Brazil announced this week that they will be implementing a 2% tax on fixed-income and equity purchases by foreign investors in an attempt to curb the appreciation of the Brazilian real, which is up 32% this year against the U.S. dollar. Brazil is trying to deter foreign investors from investing into their country, in an attempt to artificially prop up the U.S. dollar.

It is completely absurd for Brazil to care so much about having the ability to export their products to Americans who can’t afford them. They should be allowing the real to appreciate in value so that their citizens can enjoy an increased standard of living. The only people who will benefit from Brazil’s actions are those who own exporting companies in Brazil. The overwhelming majority of the people in Brazil will suffer, as the country will likely continue adding to their $231.5 billion in U.S. dollar reserves that will eventually be completely worthless.

Federal Reserve Chairman Ben Bernanke said this week that the U.S. should cut down on its budget deficit in order to reduce global imbalances. This is hypocritical, as it’s Bernanke who is allowing the U.S. to have such huge budget deficits by monetizing our government’s spending. Bernanke is the only person with the power to put a stop to the madness, but in his campaign to get reappointed, he most likely promised everybody in Washington that he would continue monetizing their spending in the future.

Bernanke continues to claim that the recession is over and the financial crisis is behind us, but the global imbalances he admits we still need to correct are getting more out of control than ever. Consumer spending now accounts for 71% of the U.S. GDP, well above the long-term average of 65%. If global imbalances were to correct, we would need the consumer spending portion of GDP to overcorrect down to below 60% for an extended period of time. This would certainly put the U.S. in a very deep recession, but only then would our economy have a real chance of truly becoming healthy.

After the U.S. financial markets collapsed in late-2008/early-2009, we saw the U.S. personal savings rate triple to a high in May of 6.2%. This was a step in the right direction but it didn’t last for long. The savings rate has since then fallen three months in a row back down to 3%. Any progress that was made has been lost. The imbalances are growing to new extremes that will eventually result in complete economic chaos and hyperinflation. Our only chance to rein in the imbalances before they do irreparable harm is to follow in the footsteps of the Reserve Bank of Australia and dramatically raise interest rates immediately.

Many so-called financial experts and stock analysts on CNBC have been proclaiming the rapidly declining U.S. dollar to be good for the U.S. economy, because it will boost our exports. We need to increase exports, but our country doesn’t produce enough products to export. In order to increase the manufacturing of products to export, we need to increase savings. Without savings, it is impossible to build new factories. A falling U.S. dollar discourages Americans from saving and destroys the value of savings.

A declining U.S. dollar is bad for all Americans. Oil prices are now back above $80 per barrel; gas prices will inevitably rise back above $4 per gallon. Last time gas rose above $4 per gallon, Congress held countless hearings trying to figure out why oil prices were rising, when in fact they were the ones causing it. Congress’s deficit spending and Bernanke’s willingness to monetize it creates the inflation that drives oil prices up. Let’s see if they figure it out this time, or if they once again place the blame on speculators and the free-market.
 
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A desperate attempt at reassurance

By Nick Beams, WSWS

4 July 2009

Fareed Zakaria, editor of Newsweek International, has written an essay entitled “The Capitalist Manifesto: Greed is Good (To a point)”, which is intended to express relief that the panic engendered by the global financial crisis is easing, and to offer reassurances that, for all its faults, capitalism is still “the most productive economic engine we have yet invented.”

The problem with this claim that all is, again, for the best in the best of all possible worlds, is that far from the crisis having ended, it is only just beginning to unfold.

Zakaria begins by drawing comfort from the fact that the financial crises of the past 20 years were all overcome, leading to further economic growth. The stock market crash of 1987 defied predictions of a return to the Great Depression and “turned out to be a blip on the way to an even bigger, longer boom.” The 1997 Asian financial crisis did not lead to a global slump. Instead, the Asian economies “rebounded within two years”. The collapse of Long Term Capital Management in 1998, described by then US Treasury secretary Robert Rubin as “the worst financial crisis in 50 years”, did not result in the end of hedge funds. Rather they have “massively expanded” since then.

