heck, and a shocking page-turner.
>>The key indicators of the US money supply are at last firing on all cylinders<<
Baloney. I’m beginning to think they actually think they can speak it into existence.
Pollyanna.
Rose colored glasses.
Whistling past the graveyard.
bump.
This is solely for the reason that the US has been deficit spending to the tune of $1.6 to $2 trillion dollars annually for the past three years.
The Eurozone cannot deficit spend to that degree due to their structure as separate sovereign nations.
The US has chosen the path of hoping to deficit spend in enormous amounts until the international banks take their boots off our throats (historically about another seven years).
If deficit spending to that degree stops then we instantly enter into a very large deflationary depression.
Instead, the politicians have decided to kick the can down the road and destroy the economic future of generations untold.
The economy may be growing, albeit very, very slowly -- not enough to keep pace with population growth, but its growth is limited by fiscal policy. Bernanke got this correct, at least partially.
I hadn’t heard about that book. I’m sure it was “dark”.
It'll get better, just wait an see.
I don't see it. I see a broke, extremely divided country, most left with nothing but contempt for those in D.C. and at most local government levels.
I'll go down swinging. Yep. But the fact is, confidence is all but lost, in regards to anything improving by traditional methods.
Government continues to grows, spends more, more controlling...As most have lost all confidence and trust.
Those with Pollyanna comments, don't bother.
I’m not buying it either.
Really? This guy is joking right? I guess he hasn't noticed the 10 years worth of inventory on the market and all the foreclosures still going through.
Baloney. I’m beginning to think they actually think they can speak it into existence.
*****************************
The smart ones are trying to buy time to get their own bunkers in order. The dullards are trying to reassure themselves.
yitbos
I read the whole piece. Wow. Maybe the author should add another hyphenation to his name: Ambrose Evans-Pritchard-Lenin, perhaps? The politicos’ escalation of the debt regime will render possibilities of the future dark and murky, indeed.
The further it goes, the more radical that dangerous reorganizations of various kinds will be. It was also noticeable that Evans-Pritchard appears to dislike the more productive EU members for refusing to go down with favorite southern European vacation hosts.
We ought to think about transforming America into a federation of two superstates. One conservative and the other liberal. Each superstate would follow the Constitution as they saw fit, in essence two separate federal governments, each running their own domestic programs and paying their own taxes. And, in fact, there probably would not even need to be a physical separation between the two “superstates”. Just require each resident of America to determine which side they chose, which would then be marked on a driver's license or voter registration card. Of which, that would determine what set of rules you live by, how much tax you pay, and how many benefits you receive from the government.
And in Washington, all they'd do is foreign affairs and defense. With the caveat that each ‘superstate’ would have to pony up the same amount of cash. That way the liberal superstate could not renege on it's defense obligations.
As for the average Joe, he'd finally get to live in a manner he prefers, with a government he recognizes as sane and sound.
The only way out is free market economics. That is where the good ol' US of A has an advantage over everyone else. It's in our DNA.
Clear out all the government overgrowth, make path for economic growth and stand out of the way.
There will be horrific violence in a big part of the world.
Well, one has to have been a follower of AEP for a while to understand his perspective.
He is a true capitalist. However, in his reporting/commentary, he tells it like it is.
For instance he says that, if the EUSSR is to stave off the immediate calamity, Germany is going to have to fund the bailouts and donate a huge stimulus to the cause. Austerity for a depressed/collapsed economy does not fix it. This is not an endorsement but an opinion. He also reports that EUSSR/ECB has failed so far with regards to the current PIIGS situation.
He has been saying all along that if the socialists want to prolong their experiment, they will have to step up with real asset distribution. He says 2-3 trillion euros is not enough. It's a start.
As for the U.S.A., he's a fiscal conservative who prefers gradual cuts while maintaining slow growth.
So, the guy says to Europe, if you want a united socialism, you better start sharing the wealth. That is a slam not an admission that socialism works. He believes EUSSR fiscal unity is doomed.
In the U.S. he says the Tea Party is on the right track but over time, not a crash, burn and restart.
The above is not necessarily in this article, but pretty much is a synopsis of AEPs perspective over time.
yitbos
PS - Asia was up across the board Monday as The Obammunist hoped.
Europe PIGS tanked across the board along with Germany.
-——It’s in our DNA——
The fallacy in your thought is cancerous mutation. The DNA has mutated into cancer and is not the great body that once existed.
The leftist cancer must be removed or nuked to death.
Thanks. The irony of AEP did go over my head then. I don’t know that gradualism in cutting spending will work, though, with politicians more concerned about the desires of large, non-producing constituent groups.
I’m not referring mainly to those on subsistence benefits, but rather many of those believed to keep us physically, mentally and environmentally safe (extraneous police, regulators, social workers,...), publicly educated and so on. Bureaucrats from top to bottom receive political newsletters.
AEP says it won't work. But a gradual failure of the Eurozone will be isolated to EU. A mandated severe austerity will quickly crash not only EU but the world economy.
Perhaps a gradual weaning from socialist controls in U.S.A. is better than a politically initiated crash?
yitbos
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