Archive for March, 2009

China Is “Worried” For The Safety Of Her U.S. Investments; Does This Mean We Should All Be Petrified?

March 14th, 2009 Comments off
In 1815, just before the British Army was to march against Napoleon’s troops at the Battle of Waterloo, the Duke of Wellington conducted an inspection of his soldiers. “Do you think our men will strike fear into the hearts of the French?” inquired one of Wellington’s subordinate officers. “I don’t know about the enemy,” replied the Duke of Wellington. “But they sure scare the hell out of me.”
China’s Premier Wen Jiabao’s comment made at his annual news conference in Beijing reminded me of Wellington’s battlefield candor of almost two centuries ago. This is what Premier Wen had to say about the nearly $1 trillion China has loaned the United States government through the purchase of Treasury bills and other public debt instruments: “We have made a huge amount of loans to the United States. Of course we are concerned about the safety of our assets. To be honest, I’m a little bit worried. I would like to call on the United States to honor its words, stay a credible nation and ensure the safety of Chinese assets.”

Premier Wen is a little bit worried about the solvency of the U.S. government? If he is only a little worried, at least in public, we should all be massively terrified. The reason Wen’s understatement of China’s deepest fears is more than noteworthy is that he would not have made such a comment at a news conference, heavily covered by the world’s new media, unless it was reflective of the high level of anxiety permeating the Chinese leadership over the future fiscal health of the United States.

China has invested heavily in U.S. public debt. Clearly, the American government could not have funded its extensive public deficits over the past several years without the Chinese appetite for U.S. Treasury bills. And, until the advent of the Global Economic Crisis, it seemed like a good deal for China. Invest in the credit worthiness of the U.S. government, while subsidizing the debt-ridden American consumer to purchase more and more Chinese made goods, in the process stimulating the growth of the export-driven Chinese economy. That model, it would appear, does not seem to function in the midst of a synchronized global recession. However, there are probably more concrete reasons for Wen’s expression of “worry.”

China’s Ministry of State Security manages one of the largest and most effective intelligence gathering and espionage agencies on the planet. The primary target of the MSS in recent years has been economic data pertaining to the United States. Through a network of thousands of front companies and hordes of travelling businessmen, students, scholars and diplomats, the MSS has undoubtedly, with painstaking effort, put together a picture of the U.S. economic outlook which is both more accurate and more chilling than what is to be found on the pages of the Wall Street Journal or on the website of What I think has prompted Premier Wen to utter such an uncharacteristically candid expression of doubt regarding the safety of China’s massive financial investment in the United States was a most recent intelligence briefing provided to Beijing’s top leadership.

What would that briefing have told the Chinese ruling elite? Obviously, I do not know for certain. However, this is my speculation. The most carefully guarded secrets in the United States, at present, are not those involving the launch codes for nuclear missiles or other military matters. Rather, they involve the confidential activities of the Federal Reserve and Treasury Department in their response to the Global Economic Crisis. It is being increasingly recognized that most of the U.S. banking sector is insolvent and being kept on life support through the massive injection of money by the Fed and Treasury Department. However, those two entities refuse to disclose which institutions are being paid, and how much is being allocated to each one. It is also not being openly disclosed how much fiat currency is being run off the printing presses of the Federal Reserve. However, the figures announced regarding guarantees by the Federal Reserve and Treasury for backstopping the losses and toxic assets of the American banking and financial sector have probably topped ten trillion dollars. Despite the massive borrowing by the U.S. government, the projected deficits and national indebtedness do not come even close to fulfilling the obligations that have been undertaken by the Federal Reserve and Treasury Department. What therefore seems to be happening is quantitative easing by the Fed. In effect, the Federal Reserve is simply manufacturing paper money out of thin air to “purchase” government debt, and in turn the U.S. Treasury is injecting the increased money supply into the banking sector.

If the above scenario is accurate or even close to reality, the U.S. dollar will eventually erode precipitously in value. Once that happens, China’s one trillion-dollar investment in U.S. government debt is toast.

You bet Wen Jiabao and the entire Chinese leadership are worried over the safety of their U.S. investments. Not only worried; they are terrified, as we all should be.



Global Recession Shreds Chinese Exports; Dangerous Implications For U.S. Budget Deficits

March 12th, 2009 Comments off

As a synchronized global recession hammers the economies of Europe, Japan and North America, the last refuge of those who still believe in a short-lived economic downturn, with no danger of a worldwide depression, has been China. Everyone and their cousin, it seems, are banking on China to lift the entire planet out of the clutches of the Global Economic Crisis. The latest export figures issued by the Chinese authorities, however, demolish any rational expectation that the world’s third largest economy will reverse the ferocity of the synchronized global recession.

