Golden Standard and the House Market
What have both to do with each other? Actually nothing but irrational economics and the failing financial-economic system connects them.
The economic system falters and some consider that the US might reinstall a Golden Standard and even might confiscate foreign gold. Whether true or not, it is obvious that when Goldman Sachs, Christine Lagarde and many others consider that a severe collapse of the financial economic system is possible, probable or even imminent there must be something seriously wrong.
Black Hole
Banks and other investors have abundance capital to invest. The interest rates are historical at a low level and the money supply is abundant. Despite the low return on and the abundance of capital the Western economies have not recovered from the recession that started in 2007 as a consequence of the huge mortgage fraud in the US. One should expect that with these low interest rates investments and economy would pick up; but that is not the case at all!
Can You Manage an Economy?
Considering economic policies in the developed democratic countries it appears there is hardly an economic strategy; central banks juggle with the base interest-rates trying to keep the inflation in control and economy running and not doing a good job. That's it!
Printing Money or Better Not?
Germany's Angela Merkel doesn't want to allow the ECB to print money to finance budget deficits and battle the upcoming recession. The opposition, France by Nicolas Zarkozy, would prefer an ECB that prints money and therefore avoids a recession.
Who is right and who is wrong?
Euro-bonds? Certainly Not a Good Idea Yet!
At the moment, the discussion whether the Euro-countries should emit Euro-bonds to finance the governments debts and redemption in the Euro-zone, is highly actual. Germany strongly opposes while France is an advocate.
Bonga Bonga Investment Opportunities
On October 26th the leaders of the 17 countries of the Euro-zone reached, after a 10 hour meeting, an agreement that should contain the Euro-crisis. The decision was made that the debt of Greece is diminished with 50%; the banks holding Greek bonds have to write off 100 billion Euro.
Italy, the third economy in the Euro-zone, agreed to take measures to reverse soaring long term interest rates which threatens Italy's possibilities to finance redemption and further budget deficits. Rising interest rates are the result of increasing fears on the financial markets that Italy is not able to control its finance. When you realize that the financial crisis of Greece, a small economy, almost lead to the fall of the Euro, then Italy will be disastrous.
Blessings of the Euro
In the Netherlands some political parties say we should not whine about the financial burden of the Euro-crisis because each of us earns 2,000 every year on the Euro. Like always that is hardly the truth. Yes we earn approximately that amount on trade within the European Union (EU) but that is not due to the introduction of the Euro. We benefit from our involvement since 1958 when six countries: Belgium, France, West Germany, Italy, Luxembourg and Netherlands founded the ECSC; the predecessor of the EU.
Financial Crisis Part III: The Aftermath
In “Is saving for your pension actually possible?” we argued that the economy is now and only now. Later in the economy doesn't exist. All production for consumption and investment concern the present economy; nothing is produced for over 10, 20 or 30 years when you retire.
Financial Crisis Part II: The Present
In the economy money is for consumption or investment. The amortization of companies is sufficient to replace capital goods to continue production. Profits allow companies to expand, diversify or pay dividends.
The high standard of life in Western economies has created a situation where a substantial part of the population will not consume more when income increases while on the other hand citizens with a lower income would like to spend more; those who did are now in trouble.
Financial Crisis Part I: The Origin
For all politicians full employment should be the primary (political) goal; it maximizes the wealth of a nation and gives politicians therefore the best chance to achieve specific aspirations. The employment goal for all politicians is therefore the same; structural full employment. This makes employment policies non-political; a pure economic problem.
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