We are stuck in a ZIRP trap. Because the deficit is so high, even with the Zero Interest Rate Program, the interest payments now suck up over 20% of our federal revenues. For Joe Taxpayer, it means we get a pitiful return on our savings, at a time when inflationary pressures are forcing up the costs of essential goods like food and fuel. Since raising the rates would cause our interest payments to skyrocket (thereby consuming even more of our Federal Revenues), we'll be stuck in the ZIRP trap for many years to come. Meanwhile, the dollars you saved or the money you earned loses value on a daily basis.
We've reached "The Tipping Point." Once debt exceeds 77% of GDP, any increase above the point causes a corresponding contraction in the private sector. We are now at 103% of GDP, and growing.
Europe has already recapitalized their banks, and has started their second Vienna Compact in an effort to save banks in emerging markets. Despite this, the economies are still contracting and the EU is crying to the IMF and ECB for more funds.
When Greece leaves the EU, it will send a shock wave across the derivative market to the projected tune of $22 Trillion (yes, Trillion) dollars.
England has already openly acknowledge they are in another recession.
I've been warning people for quite some time now that we are in a long-wave contraction. Too many conservative pundits and writers blamed the "Obama Economy" for the mess we are in; they were wrong. This is a global depression, and the next wave is going to hurt more than the first.
But most Obama voters don't want to give up their goodies, so they will be like Berlin, partying on while the world burns.
Excellent post!