I’ve been so wrapped up in convos about the Euro, global economy, voodoo dolls, betting pools and other fun stuff on twitter (follow hastag #gfc2 if you’re interested) that I haven’t blogged in a couple of weeks. But the lies/fantasies/truths are getting to such an eggregious point that I need more space than 140 characters to point them out. (I’ve got money on Spain to go next). So here are the latest howlers that would be funny if so much weren’t at stake:
- EU Bank Stress Tests Rigged (Reuters): Stress tests are designed to determine whether a bank could survive a financial crisis. But when regulators have decided in advance how many banks will fail and how many will pass, it’s not hard to wonder if the tests are meaningful in any way. My guess: they don’t mean much. So we are back to having no clue how EU banks would survive, for example, a shock like a Greek default which could happen fairly soon.
- Christine Lagarde to head IMF (WSJ): Like we didn’t know she was a slam dunk for the IMF ever since she announced, or even before for that matter. The US waited until it seemed like some type of democratic process had played out before confirming what we already knew. Just reinforces the status quo: save the banks. I believe Lagarde is competent, but that’s not really the point. She is pledged to uphold the status quo, to uphold the Ponzi scheme known as the international financial system at the expense of all else.
- By 2013, Greece’s debt will rise to 170% of GDP (International Financing Review): This is not a joke; half of that will be owed to the IMF, EU and ECB, if Greece doesn’t default in the meantime. And that’s if economic projections play out, which there is no guarantee that they will. There is no way Greece can survive economically in any reasonable fashion with this kind of debt load. That’s why it’s crazy because I know that you know that we know that they know that this is completely unworkable. But it’s happening anyway. I am so beyond the amazement stage about any of this.
- Punishing the peripheral countries via austerity is the solution (NOT) (EconoMonitor): The IMF/EU/ECB solution of punishing the peripheral Euro Zone countries for problems that mostly are not of their making may make Germany, France and others feel vindicated that they are somehow morally superior, but it won’t, doesn’t and will never work. Austerity is punishing the citizens of these countries and pushing their economies into recession, if not outright depression. Ireland, Greece, Portugal, Spain and Italy are caught or will soon be caught in a viscous cycle where austerity drives growth out of the economy and the economies have no way to escape the trap via devaluation, so they are forced into more austerity by the powers that be, which produces more economic anguish.
- The US is in a recession (ZeroHedge): Anyone who is not super-wealthy with a brain in their head and who lives in the real economy, as opposed to the official economy inhabited by economists and governments, knows that the economy recovery is an illusion. So we finally have confirmation as to what all of us normal people know: the economy has slipped back into a recession. And if the deficit hawks have anything to say about it, it may turn into a genuine depression if enough federal budget cuts are implemented on top of state budget cuts. See austerity, above.