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Monday, April 9, 2012

The suffocation of unsustainable global debt – Total global debt is now over $190 trillion and more than three times global GDP. Contagion with European Union.

Easy fiat money produced mountains of unsustainable debt at all levels - government, business and consumer. The world is in for painful deleveraging and prolonged economic misery. The central banksters are powerless to stop it.
Countries like Spain have an astounding 23.6 percent headline unemployment rate. The young in Spain are facing an unemployment rate above 50 percent which is stunning for a developed market economy. These kinds of structural issues cannot be peppered over with more debt. The issues facing the global markets are based on peak debt situations. Central banks like the Fed and the ECB are dealing with the crisis as if it were based on short-term liquidity issues. Like someone asking you for rent in the middle of the month when your paycheck will not come in until the end of the month. In this case, you know the income is forthcoming and will cover the requested payment. That is not what is impacting the global economy today. Peak debt has been reached in many cases and when it hits markets are forced to deleverage and price discovery unfortunately is a necessary and painful process. To think that the European issues will stay isolated is unrealistic.
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