Exports from China in February declined 25.7 % from one year ago, a staggering rate of contraction that is far worse than the expectations of analysts. The clear message is that the Chinese economy is being fully impacted by the Global Economic Crisis, despite the forlorn hopes of some that Beijing would successfully decouple its economy from the global recession.

The entire center of gravity of the Chinese economic machine is export trade. No matter how one may try to formulate some new theory of Chinese economic development based on the mythology of “domestic demand,” it is China’s transition into the factory of the world that transformed the formally stagnant economy of Mao’s Cultural Revolution into a 21st century behemoth. It is for that reason that a decline of one quarter in China’s exports must be seen for the economic catastrophe that it is, both for China and the world.

Along with the plunging in exports has been the narrowing of China’s once vast trade surplus. Until recently, China typically experienced a monthly current account surplus of $40 billion. In February, this figure shrank to less than $5 billion. This diminution in the current account surplus is significant, for it was through large trade surpluses that China was able to accumulate large foreign exchange reserves, currently in the range of $2 trillion dollars. This reserve enabled the Chinese government to purchase nearly a trillion dollars in U.S. Treasuries, a critical factor in providing credit to cover the staggering budgetary deficits incurred by the United States. A continuing trend downward in both overall Chinese exports and her current account surplus, combined with the need to now fund Chinese deficit spending for that nation’s own economic stimulus program, translates into less capacity for Beijing to loan the U.S. Treasury money. This dismal convergence occurs precisely when the projected U.S. government deficits are expected to increase exponentially.

China’s export contraction is bad news for many reasons. Domestically, the Chinese authorities worry, with good reason, that social stability and cohesion will be at risk due to increasing levels of unemployment. Fewer Chinese exports also means that Beijing imports less from the rest of the planet, further exacerbating the Global Economic Crisis. Most vexatious of all, however, is the diminished ability of China to be the banker of last resort to the debt-ridden U.S. Treasury. Not enough attention has been devoted to the contradiction of America planning multi-trillion dollar deficits annually for years to come at exactly the time when China’s now sputtering export machine likely means that the number one source of credit for the United States will no longer be able to satisfy the credit needs of the American government.

The latest export data from China, when placed in the context of the factors listed above, points to a perfect fiscal storm brewing that will prove shattering to the U.S. economy and a volatile accelerant in the mad rush towards a global economic depression.


World Bank Report Offers Chilly Forecast For Global Economy

March 11th, 2009 Comments off

World Bank president Robert Zoellick has issued a chilling report that leaves no doubt that our entire planet is in the midst of a raging Global Economic Crisis. While framed in the context of the impact of the crisis on emerging economies, the overall assessment of the World Bank is what strikes a note of gloom and doom for the few remaining financial optimists. For the first time since the Second World War, the entire planet will be in recession.

Since the Great Depression, the global economy has suffered through numerous recessions, both large and small. Yet, even in a severe recession, there were always parts of the world, and frequently entire regions, that still experienced economic growth. The quantitative manifestation of that reality is that even in prior recessionary periods, the overall GDP of the planet still witnessed net growth, through at a reduced level. That was then; but this is now. Welcome to the super-globalized economy.

In the report issued by the World Bank, the current forecast is for an overall decline in global GDP. The mathematical modeling that leads to this conclusion provides for a devastating negative feedback loop that integrates the decimation of exports from major economies with collateral damage to smaller but equally essential export trade from emerging economies. As Zoellick puts it in the World Bank Report, with the overall World economy shrinking for the first time since the Second World War, ‘‘this global crisis needs a global solution and preventing an economic catastrophe in developing countries is important for global efforts to overcome this crisis.” The World Bank president warns that with global trade witnessing its sharpest decline in 80 years, an additional 46 million people will be forced into poverty.

The sober assessment being offered by the World Bank points out with clarity why this worldwide financial and economic disaster has become the Global Economic Crisis. No one is coming out of this man-made cataclysm intact. Entire countries, powerful and weak, rich and poor, face ruination as the first great economic depression of the 21st century wreaks havoc on our world.


Austria Facing Banking Collapse: Is This Another 1931 Credit-Anstalt Financial Crisis?

