Via: Matterhorn Asset Management AG
When we look at the world economy today, wherever we turn we see a wall of risk. And sadly this is an insurmountable wall with risks that are totally unprecedented in history.
There has never before been a potentially catastrophic combination of so many virtually bankrupt major sovereign states (US, UK, Spain, Italy Greece, Japan and many more) and a financial system which is bankrupt but is temporarily kept alive with phoney valuations and unlimited money printing. But governments will soon realise that they are not alchemists who can turn printed paper into gold. The consequences of the global financial crisis are potentially catastrophic.
As the Austrian economist von Mises said: “There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency involved.”
In our view, governments like the US and the UK and many others will not abandon further credit expansion. They are committed to printing increasing amounts of worthless paper money in order to finance the growing deficits and the rotten financial system. Therefore there is no chance of Quantitative Easing ending but instead it will accelerate in 2010 and after.
The consequence of this will be a hyperinflationary depression in many countries due to many currencies becoming worthless. No economy in the world, including China, will avoid this severe economic downturn which is likely to have a major impact on the world economy for many, many years to come.
Read the rest of the story here.
No related posts.
{ 8 comments }
We have all seen this coming for at least the last 10 years. We are literally within days of an economic collapse that will change this country for the rest of time. Washington has to stop spending and cut taxes or we are all doomed.
If congress cuts taxes and stops spending we're also doomed. The system is going to break down regardless of what we do at this point.
There are a couple things we can count on though: 1) Politicians are going to tell us everything is ok and recovery is just around the corner even when blood spills into the streets. 2) It will either end in war, or a multilateral effort by countries to bring a new currency to "rescue" us.
Then the mess starts all over again – it's too profitable for them not to restart. If we have some sort of revolution that overthrows most of the government, then we'll just be taken over by another country.
I am not sure there is any way to stop it now. Our economies, all over the world, are so interconnected and interdependent, that "We" couldn't stop it from falling by ourselves anyway. As members of the EC start to fall, the downward pressure will begin to pick up momentum. This is not a situation that any one nation can stop. It is now a matter of time before it all falls. The question is IF there are Countries that are willing to do what they need to NOW to minimize the damage. Unfortunately for us all, I doubt our own Nation will be able to do so.
It's inevitable alright. It's just whether we're ready or not.
I found a graph of personal income that is slightly flatter:
http://en.wikipedia.org/wiki/File:United_States_Income_Distribution_1947-2007.svg
Unfortunately the present administration’s plan is to tax folks above the 95th percentile when the real problem is clearly that we can not sustain the military industrial complex that Ike (http://en.wikipedia.org/wiki/Dwight_D._Eisenhower) warned about and deal with social issues at home…
petecolorado
WITH ALL THE MESS GOING ON IN THE WORLD AND HERE AT HOME,ONLY GOD KNOWS WHATS GOING TO HAPPEN.AS MD HAS SAID SINCE THE BEGINNING PREP MORE ,PREP KNOW ,PREP WHILE YOU STILL CAN.MAY I ADD WE ALL GET DOWN ON OUR KNEES AND PRAY FOR A BETTER TOMORROW FOR OUR GREAT COUNTRY.FROM JAY IN NC
Total financial collapse is probable, but not necessarily inevitable. A “Black Swan” (from Wikipedia, “high-impact, hard-to-predict, and rare events that are beyond the realm of normal expectations”) development could alter that.
Still, barring that, it would appear to be immanent. The article doesn’t even touch on the issues of demographics in the West and China (more people retiring, less paying tax – China due to the One Child Policy) or rest of the world (population explosions – need more resources when there are less), agricultural problems (aquifers issues in the U.S. west, impending farming collapse in India), or the biggest one of all – energy resources.
NOTE TO M.D. – You may want to consider putting a source/credits at the front of long quotes from articles, and putting them in block quotes/using quotation marks, since to the casual reader it would appear you posed this as you being the author. I say this b/c this blog is your business, and posting copyrighted material in such a way could lead to the author coming after you legally, which could get real expensive real fast.
Suburban Survivalist,
Anytime I post news links I always post a link back to the source for those who want to read the rest of the article.
To be honest, I've been thinking of just posting a list of links to various news pieces everyday instead of snippets such as the one above.
Comments on this entry are closed.