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Brain -> The US recovery is little more than an economic sugar-rush (4/4/2011 1:07:22 PM)
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It’s ridiculous all the problems the banks have caused and it may not be over. Unbelievable what the banks got away with, and they say “crime doesn’t pay”, yeah right!
The US recovery is little more than an economic 'sugar-rush'
In the immediate aftermath of “sub-prime”, QE helped a wide variety of financial institutions to avoid facing up to their losses, covertly recapitalizing Western banks that were, to all intents and purposes, insolvent. For a while, the rest of the world put up with it. Now America is being blamed, rightly, for artificially depressing the dollar, so unfairly boosting US exports at the expense of those from elsewhere. At the same time, a lower greenback cuts the real value of the huge debts that America owes overseas creditors - not least the Chinese.
The only currency the White House understands is power politics - and Beijing is turning the thumb screws. Xia Bin, a long-standing adviser to China’s Central Bank, recently referred to the unbridled printing of dollars as “the biggest risk” to the global economy. “As long as the world exercises no restraint in issuing dollars,” he wrote, “then the occurrence of another crisis is inevitable”. Were it to happen, another round of money-printing - QE3 - would cause a major diplomatic protest led by countries America cannot afford to upset. The US government also knows, although it denies it, that the more money it prints, the more speculative pressures push up global food prices. While the causes behind current Middle Eastern unrest are complex, it was surging food price that provided the spark.
So beware of the siren voices claiming that shares on Wall Street will keep rising. Beware of anyone who is so deluded that they point to surging oil prices as “evidence” that the US - the world’s biggest oil importer by far, of course - is “fit and healthy” and “ready to rock”. Yet that was the cry among many Wall Street denizens last week. “Oil is rising – we are saved!” I paraphrase, but not a lot.
http://www.telegraph.co.uk/finance/comment/liamhalligan/8423520/The-US-recovery-is-little-more-than-an-economic-sugar-rush.html
'The recent growth-burst is built on monetary and fiscal policies which are wildly expansionary, wholly unsustainable and will surely soon come to an end.'
[image]local://upfiles/392475/9A0585D42E5F4C908C98D8F5D644D035.jpg[/image]
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