Friday, August 19, 2011

Repetition... the key to learning. I have been warning about the Euro area problems for four years now and the rest of the world has caught up. Now the critical investment decisions need to be levied. A coordinated effort to shore up banking capital in Europe and the U.S. in order to facilitate the export markets of China and Japan (to say nothing of assisting in Middle East stability as an oil crash would be most unwelcome during the summer of Arab Revolution) may allow the global economy to "muddle though" until conditions normalize.

I doubt this will be successful. More likely that conditions worsen and capital floods to U.S. assets.

More ominously, Russia stands well-armed and in perfect condition to assert itself should united Europe fracture.

Dangerous times indeed.

(National Post) -- It's possible that President
Barack Obama will soon face the toughest economic question
since his original stimulus decision: Whether or not to join a
global bailout of the European periphery countries.
In 2008, President George W. Bush moved to rescue U.S.
banks deemed too big to fail. The really scary possibility in a
European banking crisis is that the hardest-pressed European
banks may be too big to save by the European Union acting
alone. American and Japanese help may be needed. China may play
a role as well.

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