The Impact of Bubbles And The Future of Risk

Posted: March 20 2010

Bubbles of years ago being felt today, why rescue people from their mistakes? Destructive economic processes at work, many countries on the verge of bankruptcy, America now holds debt far beyond its ability to pay back, Debasement the order of the day, Bill Gross of PIMCO looks to developing nations for stability...

There was no turning back after June 2003. The last bubble was in the process of being created. The collapse of real estate, both residential and commercial, had been put in place and their fateful journey had begun. The credit expansion had begun and there would be no stopping it until it had run its course. Currently the credit crisis is in its initial 30th month with a possible end in sight. If quantitative easing is withdrawn, money and credit is dramatically reduced and interest rates are increased, deflation will start to make headway. In today’s circumstances we have a sovereign debt crisis, which is worsening. You put all this together, and in the absence, further stimulation of one form or another, the world could easily fall into a deflationary depression.

Everyone wants to be rescued from their mistakes and that simply can’t happen. In the meantime to finance this illusion they both go deeper and deeper into debt.

Europe is far more advanced into their destructive process. The euro zone is headed toward dissolution and perhaps the European Union as well. We will have the answer on the euro zone within two years. The beginning of the end has begun with Greece’s problems and the reluctance of Germany to bail that country out. Due to this reticence Germany has been threatened by other members of the euro zone and the EU, which was more than dumb. What they do not understand is what they have put into motion can’t be stopped. The euro and the euro zone was a political creation doomed to failure from its very beginning. The masters of Europe, the “Black Nobility