Algemeen English Posts Politiek

30 Jul 2010 | 12:04


Governments, banks and the media since about 8 months are trying to convince us and themselves, that our economy is clearly recovering. Given the fact, that no substantial changes have been made to the system that finally broke down in 2008, this seems odd. Even more so, if we take into account that every rescue operation that kept ‘the system’ afloat has cost us so dearly, that operations of the shape and size we’ve seen, are no longer an option. In other words, the ship is still making water, and all the life boats are taken.

FD today published an interesting article by Nouriel Roubini. Though his views seem to be primarily based on macro considerations, I believe he is closer to the truth than the ‘analysts’ of banks, cited by journalists.

In short, it goes like this:

–          The fundamental excesses fueling the crisis have not been extinguished

–          Reducing debt in the private sector has only just begun

–          Public debt has risen sharply, so spending cuts are required

–          Overspending by some countries (US, UK etc) will not be compensated by countries that have historically spent too little (Germany, Japan, China)

Therefore, recovery will show a very slow U-shape, so slow in fact, that it may feel like a recession. Let’s try to be prepared… (full article)

Ebel Kemeling.