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Global Economic Thermometer Inches Toward War

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User ID: 1143628
United States
11/10/2010 06:42 AM
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Global Economic Thermometer Inches Toward War
This is an extraordinarily well written article by Todd Harrison, of Minyanville, that describes how we are entering a period of increasing economic hostility, and inching toward the kind of conditions that lead to international wars over economics, like World War II. He criticizes the recent Fed decision to buy more US debt and how it's being received with anger abroad from those who are forced to eat more losses by the inflation, on top of their austerity measures while we continue to spend on debt.

Below are some excerpts. The full article is at [link to www.marketwatch.com]


...“In 2007, we previewed the deterioration of the middle class and the friction between the ‘haves’ and ‘have nots.’ In 2008, we forecast percolating societal acrimony and last year, we spoke of the migration towards social unrest and geopolitical conflict.

As this dynamic evolves, real risk remains across the spectrum of social strife. While this assumes many shapes and forms — populist uprising, the rejection of wealth and an emerging class war — we should remember that many global conflicts have historically been triggered by financial hardship....

...Following the second iteration of quantitative easing last week, we received troubling feedback around the world. President Barack Obama defended the additional stimulus by saying, “The Fed’s mandate, my mandate, is to grow our economy. And that’s not just good for the United States, that’s good for the world as a whole.” Unfortunately, global leaders didn’t share his enthusiasm.

Wolfgang Schäuble, German finance minister, called the Fed’s actions “clueless” and said, “It doesn’t add up when the Americans accuse the Chinese of currency manipulation and then artificially lower the value of the dollar…I have great doubts about whether it makes sense to pump unlimited amounts of money into the markets. There is no shortage of liquidity in the U.S. economy. I can’t see the economic argument for this move.”

Dilma Rousseff, Brazil’s president-elect, warned, “The last time there was a competitive devaluation of currencies it ended up where it did, in the second World War.”

Zhu Guangyao, the Chinese vice finance minister, offered, “The U.S. decision does not recognize, as a country that issues one of the world’s major reserve currencies, its obligation to stabilize capital markets.”..

...We’ve mapped the crossroads. On one side, there’s the bitter pill of debt destruction, asset class deflation, and a stronger dollar. On the other, there’s more of the same synthetic sweetener that got us into this mess in the first place. Read Minyanville’s “The Main Event: Inflation vs. Deflation.”

But it’s not that clean. For every action, there is an equal and opposite reaction and when the actions are cumulative, the reaction will be equally severe. We saw it in 2008 and take me at my word, we’ll see it again. Read Minyanville’s “The Anatomy of a Recession.”...

...If the rest of the world is forced to endure austerity measures and upward taxation, the U.S., widely viewed as the genesis of the global financial crisis, best get used to a tighter stateside belt. Ironically, our leaders are telling us to go out and spend while punishing the savers who have chosen not to. That might prolong the relative calm but we know what happens when you mess with Mother Nature — or free markets....

...Watch the dollar (any lift will quell the upside asset class swell), eyeball the banks (which encapsulate our finance-based economy), note the resistance zone of S&P 1,200 to 1,220 and try to define your risk regardless of your current position. It’s entirely fine to dance while the music is playing; some would say that’s our mission in the rain. Just make certain you have a seat when it stops, and keep close tabs on those who don’t.

Full article at [link to www.marketwatch.com]

User ID: 1159059
11/10/2010 06:53 AM
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Re: Global Economic Thermometer Inches Toward War
Economic doom leading to war doom. Finally doom we can count on!
Twenty grand dood, it's a lot of money!

Recently homosexuals have been making anti christian threads. Think about it.
Anonymous Coward
User ID: 1132105
United States
11/10/2010 07:35 AM
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Re: Global Economic Thermometer Inches Toward War
Economic doom leading to war doom. Finally doom we can count on!
 Quoting: Irdoooomed

This is not your Fathers or even your Grandfathers doom.... Time to put the big boy pampers on....
Andromeda (OP)
User ID: 1143628
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11/10/2010 09:47 AM
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Re: Global Economic Thermometer Inches Toward War
Currency war is breaking out...

Currency war's key battlegrounds
By Andrew Walker
Economics correspondent, BBC World Service

It has been called a "currency war", by the International Monetary Fund's managing director and the Brazilian finance minister among others.

IMF chief Dominique Strauss-Kahn told the BBC last month that there were signs that countries were trying to use their currencies "as a weapon".

For his part, Brazil's Guido Mantega said competitive devaluations by advanced countries amounted to a new trade war.

"We're in the midst of an international currency war," he told a meeting of industrial leaders in September. "This threatens us because it takes away our competitiveness."

But what does it all mean?

There are several main elements, two of them fairly new, but the first is a long-standing one.

Details and the full article at [link to www.bbc.co.uk]