Please don't take my free lunch away...
by, 16th-June-2009 at 12:46 PM (748 Views)
BRC without an "I" had enough
At some point, the QE will end because if it doesn't or if "they" don't, the US$'s hegemony will end (not that it is not on its way currently), and the cost to "rescue" the "global", or rather the developed nations' economy without too much pain will fail. Already unemployment is piling up, to about 2 mln in the EU and counting, with no sign or end of of the bad bank write down in sight. IMF estimated the EU has to write down about 900bln worth of bad assets while the EU is playing hide and seek and "refused" to acknowledge that they have a problem.
It's not going to end up pretty when it blows. For those who are betting for a quick recovery, I think, it is going to cost them in buying this folly.
A recession, a deep recession or depression are just words, they don't mean "nuthin'". It's the real economy that counts - productivity, savings, reserves, real assets, jobs and plenty of jobs that would make the recession less painful. With QE grossing over the bad assets and bloated wasteful spending of the past, the USA and EU are pulling wool over their eyes, pretending they can QE their way out of the slump. They can do this for as long as the creditor nations are willing to support and pay for them, but now that they are sending out hints of their refusal to continue supporting such endless pit, I doubt if QE is still viable as THE choice of the mother of all rescue. Seriously doubting it!
For those who can't seem to see the paradigm shift, and continue on with their narrow sighted view that once the global economy is recovered, life will go back to normal, ie, to pre-2007 or even pre-2000 era, they are going to be sadly disappointed.
Here's a simple observation which can be verified easily by time or event - the Asian and the rest of the developing economies will be growing, while the economies of the advanced nations, the West, will be stagnant for a long time until the shift of capital and power reaches an equilibrium where one can expect the living standard of the developing nations greatly raised with the living standard of the developed nations, lowering somewhat to allow that happen.
For the third world which is resource rich, the change will be a bliss for those who are hard pressed currently. For those who had been driving SUVs that run 9 miles per gallon, life will be a great adjustment with painful payback to the excesses in the last 20 or 50 years.
...time, it's a changin'... and dun ya take that for granted.