Economic outlook very uncertain
When analysts mull over the worldwide sovereign debt crisis, which followed the massive intervention by governments during the banking crisis, Britain and Europe are often the focus of attention. But what about the United States?
It’s a moot point whether the UK economy is worse than America’s. The US is heading into a second bout of the “Great Recession,” as the IMF has called it. Money supply is melting away at 10pc a year. The Fed is prevented from buying up bonds to increase liquidity by the regional Feds.
The US outlook is very grim right now, with sovereign debt reaching 100pc of GDP. That’s when deflationary spirals set in, Japanese-style.
Britain’s economy is bad enough, but with public debt at around 70pc of GDP, the situation is not so acute as in the States … yet.
The big problem for everyone is the eurozone, which is perpetually on the edge of disaster. If one or two countries implode, the overhang of unpayable debt will bring down the world’s banking system all over again, with governments unable to intervene this time round because of their own sovereign debt crisis.
We’re into 1931 territory here.
