2012 as "Year IV of the Long Slump"

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Alexis
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2012 as "Year IV of the Long Slump"

Post by Alexis »

A series of peeks into 2012 by Evans-Pritchard of financial comment at Daily Telegraph
Not to be taken entirely seriously of course, I believe AEP is no fool to believe predictions are possible... but he offers an entertaining series of possible crisis consequences this year.

Crisis, unemployment, and political consequences
The second wave will hit with youth unemployment already at 45pc in Greece and 49pc in Spain; and with the US labour participation rate already at depression levels of 64pc.

We will hear more about Italy's Red Brigades, Greece's Sect of Revolutionaries, and America's militia groups, and how democracies respond. Proto-fascism in Hungary is our warning.
China
China's surgical soft-landing will slip control, like Fed tightening in 1929 and 2007, or Japan's squeeze in 1990. Once construction has run amok, bears will have their way.
Japan
Public debt has reached one quadrillion yen, as noted acidly by Tokyo's R&I rating agency when it stripped Japan of its AAA rating last month. That is $12.8 trillion, or Italy plus Spain times four.

There is a graveyard full of Gaijin commentators who wrote off Japan too soon. Will the dam break this year at last, with tax covering less than half of spending, public debt at 237pc of GDP, ever fewer workers, and a state pension fund now selling government bonds? Perhaps. As R&I warns, Europe's woes have brought sovereign debt into very sharp focus.
United States
Politics on Capitol Hill will restrain Ben Bernanke from launching QE3 until the Tea Party can see the eye-whites of deflation. Six-month PCE inflation was 2.9pc in August, 2.4pc in September, 1.6pc in October, and 1.2pc in November. Not there yet. Prepare for a Wall Street squall first.
Euro-federalism, and its consequences
Politics will fracture further, splintering to the hard Left and Right. The Front National's Marie Le Pen's will beat Maréchal Sarkozy into the French run-off invoking 'terroir' and the ancient franc. Escalating levels of coercion will be needed to uphold the Project, with EU commissars eating alone in the administered territories of Greece and Italy.
Consequences of euro, continued
Lisbon's second bail-out will come just as Greece graduates from riots to insurrection, and Italy's Silvio Berlusconi will try to snatch power again by whipping up fury against Tedeschi. Bundestag patience will snap at such disorder everywhere.
Deutsche Konklusion
Germany will not be able to fudge EMU any longer. It must either immolate itself, accepting a debt union and internal inflation to save a currency it never wanted and doesn't love; or opt instead to uphold fiscal sovereignty and the essence of its own democracy, and let the Project die.

The shrewd, equivocating, ice-cold Chancellor will quietly oust arch-europhile Wolfgang Schauble and let the Project die, always pretending otherwise.

...Happy New Year to all! :D :P
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monster_gardener
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Re: 2012 as "Year IV of the Long Slump"

Post by monster_gardener »

Thank you very much for your post & the link, Alexis.

Something I likely would not have read otherwise.

Thanks again,

Your friend and admirer,
MG

Happy New Year.
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