Andrewp111
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Don’t shed any tears for the sovereignty of EU States. The Money Power is one of the key pillars of sovereignty. When these States agreed to the Euro, they surrendered their sovereignty, and they were fully aware of what they were doing. Perhaps the Euro was sold to the gullible public in other terms, but so what. Politicians lie all the time. The fact that this surrender of sovereignty wasn’t noticed until there is a crisis is just too bad. The British had the good sense to stay out of the Euro, as they recognized it is “a burning building with no exits”. Of course, the British have other problems, including a likely breakup of their country when Scotland secedes to join the Euro.
Response to rapier. You are right about the effect of Mark To Market repeal. Do loans have to be repaid if no one cares? Of course not, but there are 2 natural constraints. A bank is insolvent when it can’t make a payment on debt it owes, and is forced to default. This is what happened to Lehman. If a bank is backed by the Government, it never has to default. Then the ultimate constraint is resources – especially energy. I expect the China bubble to end when oil prices shoot the moon again. It could be a long time before that happens.
JPM may be showing record profits, but I wonder how real that is. There is no doubt that banks “evergreen” their commercial loans to prevent the bank from going under. They have done this in Japan for decades, and have done it here since 2009 as well.
I don’t expect the Tsunami to start in the US. China is a more likely possibility, but war with China is possible too. When it comes, no one will see it before it hits.
A decline in oil prices is actually inflationary – for oil importing countries. Think of it this way. Money spent on oil consumption leaks out of your country and goes to the exporters. High oil prices act like a tax and a decline in those prices acts like a tax cut. Now, for a country like the USA where domestic production has been soaring, the picture is kind of muddled. An oil price cut will stimulate the consumption centers of metro areas and depress places like North Dakota.
The real questions for the rest of us are (1) how long will this Chinese financial juggling show stay on the road, and (2) are China’s recent bellicose statements involving islands indicative of a real danger of war with the USA?
