The long drawn out path to full blown Worldwide Deflation

A familiar site? Perhaps to those who read history and make the comparison.

Main photo is 2015 in greece

The photo below taken in1929 during the Great Depression.

Bank-Run

its been a long while since I posted as my health gave in for quite some time. It’s great to push yourself to the limit but I recently discovered that when the body and mind tells you to stop and you ignore it, burnout occurs.

I’m glad to say that a full recovery is in process and so another blog post is now long overdue, much like this worldwide credit bubble deflation is also long overdue šŸ™‚
So what has been happening? Well. Cyprus did not default yet and Greece had been through over 40 ’emergency meetings’ with no tangible results.

It took for an austerity sick public to vote in some left wing nationalists and a big drama to ensue to force action between Greece and its creditors.
The final answer to the humongously unsustainable debt problem? More debt, to the tune of ā‚¬86 Billion!

Europe ‘had’ to bail out Greece yet again because of many factors, one being the increased risk of a dissolution of Europe. The fear and uncertaintity around a Greek exit is not just a financial one but also has a destabilising effect, politically, on the rest of Europe.

This latest bailout will do nothing of the sort to eradicate the problems in Greece and Europe, only postpone eventual sovereign bankruptcy until a later date. ‘

IMF wary of third bailout’ says a BBC news article 30th July 2015

Even the IMF is beginning to recognise that something is seriously wrong by voicing concerns over the size of this latest bailout which they also fear can never really be paid back.

In summary, Europe has ‘managed to avert’ (or prolong) the inevitable full blown meltdown yet again, for now.

How long can this go on for?

Well, it has certainly taken longer than I expected with all the weird and wonderful new ways that the central banks seem to be managing to kick this proverbial can down the road. The ECB paying negative interest rates on deposits is something completely new (and bonkers) and although it was a possible prediction, it was not to be expected that short term thinking could come up with something so dumb. So we currently have Unlimited QE (Quantitive Easing, constant ZIRP (Zero Interest Rate Policies) and also Negative Interest.  This still won’t fix the problem, only make it blow up harder and faster than ever before. We are now truly in a very dysfunctional economy indeed.
Looking elsewhere in the world. Another giant credit bubble has been forming for some time and is now beginning to pop in China with stock indices taking a somewhat 30% hit almost overnight.

Current economic world stability? It only takes for one more decently sized over invested bank to become illiquid of cash for another potential worldwide credit crisis to begin.
Looking at the banks over the pond, they are still doing what they were doing back in 2007. No real lessons have been learned. A new huge credit wave is taking the USA by storm but this time Instead of it been sub prime debt with properties, it is with vehicle loans.
I’ll keep you posted. . . .

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