March 8th, 2009 Comments off
While economists, analysts and media pundits argue over the character of the Global Economic Crisis and the semantic issue of whether or not it is a global depression, or merely a synchronized global recession, there are far more urgent matters at hand. As the Spanish-American philosopher George Santayana once presciently noted, those who forget the errors of the past are condemned to repeat them. It appears that a horrific financial disaster of the past may be about to be replicated in a much more destructive form. Does anyone still remember the collapse of the Credit-Anstalt?
Created in 1855, with links to the Austro-Hungarian nobility and Rothschild banking family, Credit-Anstalt was the world’s first investment bank. It was the catalyst of many of the most important infrastructure projects in the last decades of existence of the Hapsburg Empire. In the years after World War I, this Austrian bank engaged in major speculation throughout Europe, giving all the appearances of being a highly profitable financial institution. Even after the stock market crash on Wall Street in 1929, Credit-Anstalt sought to conduct business as usual, though the economic contraction that followed the 1929 crash transformed a growing proportion of its balance sheet into non-performing assets. When the bubble burst on May 11, 1931, it sent shock waves throughout the world’s financial system.
Contrary to public perception, the Wall Street Crash of 1929 was not the major catastrophe of the Great Depression; it was merely the precipitating event. In fact it was the bankruptcy of Credit-Anstalt in 1931 that made the Depression truly global, and crippled banks throughout Europe and North America. The resulting run on banks throughout the world, with numerous banking failures, was the catalyst that accelerated the rise in global unemployment. When Franklin Roosevelt assumed the U.S. presidency in 1933, his first major task was to attend to the deplorable state of U.S. banking. That reality was at least in part attributable to a chain reaction of financial failures that stemmed from the insolvency of Credit-Anstalt.

Now we are in 2009, with the subprime mortgage securities debacle having been the underlying cause of the state of insolvency afflicting America’s largest banks. The U.S. government, including Congress, Treasury and the Fed, have injected or issued backstop guarantees to the tune of trillions of dollars, in a frantic effort aimed at keeping these zombie financial institutions artificially alive. Yet, in this truly global economic and financial crisis, events in other parts of the world may render mute and futile all the trillions of dollars the U.S. is borrowing to save the American and global financial system. As in 1931, it may well be the Austrian banking sector that is the final nail in the coffin of the current globalized financial order.

With the fall of communism, former East Bloc European states were encouraged to borrow heavily by their Western brethren, with Austrian banks leading the way. Governments in Eastern Europe borrowed massively to finance the modernization of their industries, with the goal of providing lower-cost industrial goods and commodities to consumers throughout Western Europe. In addition, consumers in Eastern Europe were encouraged to borrow money in Euro currency at low interest rates for homes and consumer durables. When the Global Economic Crisis hit Europe, demand destruction afflicted the highly leveraged new industrial plants in Eastern Europe. In addition, the consumers who unwisely borrowed money from Western banks in Euros were devastated by the collapse of their home currencies. A new housing crisis has arisen in lands as diverse as Hungary, Bulgaria and Romania.

The non-performing assets on the balance sheets of European banks are enormous, and have affected many countries throughout the Eurozone. However, in terms of percentage of toxic assets to GDP, no European state is in as precarious a state as Austria. More than $250 billion in bad assets are poisoning the balance sheets of Austrian banks, a sum equal to more than 62% of the nation’s GDP. By way of comparison, if the admittedly shaky U.S. banks held toxic assets in the same ratio to GDP, this would equal $8.7 trillion dollars in bad assets. If America’s banking disaster was on the same scale as Austria’s, it would require a dozen TARP programs to cover the holes on the balance sheets.

Is another Credit-Anstalt catastrophe in the works? The macroeconomic data emerging from Europe looks increasingly gloomy. In addition, the European Union is proving to be both disunited and uncoordinated in facing up to mounting evidence of a financial avalanche that may bury the Union and everything else with it, including the common currency. Policymakers throughout Europe are arguing over Eastern European stabilization funds, protectionism versus “free trade,” and other issues, both real and distractions, while the financial underpinning of the entire European economic system is ablaze.

Just as Iceland was the first nation to become nationally insolvent due to bank failures stemming from the Global Economic Crisis, Austria may be fated to endure a similar disastrous outcome. Should Austria’s banks fail as spectacularly as did the Credit-Anstalt back in 1931, the impact on the world’s financial and economic order will be at least as catastrophic and likely much worse.

Will 2009 prove to be 1931 redux? The indicators favor the pessimists far more than the optimists.



