Brahmason's Blog

USA budgetary deficit breaking records and most negative forecasts with current deficit persisting  weakness and whole sales inventories climbing up because retail sales stay as sick as ever and distribution was late to compute the poor reality of demand .

QE3 is launched with more money being printed to buy debt supporting mortgages , confirming uncontrolled economy weakness .

The continuous slide of purchase capacity due to the big loss of jobs in high segment added value products and services , plus the endemic unemployment and lowering salaries trend , with petrol aiming at higher price level on different factors , consolidates stagflation . ( low or negative growth with inflation higher than growth rate )

In that situation continuous Quantitative Easing moves serve only as confirmation of a very negative outlook .

With a bit of propaganda on euro’s stability achievement ( far from reality ) the rate € / $ may this time move towards 1.40 again .

The late agreement on the application of the Permanent Euro Rescue Fund has not actually changed anything except that markets take it for granted that Spain will have inevitably ask for official help wich is compulsory before money can be available to buy spanish sovereign debt .

In fact it shows how unprepared economic speculators are , because the amount of the rescue fund is very low to solve the real problems of spanish economy which needs a tremendous overhaul of structures before it can have any chance of growing without needing huge amounts of liquidity that should only serve to spiral debt .

The cuts supported by Merkel will have mostly a negative effect , because Merkel does not realise that what is good for economies like Germany with a full capacity of response to those cuts because GDP has a healthy added value , is not good for economies like the mediterraneans with low added value GDP and consequently a middle class with very little purchase capacity .

Japan’s economy is very much sensitive to world situation and the government actions are far from being the most suitable to current world economy instability . The obsession with rates as the only instrument to solve their unsurmountable problems on growth and sovereign debt , is no less dramatic than american or european troubles and relation with China is of paramount importance .

Political tensions in the Middle East are not helping at all and Iran should not play with this because any outburst might send petrol and raw materials prices spiraling and plain people all over the world would be suffering the consequences including iranians .

Iran should understand the worries of Israel about its nuclear development as Iran officials and other region radical forces support the idea of taking Israel out of the map . No matter the attitude of some israeli politicians precisely because of their » survival worries «.

Leaders all over the world should understand that if all they do is only helping speculators and further ruining the limited purchase capacity of the middle class , they are only paving the way for economic collapse .

The car manufacturers as well as other consumer goods , need a very solid middle class all around the world to be able to sell their production . Twenty percent of world population canot buy the production of all long term honest investors who need a much bigger percentage of consumers with solid purchase capacity to buy the world output .

Brahmason

Brahmason@gmail.com