Tuesday, July 12, 2011

Economic collapse 2011

Analyst Dennis Slothower foresaw 2008 collapse; issues new warning.

 Get ready.
Financial capitals all around the world are awash with the worst kind of rumours. A second global financial crisis is just around the corner.

The rumours start with the possible exit of Italy’s Finance Minister Guilio Tremonti, whose head is expected to roll over the country’s mounting debt problems.
But that’s just the beginning of what is becoming a disturbing pattern of dominoes falling across the continent.
This time, the keyword is ‘contagion’, which literally means flu or a virus. In this case, it’s of an economic nature – and spreading fast.

For instance, the EU today conceded that Greece will default on its debt, leading many to wonder which one of the fragile European economies will be next.

That could be Portugal, Spain or Ireland. All three countries, to put it nicely, are up the proverbial creek without a paddle.
Earlier last week, that ‘paddle’ was the prospect of a bailout for Greece.
Now, with a dramatically worsening contagion spreading throughout the Eurozone, the focus is shifting on containing a new crisis.
Greece, as far as the bigwigs in Brussels are concerned, can wait. Italy is about to experience severe economic turbulence, and that has Europe worried.
After all, bailing out Greece is one thing. Bailing Italy out of its $1.8 trillion debt is outright unaffordable.

But wait, what about the US debt ceiling? The prospect of a deal to resolve the world’s largest economy’s debt crisis is equally dim.
To quote US President Barack Obama today, ”I don’t see a path to a deal if they [Republicans Party] don’t budge and compromise on ending loopholes, ending subsidies.”

The irony is that the Republicans secretly favour the US defaulting on its debt.
  Why? Because the default will happen on Obama’s watch and not theirs. Also, it’ll force US Treasury Secretary Timothy Geithner to cut spending whether he likes it or not.

Last but not least, it’ll provide a clear passageway for a GOP victory in next year’s election.
These are the rumours that are circulating from Wall Street to the Shanghai Stock Exchange, and they have substance.
With the Eurozone in economic paralysis and the debt ceiling talks in Washington stalling, it might pay to avoid risks.
The big old creaky wagon we call the global economy has until August before it buckles under its load of debt and the wheels come off.

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