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Rising bond yields signal trouble. Some financial analysts suggest euro crisis round two arrived or at the least draws near. A Financial Times/Brookings Institution report said the world economy "remains on life support." It's levitating on an ocean of money. According to Brookings' Eswar Prasad:
"The global economic recovery is still spluttering due to a lack of robust demand, policy tools that are stretched to their limits and unable to muster much traction, and enormous risks posed by weak financial systems and political uncertainty."
A worried Wall Street Journal article headlined, "Sowing Seeds of the Next Major Crisis," saying:
In America and Europe, private sector "dependence on government support" produces "excessive risk-taking, distortions in capital markets, and" greater inflationary pressures. The foundation for the next crisis looms.
What worked last time won't next time around. Unpalatable consequences await. When risk stops being a dirty word, today's "unwitting experiment in state-influenced capital markets may be sowing the seeds of the next crisis."
Fragility threatens greater crisis with few effective tools left. Global slowdowns and declines are increasing. Troubled Greece is a corpse awaiting burial. Spain's pain contaminates the continent.
What's a central banker to do? There's "little they can do on their own," says El-Erian. Avoiding global depression conditions may have only delayed them. Main Street America and Europe already experience them.
Monetary madness put central banks in a box. They made their bed and have to sleep in it. So do ordinary households victimized by their policies. Western banks, other corporate giants, and rich elites got the benefits. They got the pain. It's not getting better. It's getting worse.
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