May 09, 2010

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Europe fixes debt with more debt Anybody remember the last G20 Summit? Hard to forget. It’s only been what? - six months since the event, held in Pittsburgh last September. The words of our leaders, triumphant and self-congratulatory, still ring out today. Boasting of having launched “the largest and most coordinated fiscal and monetary stimulus ever undertaken,” the G20 looked back at the London Summit, where Gordon Brown, now former PM of Britain, orchestrated a rousing session around the theme of spend, spend, spend to get the world out of economic crisis. “At that time [in London], our countries agreed to do everything necessary to ensure recovery, to repair our financial systems and to maintain the global flow of capital. It worked.” Monday, the subprime government debt crisis, the direct product of the above-mentioned summits and other meetings of the world’s economic and political leaders, produced another threat. The European Union, its members sliding into stimulus debt and losing market confidence, would again do “whatever is necessary” to end the crisis, restore confidence and protect the euro. Whatever is necessary turns out to be more of the same. The amazing European and IMF economic stimulus machines will tackle their debt crisis with a new strategy: More debt! Already racked with rising deficits and debt loads that are in dangerous territory, the EU plans to fix the problem with US$1-trillion loan packages. And if the debt doesn’t work, they’ll crank up monetary policy and have the European Central Bank buy up government bonds and private bonds of banks that are lending money to the governments. That spells inflation, although the ECB said it would be taking countermeasures to “sterilize” or neutralize the inflationary impact of its bond plan.

Watchman

I'm a watchman for Christ, looking on the horizon in expectation for the fulfillment of God's Word.

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