International Forecaster February 2011 (#2) – Gold, Silver, Economy + More
By: Bob Chapman
Sunday, 6 February 2011
The Euro zone participants who have financial problems, Greece, Ireland, Portugal, Belgium, Spain and Italy are expected to deflate via austerity and at the same time be more competitive. This is supposed to be accomplished quickly so that overhanging debt can be extinguished. This, of course, is an impossible task. You have the IMF demanding austerity and EU members demanding growth.
The problems of the southern European states are similar to those of the states and municipalities in the US. The product of years of living beyond their means, and being accommodated by banks who knew they should have never been making the loans they were making. These entities cannot print money to solve their problems and they cannot grow fast enough to service current levels of debt, never mind service additional debt necessary to spark growth. They cannot manipulate their money supplies, because they have no control over them. They have no control over interest rates as well. They either find a way to pay the debt or they default. The only other alternative is to find someone to lend to them. That usually takes place at higher interest rates, due to the risk to the lender. These conditions are truly a quandary.
Each nation and state had its own set of problems. The most obvious was and is living beyond their means. Some had uncompetitive economies and some had one interest rate fits all, a condition that tricks unsuspecting countries into borrowing more than they can afford. Some had real estate and stock market bubbles; some had slow growth in part caused by lack of increasing productivity. Some had anemic savings or an economy dependent on loans from bankers who used a fractional banking system that they in error over-expanded. That is the way it was and still is.
We ask ourselves how did so many nations do the same stupid things and why would bankers use disastrous levels of leverage and lending? We certainly cannot totally ascribe it to greed or stupidity. Bankers are not stupid people. The policies followed by these nations were promulgated by the Federal Reserve and the City of London to bring about a crisis that would lead to world government. This is what this whole orchestration is all about.