In the current issue of the Financial Times, columnist Martin Wolf provides a cogent and timely warning on the credit anomalies proliferating throughout the Eurozone that, in conjunction with feeble policy measures, are contributing to a scenario akin to the credit collapse that unleashed the most virulent stage of the Great Depression of the 1930s. In the column, he observes:
“One would expect feeble demand in such a world. The willingness to implement expansionary monetary policies and tolerate huge fiscal deficits has contained depression and even induced weak recoveries. Yet the fact that unprecedented monetary policies and huge fiscal deficits have not induced strong recoveries shows how powerful the forces depressing economies have been…. Before now, I had never really understood how the 1930s could happen. Now I do.”
In the wake of the unfolding financial and economic disasters unfolding in the Eurozone, the analysis offered by Martin Wolf is must reading for anyone concerned about the global economic crisis. The link to the entirety of Wolf’s piece in the Financial Times is here:
global economic crisis
After months of individual sovereign downgrades by the three leading ratings agencies, S & P has now entered a quantum leap by placing almost the entire Eurozone on a credit watch, including the behemoth economies of Germany and France. Furthermore, Standard & Poor’s followed up by placing the European Financial Stability Facility, the vehicle for supposedly bailing out problematic Eurozone sovereigns and banks, on a negative credit watch. The fact that even the EFSF is on the verge of a downgrade, along with potentially almost all the sovereign states using the euro, is proof positive that the Eurozone debt crisis is irreversible, the politicians have lost control, and when the inevitable downgrades follow this devastating credit warning from S & P, all hell will break loose.
In the meantime, the clownish politicos of the Eurozone continue their interminable series of emergency meetings, continuing to promise a final and complete solution to the Eurozone debt crisis. However, in a rare moment of candor, German Chancellor Angela Merkel admitted that at best, a solution was years away. Given all that, will China and the other BRIC nations, along with private investors, really want to invest in Euro bonds?
Officer Larry of the NYPD is on his way to Zuccotti Park in lower Manhattan to arrest peaceful protesters involved with the Occupy Wall Street movement. Being a public spirited member of the New York Police Department, Officer Larry does remind us that there is a global economic crisis underway that rivals the Great Depression of the 1930s.
global economic crisis