Historically, the current business cycle expansion is now in its last inning. It is a fact that recessions in the US occur every 4 to 6 years, so by the end of this year leading into 2013 or the end of next year leading into 2014, a serious downturn is in the cards for the Western World. And with fiscal stimulus bullets all shot in 2008, what will governments do the next time around?
Look after themselves - that is what politicians will do.
ReplyDeleteThey are utterly convinced that money printing is the way forward - politicians do not like u-turns because it makes them look thick, especially in election years such as in France, the US and, next year, in Germany.
So they will print partly from lack of imagination, partly from not having any idea what to do other than to print, but mainly because doing anything else will mean that they lose face.
Oh, and as most politicians could not run a hot dog stand the reality is that virtually all of them rely on the Bernankes and the Kings to tell them what to do.
Ultimately, protectionism will rear its head - it is the only way out of this mess. But that will have to wait until there is a new President in the Oval Office and attention turns towards the growing threat of China.
I just couldn't agree more. If we could summarise it in a phrase, it would be headless chooks who do not want to take pain now, but rather flirt with total systematic collapse 5 years out from here!
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