Saturday, 7 March 2009

Who's got the balls?

It's here. The economic crisis, I mean.
To be quite honest, it was due for quite some time now. With the global economy booming and everybody spending like there's no tomorrow, without much thought on prices and actual need, we got just what we deserve. Nobody, I mean NOBODY was thinking about saving anything in case things wouldn't be so good in the future.
An economic crisis is certainly no fun, don't get me wrong. Aside from businesses closing down, it has a nasty habit of hitting the average Joe. Lots of people lost their jobs. I wish I could say it was for a greater good, but it wasn't. In my opinion, our current situation is a result first and foremost of greed. Distant second is plain carelesness.

So a couple of trillion US $ just vanished from the market. How miserable an excuse can that be for a crisis?!? The most virtual stuff man managed to invent, easily redefined in any way we see fit - and we call that a good excuse to make several hundred million people unemployed?

World governments failed to react in due time. The measure was quite simple: just replace the vanished money. Yes, I know, that would just boost the inflation in the mid-term. But it would fix the immediate problem in the short term.
But even if the governments did react in time, it would only delay the inevitable cleansing of the economy (by means of a crisis).

It's what the governments are doing now to get us out of the crisis that matters. It is known that government spending boosts economy. But while our governments were spending like mad during the good times, now they are squeaking how there's no money to spend. Oh please - I've lived in a country with 2000% plus inflation. So I know money can be made at will. They won't even do warranties so that banks would start lending again.

So while Obama is signing bills that will cost U.S. taxpayers in excess of 2 trillion US $, the Euro group is clinging to the monetary criteria like we're all going to die if the criteria would be temporarily forgotten to get us out of the crisis. None of the member countries conforms to the criteria anyway, they just have to lie about it now... Not to even mention the program our own prime minister made: a couple of hundred million € savings in government spending with special emphasis that he would be buying his own coffee from now on. OK, forgetting the coffee thing - you managed to save a bit. But where will you put this money? No idea? Oh, well...

To cut this short:
I believe the Americans are doing the right thing at the moment. Government warranties + direct spending to re-boot the banks is currently all that is needed. Sure it will boost inflation, but it will also revive the industry.
The EU on the other hand has no approach at all. Even when the french president decided to throw a hefty pack of cash to the automobile industry, everybody just cried foul at him. At least he did something...

Guess who's going to come out of this stronger?

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