Dire Consequences As Global Growth Grinds To A Halt…(Can You Say Global War?…I Knew You Could…)

Monday, December 12, 2011
By Paul Martin

Bill Bonner

People think the Europeans are going to sort out their problems. But are they?

Europe is the world’s biggest economy. It is menaced by bank and government debt defaults. It is growing old and has far more social spending obligations than it can afford. It is paralyzed by competing national governments and decentralized financial institutions. It can say ‘drop dead’ in 17 different languages.

If Europe goes into a deep or prolonged economic slump, the rest of the world follows. Because Europe is a big customer, not only for Asia, but for America too.

The only way out of the debt problem for Europe is growth. Austerity alone won’t do it. Europe’s debts can only be serviced if the economy grows. Not that we’re counting on it. On the contrary, we’re guessing it won’t happen.

Europe’s social spending can only continue if there is growth. Without growth, everything goes bad. Debts can’t be paid. Public workers can’t be paid. And neither the stock market nor the bond market are worth nearly as much as people think they are.

Everybody assumed growth would continue, even if it were interrupted from time to time by recession. Every recession since the ’40s has been a relatively quick and relatively painless pause, not a major change of direction. Now something seems to have changed. Maybe it is a Great Recession, as some call it. Maybe it is a Great Correction, as we call it. Maybe the age of growth is over.

The Rest…HERE

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