Financial Armageddon (148)

Arkayos: Bernard Connolly worked in the heart of Europe, helping design the framework for the single currency, but he became disillusioned and turned against the European project, writing a polemical tome against monetary union called “The Rotten Heart of Europe: The Dirty War for Europe’s Money”. For his troubles he was sacked by the European Commission.

His predictions about the future of europe are a little scarey:

“The current policy of lending plus austerity will lead to social unrest,” he said. To gasps in the audience, he talked about the countries at the centre of the storm — Greece, Italy, Portugal and Spain, “One should not forget that of the four countries we are talking about, all have had civil wars, fascist dictatorships and revolutions. That is history. And that is the future if this malignant lunacy of monetary union is pursued and crushes these countries into the ground.”

Meanwhile Defence chiefs are drawing up plans to cope with the potential military fallout from the eurozone crisis, according to General Sir David Richards. (http://www.telegraph.co.uk/news/uknews/defence/8957513/Eurozone-crisis-poses-military-risk-warns-defence-chief-General-Sir-David-Richards.html)

1933 all over again. As George Santayana once said, “Those who cannot remember the past are condemned to repeat it.”

Arkayos: This could be more important to us than Europe...

Ambrose Evans-Pritchard thinks China is crashing:

It is hard to obtain good data in China, but something is wrong when the country's Homelink property website can report that new home prices in Beijing fell 35pc in November from the month before....

...Meanwhile, the slowdown is creeping into core industries. Steel output has buckled....

With lower steel production there will be less demand for Australian ore, and Australian coal... Could mean the mining boom is about to slow down...

Full Article:

revealer24: Yes, China is in deep trouble. In 2008 the government had to deal with social unrest in two provinces. They are the factory of the world, but with virtually no internal market they are fragile, their economy depends on external markets. A lot of wealth will evaporate in the coming deflation. A Chinese friend of mine said, this will be good for the country because 99% of the population lives on a dollar a day anyway, they will not be affected.

telegraph: Confounded by the triumph of remorseless debt over political will, EU leaders have succumbed to collective delirium, promising that future government budgets will be “balanced or in surplus” and that annual structural deficits will “not exceed 0.5 per cent of nominal gross domestic product”.

There is not one chance in a million that this can be achieved by more than a handful of EU states. When fantasy masquerades as action, the end is nigh.

AEP: The echoes of the 1930s are loud, and will become louder as combined monetary and fiscal contraction entrench depression.