Friday, December 3, 2010

Dirty C.T.'s Economic Outlook for 2011 and Beyond!

A synthesis of articles I've read and interviews I've listened to over the past few years, and then processed by that steel trap mind of mine:

-The Irish Situation: A Debt Sentence
-Irish Banks borrow money from mostly large European Banks.
-The bets go bad and they can't repay those who loaned them the money.
-The Irish government steps in and guarantees the loans to the creditors.
-They take this money from the public coffers, and attempt to make it up by imposing austerity measures on their people, in the form of social cuts.
-The social cuts cause wages to go down, unemployment to rise, deepening their recession, thus making it's people further incapable of repaying their debts.
-The E.U. bails them out and begins to dictate terms of their democracy to the Irish.
-Ireland is forced to repay their debt at a rate of 5.8%, money the banks borrow at 1%
-I think Ireland will find a way to escape the clutches of the Euro, by reviving "the Punt", and ironically, pegging it to the U.K. Pound.
-Although Iceland had a similar banking crisis, it is in a better situation than Ireland because it allowed its banks to fail, and did not raid its public treasury, while maintaining control of its own currency.
-Greece did not come across its debt crisis by the recklessness of its citizens, but by the lavish spending and speculative bubble bets of its elected officials.
-The average German citizen is more indebted than the average Greek.
-Being the largest economy in the Eurozone, Germany has been expected to shoulder the burden of the weaker European Union countries.
-Political pressure will soon mount within Germany for them to exit the Euro and move back to the Deutchmark, this will be the death knell of the failed E.U.
-Pressure within the U.K. will also cause them to pull out of the E.U, easier for them to do since they have maintained their own currency, as will Sweden, probably in concert with the Germans pulling out of the Euro.
-Italian bond markets are now under attack, their economy is bigger than Spain, which is seven times the size of Ireland. They don't call it a contagion for nothing!
-Portugal is the next country to wilt under the pressure of its insurmountable debt to G.D.P. ratios.
-The U.S. currency is over inflated solely because it has the confidence of investors.
-The U.S. dollar, I believe, has become a temporary safe haven, as it did preceding the economic crash of '08, brought on by the pressures on foreign markets created by their QE2 monetary policies, and is just another bubble, which when burst, will cause massive inflation, as commodities begin to skyrocket.
-Despite Canada's responsible banking system, its currency may, at best, enjoy a brief period of privileged status, as this dingy lifeboat economy gets sucked down by the massive displacement of economic waters brought on by the sinking of its Titanic neighbour to the south, the U.S.of A.
-China will eventually allow their currency to appreciate, that is if the whole region doesn't go up in a puff of Korean smoke. Japan is caught between a rock and a hard place…as the price of oil continues to rise, and no way of accessing any, they are in for a BIG collapse, or as Kunstler says, they may just go "Apeshit".
-All this to say that a collapse of economy/banking would ultimately affect vulnerable countries like Israel the worst, who produce little and rely heavily on investments, while surrounded by hostile neighbours.
-Australia is China's bitch at the moment, they ship most of their raw materials on a fast boat to China. The Aussies are too proud for that, as internet freedoms are curtailed,and security measures increase, look for the Australians to dig their heels in, in the form of a big time Chinese backlash, and with it will go their mighty currency, but that will come much later.
-India, well I ain't got no idea, if they can't sell their cheap products, their new economic might will dwindle to irrelevance. It will be over before it began, hopefully nobody will blame it on Pakistan.

-Dirty C.T.

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