It Appears inflation is finaly starting to kick up in Europe
http://blogs.wsj.com/economics/2011/01/06/euro-zone-inflation-expectations-flashing-yellow/
Don’t worry there is no inflation unless you want to move, heat, cool or eat.
And as usual, the inflation has already been create and is has not been abated much. The effects of inflation are being noticed.
I don’t think the true negative effects of the euro will never be fully revealed. For years even mentioning the appearance of the euro as a cause of the massive price inflation of the Naughties has been a sure way to provoke the unabated fury of various political pundits (including their media shills). While the CPI has always been semicomatose, every housewife going shopping for groceries or trucker filling up his rig would say otherwise. This year price inflation has jumped in alarming fashion: despite hiding behind their usual doctored CPI datas even the most stolid Eurocrats are sweating profundly. The ECB rests on a single promise: to provide price stability. If that fails it has no reason to exist. Prices have never been stable but as long as the rolling was good scepticism could laughed away or safely ignored. Now the blame game is on. The media may present us daily with the usual party line “The euro is the only future” and “No sacrifice is to big to save the EMU” but the reality is different. Countries like Greece and Ireland are being crippled: they have economic depression, but strongly rising prices; they are experiencing price inflation but cannot repay their debts and become more competitive by debasing their own currency; the “austerity” measures dictated by Berlin and Paris are causing civil unrest which in Greece shows no signs of turning into quiet acceptance. Countries like Portugal, Spain and Italy are sweating profundly: prices are rising fast, public debt is rising and there’s no easy way out. In the meantime the Germans are perhaps starting to realize, for the third time in a century, that they may bitten off more than they can chew.
Kakugo,
Can you take a guess how long before the euro is abandoned? Are we talking months, years, decades?
Both George Soros and Gerald Celente have given the EMU (European Monetary Union) a decade at the most. As I’ve already said when these two men agree on any given topic you’d better pay attention. If I had a detailed timeline I’d be on the phone with my bank all day telling them to sell sell or buy buy. All I can say is that both the dollar and the euro are locked in a race for the bottom with both currencies taking their turn at leading. Right now it is the euro’s turn.
The game will be over once the Germans think it’s not worth anymore and the governments of the various EMU members will realize they have too much to lose by keep on playing the game. I have learned long ago that when politicians and bureaucrats keep on repeating one thing and swearing by it they are lying. In the past few months we have been buried under the aforementioned stream of unabated propaganda on the line of “there’s no contingency plan”: it means a contingency plan is being put together. Members of the CSU (Bavarian Christian-Democratic Party) openly said that countries with too much public debt shoud be “let go” from the EMU. Herr Schauble, the German Minister of Finance, is obviously very worried about both the need to bail out more countries and the threat of a growing German debt. He’s a politician, of course, but he’s also a realist. He sees the real numbers, he reads the news, he can do the math. Greece is being kept on life support; Ireland will need more money; Portugal may be the next on the list; Germany is already guaranteeing the huge debts of the Baltic nations, one of which has just joined the EMU. Just this alone would cause anybody to lose his sleep. There are more frightening prospectives: the Greeks aren’t accepting their fate and the French and English riots hint at massive social unrest in case serious budget cuts are implemented. Despite record GDP growth figures German unemployment figures have actually increased in 2010 while car sales are in the gutters. Nobody believes CPI figures anymore and prices are rising, fast. German voters fear prices inflation like the Plague: they have no alternatives right now but they may find one soon enough: this is a perfect breeding ground for populist movements, especially on the Left. Nothing happens too fast in Europe: this may be about to change.
Old loves, they die hard, old lies they die harder.
I’d also say years. The euro experiment is going to die after they inevitably bail out Portugal and Spain.
I do not think that the euro will be abolished so soon. As you all know, politicians do not pay for their mistakes. Furthermore, government`s are not dynamic, their creation endures for a long time.
Inflation will soar this decade. It is true that velocity of money is tremendously slow right now; however demand for consumption will expand as alternatives become poorer.
Look at Zimbabwe and Weimar - both destroyed their currencies in shockingly short order(Austria narrowly escaped this fate, thanks to Mises himself and a prime minister(equivalent?) who actually believed in doing the right thing). Until hyperinflation actually sets in, though, it’s mostly speculation about what could trigger it.
The problem is politicians are running short of scapegoats and people are finally becoming disillusioned with them and their “kick the can” fixes. Mind, they aren’t opening their eyes to reality, they are just realizing that voting right, center or left doesn’t make a iota of difference. As I said this leaves the field wide open to populists of all sorts.
Politics in Europe are even more sanitized than in the US, there’s absolutely nothing comparing to Ron Paul and his followers. Ron Paul provides a “safety valve” for popular malcontent by channeling it into peaceful directions. There are no safety valves in Europe and the meteoric rise of Pim Fortuyin (stopped only by a bullet) clearly shows that when European people are presented with alternatives they will flock to them. We are literally starved for alternatives and this could lead to troubles: disillusion can turn into despair and despair can turn into anger.
Looking at well stocked shops can be decieving: in countries like Finland, Italy and Spain a quarter of the young men and women between 20 and 30 are unemployed. Most of them live courtesy of unemployment benefits, relatives’ generosity or through a string of badly paid temporary jobs. There’s no future for them: even if they finally land a permanent job new retirement requirements will force them to work into their late 60’s or early 70’s. Their parents are often already retired… my grandmother retired from her Post Office job when she was 55 and has being drawing two government pensions ever since (three since my grandfather died).
This is explosive material.
i’m not all that familiar with the European economy, but does anybody know if european bannks are sitting on massive reserves like the US banks are?
No. They are at an all time high but are not as massive as the ones held by US banks.
This paper http://www.univ-orleans.fr/gdre09/articles/Sol%20MurtaFatima.pdf may provide some more material to chew on.
It’s always around. Sometimes, the inflation isn’t immediately noticeable.
Here in America, there are several indicators. Go to some restaurants you often frequent. The classic example that comes to mind immediately are the green peppers at Subway. A couple months ago, they began cutting them much thinner. Same with tomatoes. I noticed the other day that my Chips Ahoy chewy cookies had new inner packaging. Instead of a plastic tray divided in the middle with two rows of cookies, there is a cross-division, cutting the normal two rows into a four-square. The net result is a plastic void in the center of the bag, where once there sat 4-6 more cookies. So judging by the package, the price of my cookies is the same, but once it is seen that I am poorer by several cookies, the rise in price is obvious.
Had I the time, I’d track these changes on a Wiki page or something.