How were these earlier crises overcome? As Zakaria notes, US Federal Reserve chairman Alan Greenspan always advanced the same solution: cut interest rates and provide easy money, creating a series of asset bubbles.

When the subprime crisis developed in 2007, Fed chairman Ben Bernanke followed the same procedure. However, on this occasion, interest rate cuts failed to alleviate the crisis. The Fed initiated its injections of liquidity in August 2007, but the situation only worsened. The investment bank Bear Stearns went under in March 2008, followed by the collapse of Lehman Brothers in September and, by the end of 2008, notwithstanding massive injections of liquidity, all five Wall Street investment banks had either collapsed or been forced to restructure. The global financial system was on the brink of a meltdown.

This alone demonstrates that, far from the happy scenario painted by Zakaria—this crisis is just like the others since 1987—the collapse that began in 2007 marked a qualitative turn in an ongoing process.

Zakaria is forced to acknowledge that the global financial system has been “crashing more frequently over the past 30 years than in any comparable period in history”. But he insists that the problem is not with the profit system itself. “What we are experiencing is not a crisis of capitalism. It is a crisis of finance, of democracy, of globalization and ultimately of ethics.”

In the first place, the separation of capitalism from each of these phenomena is absurd—as if the capitalist mode of production could somehow be lifted out of the historical situation in which it is situated; as if it does not shape the socio-political environment in which it operates, including the prevailing ethics.

Let us examine each of Zakaria’s explanations of the crisis in turn. He insists, along with many others, that the fault lies with the operations of the financial system.

“Finance screwed up, or to be more precise, financiers did. In June 2007, when the financial crisis began, Coca-Cola, PepsiCo, IBM, Nike, Wal-Mart and Microsoft were all running their companies with strong balance sheets and sensible business models. Major American corporations were highly profitable, and they were spending prudently, holding on to cash to build a cushion for a downturn.”

The separation of finance (the bad side) from the rest of the capitalist economy (the good side) has a long history. It was taken up by Marx in his withering critique of the French petty-bourgeois anarchist Proudhon more than 150 years ago. As Marx explained then, the “bad” side cannot be separated from the “good”, especially as it turns out that, more often than not, the “bad” side is the driving force of historical development. And that is the case in the current situation. The development of American capitalism—and the global economy—has been grounded on the vast changes associated with the processes of financialisation that began in the 1980s.

A few figures illustrate what has occurred. In 1980, financial firms accounted for about 5 percent of total corporate profits. By 2006 this had risen to around 40 percent. On a global scale, financial assets in 1980 were roughly equal in value to world gross domestic product. Twenty-five years later they constituted 350 percent of global GDP. At the heart of this transformation has been the accumulation of finance sector debt in the US economy. It rose from 63.8 percent of GDP in 1997 to 113.8 percent in 2007—a result of the banks and financial corporations plunging ever deeper into debt in order to fund their debt-based financial operations.

The rise and rise of financialisation was not simply a policy choice, but a response to a crisis in the capitalist accumulation process that had developed in the late 1960s and 1970s. Faced with a downturn in the rate of profit, American capitalism undertook a major restructuring program from the end of the 1970s onwards. This involved the destruction of large swathes of manufacturing industry, a concerted assault on the social position of the working class, the development of off-shoring and outsourcing to take advantage of cheaper sources of labour, and a turn to financial manipulation, such as hostile takeovers and mergers, as the source of profit.

New mode of accumulation

The transformation of the American economy in the 1980s saw the emergence of a new mode of accumulation, in which profits were made through the appropriation, by financial methods, of already created wealth. Historically, wealth had been accumulated in the US economy through investment, trade and manufacturing. Now the driving force of accumulation became rising asset prices. This has determined the shape of the US economy, and the accumulation of profit by all sections of capital—even for those not immediately connected to finance.

Back in the 1950s and 1960s, manufacturing firms based on assembly-line production were not the largest component of the American economy. But the vast increases in profitability that these methods made possible created the conditions where all sectors of capital could expand. This was a society dominated by what sociologists have called a “Fordist regime” in which, as former GM CEO Charles Wilson famously noted, “what was good for the country was good for General Motors and vice versa.”

