Wednesday, October 28, 2015

The Eurozone has no fire-power to strengthen. QE has failed because they are already mired deep in a Japanese style deflation trap to which there is no easy escape. Draghi's peashooter has allowed them to standstill for a few months and nothing more.  The only thing to be done now is to forcibly devalue the currency and drive it through dollar parity as policy. This is what is necessary to re-establish inflation and growth on the continent.  This would be European style economics but may be the only way to save the euro. It must be done now though. The alternative is a slow death and definitely lose the euro.  My bet is that the Europhiles cannot face up to what they have done and will therefore opt to do nothing. So it will be the slow death then...the Central Banks are in trouble...and relying on Draghi's monthly or quarterly QE payroll. It's as simple as that. Deflation will hit their books hard. Notice the pressure on Banks to impose charges, more now than ever before. As for Deutsche Bank; it's all their satellites that will feel the pinch....something that Merkel has overlooked at her peril....There is no money. Nobody can buy anything so nobody can sell anything so there is no growth and all kinds of social bills still to be paid through more borrowing along with all the previous debt service costs. Reciprocal debt forgiveness: for some nations temporary retreat from an utterly inappropriate €conomic instrument used as a political weapon that has failed on both battlefields: sustainable, as equable as possible, benefit reduction and an opening of the democracy door to all of the peoples with the same voting weight at all levels are the only answers now. But I think the burden is too great and it is too late, especially with the utterly divisive irritant of the imperial court's decrees on immigration to add to the stew....The ECB printing up more trillions of fiat currency to lavish on their .1% cronies in the financial sector "to combat deflation" (and buy up the distressed assets of the increasingly pauperized middle and working classes at fire sale prices) - my, how groundbreaking.  Remind me again of the clinical definition of insanity.

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