Posted on 12/10/2011 4:42:48 AM PST by blam
What Happens When World’s Economic Growth Engine Goes Kaput
The Daily Reckoning
Dec. 9, 2011, 2:53 PM
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.
And 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 or 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.
But 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. And maybe the age of growth is over.
What a helluva thing that would be if it were true. When people lent money to government and private borrowers they were betting on growth. When the government extended its promises of pensions and health care, it was counting on growth.
(snip)
(Excerpt) Read more at businessinsider.com ...
We are about to find out. . . . . .
The author asks, what would stop growth? We don’t know.
Yes, we do know. Too much debt. Japan stopped growing because they refused to write off bad debt and let firms who owed it declare bankruptcy. The government kept stepping in with schemes to keep the old titans alive, like quantitative easing. So now those companies lumber along mortally wounded and unable to make investments and grow. If they’d been allowed to declare bankruptcy their assets would have been sold to productive companies that would use those assets, now unencumbered by debt, to grow their companies.
One reason they didn’t allow bankruptcies in Japan is the social cost. The president of the company loses all his personal assets and becomes homeless. What’s more he must present himself so his creditors can beat and humiliate him. In the United States they don’t allow bankruptcies because a little political graft makes a company too big to fail.
There was a great article in USA Today yesterday....the pension crisis in America. What they got to....was the public state and county workers in each state who are making political figures promise outrageous amounts of pension, at age 50-55. There’s no way that the states can ever deliver this beyond the next five years. When people start to retire by 2016, the whole nation will be in a uproar over promises made and the inability of states to deliver.
The Eurocentric view of mandatory Euro growth being a driving engine fails to consider change.
The Pacific rim coupled with the Mideast, specifically the Gulf, is where the change and resultant growth will be. The cities where that transformation is already well under way are Abu Dhabi, Dubai, Singapore and Shanghai. You can throw in Seoul and Hong Kong for kickers. And then there are Jakarta, Kuala Lumpur and Bangkok as well. These engines of growth will surpass and bury the need for Europe.
Lest we be accused of slight, add Brazil and Sao Paolo/ Rio into the mix.
“What Happens When World’s Economic Growth Engine Goes Kaput.”
Maybe people will wise up and turn back to God and seek HIS Wisdom.
;-/
“What Happens When World’s Economic Growth Engine Goes Kaput?”
War
*** “What Happens When World’s Economic Growth Engine Goes Kaput.” ****
Up from the seas come the many faces of Newt.
Just Sao Paulo - as the Cariocas say of the Paulistas "Oh...They work..."
“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 or the bond market are worth nearly as much as people think they are.”
Perhaps I’m reading this incorrectly, but the author seems to be assuming that the current level of massive “social” spending must continue. I’m not sure what he means by austerity, but it apparently does not include cutting back the welfare state.
In assuming growth, they overestimated the "growth" and the amount they could confiscate from the system to "take care" of citizens and then blissfully understimated the signs on the wall about the ramifications of being wrong because it didn't fit the false paradigm they live under.
It stops growing... and then some begin to realize that economic growth and happiness aren’t exactly synonymous.
Hey great the economy went up 3%... no children though... the little shops? Gone. The country’s culture, it’s once happy and fairly safe and peaceful lifestyle? A memory.
What happened to Merry Olde England? How come nobody’s singing California Dreaming anymore? Who and what are really pushing the Globalization agenda?
700,000 billion dollars in toxic financial instruments to pump GROWTH, to satisfy invented rights... Apocalyptic scenes of Black Friday sales “The Blitz line starts here!” to buy stuff made by wage slaves with no rights governed by murderous monsters thousands of miles away.
The creation of huge mega-corporations in cahoots with government. Productivity up, but real wages flat as of years. Laws made on purpose to favor the big boys and create entry barriers for the young.
Countries - like mine - governed by bankers... the value of old and glorious places decided not only by speculators, but by speculators who can make a killing by changing the perceptions that often drive the markets. Statistically proven Insider trading done by those who are supposed to govern the common good.
Good? What the hell is that? Some subjective nonsense for religious whackjobs.
The media - the supposed truth tellers - incestuous with the elites. You’ll know all about Cain’s love interests, but Corzine in cahoots with Soros? The real costs of Social Security and Medicare?
Are families happier? Neighborhoods safer? Are schools better? Is civil society more civil? Are you eating better? Is there more freedom? What are all those people doing on legal drugs, never mind the illegal variety?
The type of Finance Capitalism in vogue is creating the proletariat. A servile state.
Holland got richer, but now Rotterdam has a Muslim Mayor and pockets of Sharia.
33& of all meals are fast food...
Let’s face it, we are governed by a theocracy that worships Money... and since the world is governed by Paradox we are poorer... in fact, according to some, we’re in hock.
Every person is a consumer by nature, and must also "produce" something of value in order to make ends meet. People also spend portions of their lives where they are consumers but cannot produce (young children and the frail elderly, for example).
The problem comes when large segments of the population provide no productive value at all, or at least provide no value relative to the financial burden they place on others. Today, we have an enormous -- and growing -- imbalance between those who can produce something of value and those who are basically non-functioning citizens who don't bring anything to the table.
Unless this imbalance gets corrected, the whole system is going to collapse.
“Let’s face it, we are governed by a theocracy that worships Money... and since the world is governed by Paradox we are poorer... in fact, according to some, we’re in hock.”
Indeed....which is why I say that it’s high time to return to worshiping GOD.
(Europe has become highly secularized. We see the results.)
Never put all your eggs in one basket.
So does the U.S.A.
It's just that simple.
So does the U.S.A.
It's just that simple.
First question, with zero economic growth, will you starve, answer no.
I can help rid you of your excess money as to help you focus on G-d.
Just make out the check to...
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