Hope for the best, and prepare for the worst.
Equities are pricing in a rosy scenario, but the bonds and precious metals are saying 'beware.'
The western central banks will contine to print money in response to this financial crisis, both before and certainly after the fact.
'How much' is a policy decision, but the choice seems compelling. Rather than limiting their printing, they will most likely attempt to manipulate and mask the perception and awareness of their actions through programs of buying sovereign debt, engaging in disinformation campaigns, and allowing blatant price manipulation in the markets by insiders.
The problem with this is that insiders stand to profit enormously while the public is used and abused rather badly. Power really does corrupt, not all at once, but in stages, one rationale at a time, with a privileged outlook or groupthink that comes to be widely separated from the shared reality of the public. And the opportunity to turn this to pillage is not wasted on the worst elements of those in the halls of power.
"And remember, where you have a concentration of power in a few hands, all too frequently men with the mentality of gangsters get control. History has proven that."There are others ways to do this that do not benefit the few at the cost of the many in such a disproportionate manner.
Lord Acton
Financial Times
World Bank warns emerging nations
By Chris Giles in London
January 18, 2012 2:00 am
Developing countries should take steps to plan for a global economic meltdown on a par with 2008-09 if the European sovereign debt crisis escalates, the World Bank warned on Wednesday in its latest economic forecasts.
Predicting significantly slower global growth in 2012 than it expected last summer even if the eurozone muddles through its crisis, World Bank economists said that if financial markets deny funds to eurozone economies, global growth would be about 4 percentage points lower than even these figures, with poorer economies far from immune.
Andrew Burns, head of macroeconomics at the Bank, told journalists in London: “Developing countries should hope for the best and prepare for the worst.”
Stressing the importance of contingency planning, he added: “An escalation of the crisis would spare no one. Developed and developing-country growth rates could fall by as much or more than in 2008-09.”
The world economy would find it much more difficult to grow out of a new economic crisis, the World Bank warned, because rich countries had little monetary or fiscal ammunition available to stem any vicious circle and poorer countries now have “much less abundant capital, less vibrant trade opportunities and weaker financial support for both private and public activity [than in 2009]”...
Read the rest here.