For More Information on “Global Economic Forecast 2010-2015” please go to the homepage of our website,





China And The Global Economic Crisis

March 7th, 2009 Comments off
When Chinese Premier Wen Jiabao spoke before 3,000 legislators in the Great Hall of the People in Beijing, his words were broadcast live to a vast audience, not only in China but also throughout the globe. The most important economists, financial analysts and entrepreneurs on our planet attentively dissected everything Wen said, be it overtly expressed or subtlety placed between the lines. For it is now to China, not the United States, that the nations impacted by the Global Economic Crisis look to for salvation, and assurance that a synchronized global recession does not become an L-shaped depression of long duration.
Based on the declines in stock markets throughout the world, it appears that Premier Wen disappointed those in the West, Japan and the U.S. desperately praying that he would go far beyond the earlier promise of a 4 trillion-yuan stimulus package, equivalent to about $586 billion, to enhance domestic demand in China. Wen stuck with the 4 trillion-yuan figure, adding details as to where the stimulus package will be directed. Wen indicated that the priorities of the Chinese government would include infrastructure investment, tax reform, industrial restructuring, scientific innovation, social welfare and increasing urban and rural employment. He also indicated that the annual budget would incur a deficit of about $140 billion, equal to about 3% of China’s GDP.
Wen’s external audience had placed their bets on a significantly larger Chinese stimulus package of between $1 trillion and $1.5 trillion. However, the Chinese leadership has apparently made a far more sober and strategic calculation with respect to the Global Economic Crisis than has been the case with the political and financial elites in the United States, United Kingdom, Japan and the Eurozone. The primary concern in Beijing is maintaining social stability during a likely long economic depression, with many unpredictable and dangerous manifestations of this global disaster still in front of us. While accepting some degree of deficit spending will be necessary to modify the repercussions to China’s employment situation due to global demand destruction afflicting major components of China’s export-oriented industrial base, limits have clearly been imposed that do not compromise the nation’s long-term fiscal health.
Compare the 3% deficit forecast in China with the Obama administration’s upcoming deficit of $1.75 trillion, a staggering sum of borrowed money, equal to 12% of America’s GDP. Unlike the United States, which is the largest debtor nation in the world, China has substantial reserves of foreign currency, sovereign investments and domestic savings, enabling it to fund its deficits and stimulus spending without requiring external sources of credit. In the long term, the far more cautious and strategic approach of China towards meeting the challenge of the Global Economic Crisis will better serve her long-term national interests amid an unstable and uncertain global future.

There is another inference to draw from Premier Wen’s presentation on the economic problems confronting Beijing. While not belittling the acute and dangerous challenges that the Global Economic Crisis poses for China, the nation’s leadership seems to have taken a long view that suggests the following: by playing her cards carefully, China may be able to exploit the Global Economic Crisis in such a manner that she will emerge as the dominant economic power in the world.

With the United States reduced to literally begging China to buy her Treasuries, a vital imperative necessary to finance Washington’s stratospheric deficits, it may be that China is already positioned for global economic dominance, so long as she succeeds in maintaining her social cohesion during the difficult years that lie ahead.



For More Information on “Global Economic Forecast 2010-2015” please go to the homepage of our website,  

















Auto Industry In Global Depression

March 5th, 2009 Comments off
A certain indicator of how dire the circumstances are for the global automobile industry is the behavior of Toyota, which is without a doubt the most important and healthiest car manufacturer on the planet. It has now joined with Detroit and European auto producers in soliciting their governments for a bailout. Toyota has formally requested that Tokyo provide a “bridge loan” of $2 billion, this request following recent sales figures indicating that the Japanese behemoth experienced a decline of 40% in sales of motor vehicles in its largest market, the United States.
Toyota is in trouble, and it is actually in far better shape than almost every other auto manufacturer. When it comes to the competition, things are much worse. Especially with General Motors, which witnessed a catastrophic drop in sales of 53% in February, the news is becoming increasingly grim. The full force of the Global Economic Crisis is impacting all the grandiose plans and decisions of the world’s automakers, in the process shredding them to pieces.

Why is it that virtually all of the auto manufacturers are in varying states of deep distress? The answer lies in the nature of the automobile business, and strategic decisions made on the basis of dream-like optimism. This is reflected in the staggering levels of over-capacity in auto manufacturing worldwide. At present, the combined capacity of all the carmakers throughout the world amounts to more than 90 million cars annually. The deadly demand destruction being inflicted by the Global Economic Crisis has reduced purchases to about 50 million units per years, meaning that the world’s auto companies have nearly double the productive capacity that can be absorbed by current consumer demand.