In the past 25 years, the fundamental role once played by assembly-line manufacturing in the American economy has been assumed by finance capital.

No matter how sound or well-run an individual capitalist firm may be, the accumulation of profit is a social process. Each firm depends for its expansion on the growth of the economy as a whole. And in the US, finance capital has been the driving force.

Any attempt to separate the “bad” side from the “good” collapses upon even a cursory review. Zakaria points to various corporations as part of the “good” side of American capital. One of them is Microsoft. But one of the chief sources of Microsoft’s profits has been the sales of the computers and software programs that have powered the finance sector. Consider Nike and Wal-Mart. They have profited by exploiting cheap labour in China and other countries, under conditions of globalised production. But these operations, involving complex financial relationships, would have been impossible without the growth of financial derivates. At the same time, Nike and Wal-Mart could not have remained profitable without the rise in US consumer debt—much of it from housing finance—that has sustained American consumption spending in the face of stagnant or declining real incomes over the past quarter century.

The essential significance of the global financial crisis is that it marks the breakdown of the mode of accumulation that has prevailed for the past 25 years.

Financial assets derive their value, in the final analysis, from their claim upon the production of real wealth. Shares are an obvious example. The share is a claim to a portion of a stream of income generated by a particular company. But this share can be bought and sold, and its value may increase in the market in excess of the value of the underlying asset.

The fact that financial assets have expanded almost four-fold in relation to global production over the past two and a half decades means that all their claims to real wealth cannot be met. This disparity is expressed in the emergence of so-called “toxic assets” on the books of the banks and finance houses—claims to income and wealth that are essentially worthless.

In other words, the crisis is not one of liquidity, i.e., lack of sufficient funds to ensure the functioning of an otherwise healthy system, but of insolvency. Its dimensions are indicated by the fact that to restore the parity that existed in 1980 between the value of financial assets and global GDP would mean wiping out financial asset values equivalent to twice global GDP.

These figures make clear the meaning of the bailout and stimulus packages launched by governments around the world. They have nothing to do with maintaining the jobs and living standards of the working class. Rather, they are aimed at transferring as much as possible of the massive debts and “toxic assets” amassed by the financial corporations and banks to the state.

It is precisely this state rescue operation that has boosted stock markets over the past three months and enabled Zakaria to breathe a sigh of relief. As a recent article in the Wall Street Journal noted, one of the main reasons for the more than 30 percent rebound is “disarmingly simple”. Financial markets are “awash in government cash” as a result of the biggest combined financial stimulus the world has seen in modern times.

The US government has already pledged $12.7 trillion in support of the financial system, almost equivalent to America’s gross domestic product. Since the financial crisis intensified in September 2008, governments worldwide have committed $18 trillion in public funds, equivalent to almost 30 percent of world GDP, to recapitalising the banks. This has led to a blowout in their fiscal position.

In Britain, government debt is expected to soon reach 100 percent of GDP while Japan’s government debt is headed for 200 percent by 2011 and government debt in the US is expected to reach 100 percent of GDP by the same time. According to IMF economists, by 2014 public debt to GDP ratios in the G-20 economies, comprising some 85 percent of the global economy, will have increased by 36 percentage points of GDP compared to the levels at the end of 2007.

A new political regime

Government finance, however, cannot go on indefinitely. The debts incurred by the state to finance the banks will be paid through slashing government spending and social services and forcibly impoverishing the working class. The scale of this assault on social conditions and living standards will be directly proportionate to the size of the sums of money involved. According to one estimate in Britain, consumption there will have to be reduced by at least 20 percent from its level in 2006-2007 to make even a start on balancing the government’s books.

Zakaria points to the “terrifying” growth of government debt in America, especially when entitlements and pension commitments are included, and remarks that “no-one has tried seriously to close the gap, which can be done only by (1) raising taxes or (2) cutting expenditures.”

“This is the disease of modern democracy: the system cannot impose any short-term pain for long-term gain.” The political implications are clear: it is impossible to impose the massive spending cuts and rises in revenue needed to wipe off government debt within the present political order. Restructuring the US and other major capitalist economies requires a new, far more repressive regime.

