Recovery? What recovery?
What? No recovery? Well it would be hard to end a recession if one has never gone away in the first place. Yes a correction is a very nasty thing but it actually comes as surely as death and taxes after a major credit expansion. Investors are slowly realizing that there was no recovery – just more debt – and here are the signs: Dow is down, consumer confidence in the US is down, foreclosures and houses are still on a downhill slope, China had less growth than expected in Q1 of 2010 (is that a surprise?).
Now over in Europe:
- Greece is having protests and riots again. Well of course the voters are not going to go down that easy for they know what’s coming – if only their elected officials were as enlightened.
- The ECB had a failed debt auction when trying to “sterilize” its money injection. The yields came in higher than expected and they sold less as well. People don’t want to part from their capital that easy these days and the system can’t take more monetary contraction. The Spanish banks are screaming for more easy money from the ECB, after all, what is it there for? To top it all off, the IMF may be contemplating EU bailout #2 – they call it “precautionary credit line” – last time they said that – we had bailout #1. Maybe it is related to the fact that this week will mark the end of the one year liquidity (442 B euros) added into the system by the ECB.
And back in the USA:
- The Obama administration is struggling these days to pass regulations – FinReg (as its called) may be dead already as it seems they won’t get the 60 votes they need in the Senate. Add the failure of Congress to pass an extension of unemployment benefits for some 1.3 million unemployed – and it seems more and more difficult for the US administration to pass legislations – and that’s before the November election.
Hey even Prince Charles is joining the austerity gang – he is cutting his entertainment budget by half – cutting catering and freezing staff pay. Change is coming…