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http://www.agonist.org/story/2005/4/8/82516/08350]Link
Concerning a potential European recession:
The typical story of a post-war recession begins "When the central bank tightens..." Yet the ECB (European Central Bank) has held rates steady for a very long time, there has been no tightening of monetary policy to combat inflation. Instead, from the perspective of Europe inflation is an exogenous effect - it isn't anything Europe is doing that is causing inflation. Nor has Europe passed regulations that will amount to tightening, so one can't argue that there has been de facto tightening of the regulatory leg of the Mundell-Fleming triad of monetary policy, fiscal policy or regulatory policy. One can also not argue that Europe has lifted regulations that would cause inflation.
In short, and this is very obvious to Europeans, the source of their current economic bind is very simple: the US is printing dollars, preventing US consumers from feeling the pinch of their borrow and squander fiscal policies, and easy monetary policies. However, Europe is also aware that the Asian central banks have more or less topped out their ability to soak up dollars, and they can no longer afford to take a bath on US bonds, which are yielding as much as 300 basis points below other completely safe currencies.
Thus free market zealots in the US are calling for Europe to Thatcherize - slash wages and benefits, slash social spending and sell off assets at fire sale prices to waiting billionaires. Europe, which is a great deal closer to Russia, the last nation to try "shock therapy", realizes just how bad an idea this is. But as yet they do not have any ideas of their own.
and this:
It is only by ending the threat of failed states, and the global plague of dictatorial or oligarchic states that the economy can be shifted away from one where the military is a cost that the general economy carries, to one where it is part of the expansion of prosperity. For all of the talk from the neo-conservative movmeent about how it is committed to creating Democracy around the world, the reality is quite different. For a stark example of this, look at the ceremonies that took place to announce the new Iraqi government. Well scripted, with flags and polished furniture, it seems that all is in order. But look again, note how all the men on that stage are fat. Now look at whatever video from the Iraqi street you can find - you will see no fat Iraqis. What has happened is the installation of soft, fat, and out of touch leaders who have lived well through the times of trouble in Iraq, and their maintenance by US power. This might work in Iraq - and the present price of oil an economy doesn't have to be that efficienty - but it will work virtually nowhere else.
Edited By BWhite on 1112991563
Give someone a sufficient [b][i]why[/i][/b] and they can endure just about any [b][i]how[/i][/b]
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