The automobile business is one of the most costly and complex to run. The industry produces a consumer product annually in the tens of millions of units that is costly, complex and customized. The productive infrastructure required is both vast and exceedingly expensive. Before the onset of the Global Economic Crisis, the world’s carmakers bet heavily on a rising global marketplace that could annually absorb up to 100 million cars annually, and leveraged themselves to the maximum extent to finance the creation of the global network of assembly plants, parts manufacturing factories and distribution networks. The business model became far more globalized, adding another layer of complexity. For example, a U.S. customer who purchases a certain VW model will end up owning a car assembled in Germany, but equipped with an engine built in Mexico. In other words, a Mexican VW plant builds an engine, sends it across the Atlantic Ocean to Germany, which in turn sends it back across the Ocean in the form of an assembled car, to be purchased at an American dealership. This global supply chain is expensive, fragile, and only makes economic sense if all the manufacturing components of the business are operating at full capacity. What I just described has all the characteristics of a Rube Goldberg business model, yet virtually every major automobile company in the world conducts their business according to the pattern I have just described.

With the collapse in demand caused by the Global Economic Crisis, practically every major auto manufacturer is faced with the identical problem; over-capacity that was established with high margins of leverage, leading to massive losses with a worldwide demand for only 50 million cars each year. The reaction thus far by the automakers is to besiege their governments with requests for massive bailouts, warning that without the public purse to cover their losses, the result will be layoffs, disastrous collateral damage to the overall economy and the extinction of the industrialized base.

There is no easy solution to the massive economic problems impacting this now globalized industry. What is clear is that the auto industry is in the midst of a deep global depression. And while much of the reason for their distress lies with very bad business decisions and strategies, the leaders of the car industry are probably correct in claiming that their demise would bring about severe consequences. Unfortunately, there may be no alternative, as the issue may ultimately come down to who becomes insolvent first; the auto companies or the sovereigns being asked to bail them out.


For More Information on “Global Economic Forecast 2010-2015” please go to the homepage of our website, 









AIG Suffers Worst Quarterly Loss In U.S. Corporate History

March 3rd, 2009 Comments off
American International Group, more commonly referred to as AIG, has earned the dubious distinction of having incurred the most massive quarterly loss in the entire history of American business. In Q4 of 2008 AIG reported that it had lost a staggering total of $61.7 billion. Factor in that the current total capitalization of what was once the largest insurance company in the world now stands at a paltry $1.2 billion, or about two percent of its Q4 loss, and the dire state of this company is even more starkly revealed. Why isn’t this calamity disguised as a corporation dead and buried? The answer is found in the monotonous mantra of the U.S. Federal Reserve and Treasury Department: “Too big to fail.”
Milking the rationale that the failure of the black hole of a company that AIG now is would pose an unacceptable systemic risk to the global financial system, the unelected bosses at the Fed and Treasury have been shoveling in virtually unlimited amounts of money to prop up the comatose insurance giant and maintain the existence what in reality is a zombie company. Last fall, when the crisis at AIG exploded simultaneously with the near meltdown of the global credit markets, the U.S. government extended a “bridge loan” to AIG of $85 billion. Since then, more and more cash has been pumped into AIG by the government, while the company continues to implode. The atrocious Q4 results came on the heels of another transfusion of taxpayers money into AIG, taking the total U.S. government commitment to around $185 billion. More ominously, the governmental authorities decided to convert some of their equity in AIG from preferred into common stock, a similar approach adopted with Citigroup, also a recipient of massive government bailout funding. The bottom line is that with the conversion to common stock, the government has placed the taxpayers at much greater risk. In effect, if AIG disappears despite the incomprehensible life support being provided to it, the American taxpayers stand to lose $185 billion.

How much is $185 billion? The financial numbers associated with the bailout mania that has occurred in the wake of the Global Economic Crisis tends to obscure the real meaning of these massive amounts of money being distributed by governments all over the world to businesses deemed “too large to fail.” To put the total AIG bailout package in perspective, $185 billion represents a payment by every man, woman and child in the United States to American International Group of $616, or about $2,464 from every family of four. Yet not a single ordinary U.S. citizen, not one average American family was consulted over this financial commitment by them that involves keeping alive a business that was recklessly managed and engaged in risky financial strategies. A commitment that may likely mean that the typical family will be on the hook for what is a sizeable amount of money for most Americans. And that is just one bailout of a company deemed “too big to fail.”

