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Deepening Debt Contagion

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Deepening Debt Contagion - by Stephen Lendman

Global economic Depression worsening.

With pressure building on Europe and America, something's got to give. Progressive Radio News Hour regular Bob Chapman says Germany's Angela Merkel and France's Nicolas Sarkozy search for solutions that don't exist.

Nothing's agreed on to be implemented. Austerity weakens failing Eurozone economies. French and other banks are selling bonds. Yields are rising. So isn't economic, financial and political uncertainty.

Europe's in disarray. Germany printed Deutsch Marks just in case. It "has to come to terms with cutting loose six loser countries. That means leaving the euro and perhaps the EU. We see no other choice in this unnatural" union.

"The future of the euro zone is sealed." By fall 2012, "there will be six less participants." Europe's economy will have negative growth, worsening in 2013. Other Eurozone countries will be forced out. In two years or less, "the euro is history." No one knows how bad things will get. They do know today's crisis won't end soon.

New Greek and Italian governments can't resolve intractable issues. Of concern is how much more austerity can people take before exploding. 

At the same time, Eurozone and US leaders are whistling past the graveyard. Perhaps they didn't notice bond market contagion affecting highly-rated countries like Austria, the Netherlands and Finland, indicating worsening crisis conditions. 

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A recent Bank of England quarterly Inflation Report also was downbeat, saying:

"The prospects for the UK economy have worsened. Global demand slowed. And concerns about the solvency of several euro-area government intensified, increasing strains in banking and some sovereign funding markets. These factors, along with the fiscal consolidation and squeeze on households' real incomes, are likely to weigh heavily on UK growth in the near term."

In 1998, even Alan Greenspan once was right, saying:

"It is just not credible that the United States can remain an oasis of prosperity unaffected by a world that is experiencing greatly increased stress."

Compared to now, it was mild, yet enough to be worrisome. Today, global alarm bells should be sounding.

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Europe's debt crisis needs $6 - 8 trillion to resolve, an impossible amount to raise. Bailing out Italy and Spain alone would bankrupt solvent states.

European banks are threefold over-leveraged. Europe's an accident waiting to happen. In fact, it's unfolding in plain sight. Failed bond auctions show it. European Financial Stability Facility (EFSF) bond sales were postponed for lack of interest.

"Europe is the catalyst, and eventually it probably will take the financial system down." Germany and France are discussing a Eurozone breakup to let six weak countries exit the euro, but stay in the EU. All rescue measures tried so far failed.

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I was born in 1934, am a retired, progressive small businessman concerned about all the major national and world issues, committed to speak out and write about them.

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