October 04, 2008
– Comments (8)
It looks like some serious trouble for the Euro. The problem with many countries behind it is they aren't all willing to work together with trouble. Naked capitalism is a must read on this topic.
I'd say that's a big part of it
It is all about interest rates. The ECB kept raising them because the Germans, who apparently dominate it, are more fearful of inflation than anything. I suppose if you look back on their history you could understand it, but their decision isn't impacting just Germany but the entire Euro community. I have stated this elsewhere, Italy for example didn't want these rate raises because it was killing their economy. That's what higher interest rates tend to do. Slow things down and even throw Countries into recession if you go too far. ECB even stated their main concern is to control inflation.
So when the US dropped their rates in response to the economic crisis, the EURO remained strong. Now Europe is entering into a recession while the US tries to inflate out of its. Eventually Europe will have to as well, but if the Germans remain stubborn (which seems to be a national trait) it will cause problems for the other member countries.
The fact is that in the 21-century, interest rates have no bearing on the state of the economy whatsoever.
Tell that to Italy and Spain, even Greenspan who kept the rate down at 1% for so long. And when did the housing bubble crash? The year Bernanke raised the rates from 1% to 5 1/2%.
Changing interest rates are a tool used to disrupt business economys. When the rate is low, companys that borrow have a chance to outcompete those that do not. Expansion is inexpensive and not dependent upon being profitable. Inventory can be purchased using cheap credit, raising everyones costs. This cuts into profits forcing otherwise profitable business's to borrow in order to purchase inventory before their competitors do. As all business's become indebted and continually "roll over" debt to make monthly expenses, debt service effectively becomes a tax upon business. Raising interest rates effectively is a tax increase paid to a non-representative entity. Raising the rate, especially suddenly and after an extended time of low rates will force out poorly run competitors, but that does not matter to the lender if everyone left is borrowing anyway. The phrase "business's wll not make payroll if we don't pass the bailout" means that authority is in the hands of the lenders not elected representatives.
In my round about way of thinking and keeping with the religous chanles it could also be some of the Greek churches are talking about the roman church and pointing out that the 10 nation europen union could be a sign of the as I call it ( the man made end of times.)Take religion texts all over the world. Each has their own part and take on what is happening in potilicts and the stock market.Each trying to form our thoughts and reaities. Mayan, Inca, Bible, Koran, Tora, Book of Morman,Teachings of Buda, Hindi belief and the History behind each one. The discovery of the dead sea scrolls and DNA and how tracing heratage back through time. How many times over the years have they been re written to explain what in going on in the time. This is only 5,000 years how do you explain the last 10 thou. years the last million years and so on and so forth. This is why so many models don't work anymore. We were globalized and so much was put into the mix so fast no one person has the answer. Which path will we choose. A mouse used to be an animal now we use a mouse to navagate the internet. Navagate the sea's in the 1700 and Navagate the Stars. NASA. Which navagate changes what. Follow one path and everything falls into place but just one tiny change in choice then everything changes very quickly. A whole new plan and way of doing something. That is way we are in uncharted terratories. It changes in the blink of the eye.
This comment section is about as bogus as anything I've read here. Disregard all comments--just read the blog which is accurate. Religious prophecies?! And seriously, interest rates don't matter?! Zloj, I'm amazed your CAPS rating is up at a lofty 22 with the absence of brain function you Xhibited in that post.
Yes and then there is this.