AIG is, after all, not the only recipient of taxpayer bailout money. There is the $700 billion TARP rescue of financial companies and banks, soon to be substantially increased. General Motors and Chrysler have received tens of billions of dollars in government cash, and are asking for substantially more funding. Other ineptly run businesses are lining up in Washington at the public trough, with their highly paid lobbyists making the case that these companies are also “too big to fail.”

As the Global Economic Crisis increasingly looks like the beginning of a worldwide economic depression, the impulsive commitment of staggering sums of public wealth by unelected bureaucrats and officials in Washington, in most cases without even the pretext of Congressional review, looks like a classic case of adding flammable liquid to the bonfire that is the American and global economy. Ultimately the question that must be asked is this: if the policy makers succeed in bankrupting America with their frenzy of corporate bailouts, do they then intend to make the case to America’s creditors, in particular China, that the United States is too big to fail, and must be bailed out-by them? This question, which at one time seemed more rhetorical than hypothetical, may arise sooner than we think.



















Global Economic Crisis Reaches A Dangerous Turning Point

March 1st, 2009 Comments off
As the emerging macroeconomic data on the evolving Global Economic Crisis continues to grow ever more dire, the major economic actors are fast approaching a point of no return. A synchronized global recession is clearly underway, manifesting all the characteristics of a developing worldwide economic depression. Unless policy makers adopt decisive, properly conceived and coordinated responses, a point of no return will be passed. Thus far, however, the major political figures on the world stage do not give much reason to be optimistic about the future of our globalized economy. Historians may look back on this period, the first months of 2009, as the turning point that sent the whole world into an irreversible, dramatic and enduring economic depression.

There are apparent to me several signposts that clearly point to a downward spiral of accelerating velocity. One of these signposts involves the worsening statistics chronicling the effects of the Global Economic Crisis. Japan’s Q4 of 2008 growth figures show GDP contraction of 12.7%, with every indication that this measure of economic deconstruction will grow even more dire in Q1 of 2009. We already have figures indicating that in January, Japan’s exports declined by almost half from a year ago.

America’s tottering economy is receding so severely, the statisticians cannot keep track of the staggering rates of decline. The Commerce Department had to revise the Q4 of 2008 GDP figures from negative 3.8% to more than 6% GDP contraction. Unemployment numbers are swelling at an alarming rate, while the public and private debt ratios are entering into astrophysical red shift territory, so rapid is their spread from any realistic possibility of fully servicing them.

Beyond the fiscal doomsday being portrayed by the macroeconomic data, there is the looming banking apocalypse that is now gripping almost every economy on the globe, major and minor. In both the U.S. and U.K., almost the entire banking sector is insolvent, being kept on life support by massive infusions of government IOUs that are being backed by what amounts to an intergenerational commitment from the taxpayers. The banks of the European Union have on their balance sheets, according to a leaked secret European Commission document, $24 trillion of toxic assets. Iceland is already bankrupt, with Eastern Europe about to follow down the path of national insolvency.

All the dire news I just chronicled cannot be viewed in isolation, but must be seen as a devastating continuum, in which the negative news emerging from one economy impacts another, creating a destructive chain reaction that is close to achieving the point of irreversible criticality. And with the global economic order about to undergo nuclear fission, the policy makers are reacting in thoughtless panic and hysteria, stampeding into a rush of Keynesian irrational excess. Despite the fact that unsustainable debt was a principal driver of the Global Economic Crisis, the sovereigns of the world are replicating the worst habits of the consumer and private sector. Staggering levels of deficit spending are being enacted into policies, unmindful of the inability of the global financial world to absorb and sustain such stratospheric levels of unfunded spending. Neither are the policy makers cognizant of the inconvenient fact that with so many economic actors swamping the global credit markets to fund levels of deficit spending that defy the human imagination, it is inevitable that interest rates will rise to crippling levels, choking off private capital. In their frantic efforts to rescue the global economy and bailout irresponsible financial institutions and ineptly run conglomerates at any price, the politicians are planting the seeds of a bitter harvest for all.

The world is facing the equivalent of a world war, with the Global Economic Crisis playing the role of the Axis. It is humanity’s misfortune that instead of Winston Churchill or Franklin Roosevelt to lead and inspire us, we are left with the likes of Timothy Geithner and Nicholas Sarkozy. It may be our fate to be led down the path of economic perdition, with the highway to hell being paved with mediocrity and ineptitude.