It’s hard to know what to get more worried about — the United States entering territory where a return to recession is quite possible or a Europe where the financial turmoil is spreading apace to Italy and Spain.
While the US government appears to have averted the disaster of running out of money, part of the price being paid by the Obama administration is to further curb spending at a time when the economy is already showing signs of weakening again.
To divert my mind from thinking about the consequences of unemployment going well over 10 per cent again I’ve taken a punt on the country’s economy going into recession again. Paul Krugman this morning put the chances of that happening at 50:50 so I have taken a bit of Intrade’s 29%.
In Europe the price being paid by the Italian Government to borrow money has reached a new high and yields are on the rise again in Spain.
Oh the joys of unfettered captilism and globilisation. They never told us the downside when the Governments of the western stuck us with that global village schtick…
It appears to me that no one, no government, no economist nor world body has faced up to the fact that the entire financial system is broken. And broken beyond the pathetic band-aids that continue to be placed over gaping wounds!
After the initial collapse in the great depression a small recovery appeared to have everything on track for a few years and then bang – an even deeper collapse happened that needed a world war to shake out the crap. In my layman’s view the whole process needs to hit the reset button and turn to a fresh page and build a system that will be robust to prevent the greed and frantic gambling that took place and to channel time, money and effort into real and substantial global betterment.
Meanwhile we seem to be keeping the boardrooms around the world happy with interim fixes while we all wait for the other shoe to drop.
Observation said:
Dead Cat Bounce. 🙂
You could put the house on that bet, Richard.
Of course, this will mean that history might also show that as a global financial tsunami was heading toward’s Julia Gillard’s house, her main focus was to try make the smoke coming out of her chimney cleaner…..even though most of her family were trying to tell her they could already feel the financial pain!
Isn’t it great to live in a country where our leaders demonstrate such foresight?