Zakaria goes to extraordinary lengths in his attempt to claim that capitalism is not the cause of the crisis. The real problem, he insists, is not failure, but too much success. The world has been moving to “an extraordinary degree of political stability”; there is no major military competition among the great powers; political violence is on the decline. Given the wars being conducted by the US in Iraq, Pakistan and Afghanistan, such an assertion can only be described as absurd. As for the subsidence of great power rivalry, one need only point to the constant and growing concern in US policy-making circles about the rise of China.

However Zakaria is not going to let facts get in the way of the story he wants to tell. Political stability, he claims, has been accompanied by a reduction in inflation, economic growth and the establishment of a global economic system. It is these “good times” that made people complacent, and, as the cost of capital sank, more foolish. “The world economy had become the equivalent of a race car—faster and more complex than any vehicle anyone had ever seen. But it turned out that no one had driven a car like this before, and no one really knew how. So it crashed.”

What of the future? “The real problem,” he continues, “is that we’re still driving this car. The global economy remains highly complex, interconnected and imbalanced. The Chinese still pile up their surpluses and need to put them somewhere. Washington and Beijing will have to work hard to slowly stabilize their mutual dependence so that the system is not being set up for another crash.”

In other words, while the crisis is over, all the conditions that produced it are still present, and nowhere nearer to being resolved.

Lenin once remarked that the power of Marxism is that it is true. Every so often, even conscious opponents of Marxism are forced, by the very logic of objective facts, to point to processes that form the centre of Marxist analysis. This is the case here.

According to Zakaria: “More broadly, the fundamental crisis we face is of globalization itself. We have globalized the economies of nations. Trade, travel and tourism are bringing people together. Technology has created worldwide supply chains, companies and customers. But our politics remains resolutely national. This tension is at the heart of the many crashes of this era—a mismatch between interconnected economies that are producing global problems but no matching political process that can effect global solutions.”

The Marxist movement has long identified as one of the central contradictions of world capitalism that between the global development of the productive forces on the one hand, and the nation state system on which the legal and political superstructure is based, on the other. It is this contradiction that renders socialism, based on the development of an internationally planned economy, an historic necessity. Just as the feudal political order had to be overthrown to make possible the growth of the productive forces under capitalism, so today the globalisation of production has made the capitalist nation-state system as reactionary and backward as the feudal principalities and kingdoms two and three centuries ago.

This contradiction erupted in the first decade of the last century in the form of World War I. It has now emerged once again, at an even higher level. It can only be resolved by the working class taking political power on a global scale; otherwise mankind faces being plunged into wars and economic crises potentially more devastating than those that characterised the first five decades of the twentieth century.

Zakaria calls for better international coordination. But the objective logic of the capitalist system itself drives events in the opposite direction. Capitalist production is carried out on a global scale. Its purpose is not to meet human needs, but to accumulate private profit. When accumulation is expanding, the different sections of capital, as Marx noted, operate as a kind of fraternity, dividing up the spoils among themselves. When the system breaks down and it becomes no longer a question of sharing profits but of trying to avoid losses, a violent struggle breaks out. Such a breakdown no longer simply involves intensified competitive struggles in the market, as it did in the nineteenth century, but, with the vast growth of capitalist industry and finance, economic crises inevitably bring the direct involvement of the capitalist state.

This is what occurred last year. After the collapse of Lehman Brothers in September, with the banking and financial system threatened with meltdown, every government around the world responded, not by working for globally coordinated action, but to protect its “own” banking system, leading to immediate conflicts. In the months since, the differences have only widened. The Germans and French are hostile to the American government’s bailouts because they fear, rightly, that these will enable US banks to retain their dominant global position. The American government, for its part, opposes calls for greater regulation, because they are directed at US finance. The British government, meanwhile, does not want to introduce tougher regulations fearing that they would endanger London’s position, described by Financial Times commentator John Plender as “the adventure playground of the global financial system.” This brings opposition from the German government, which harboured hopes that the crisis would offer more opportunities for Frankfurt. The various industry interventions, likewise, have sharpened national rivalries. The German government’s bailout of Opel, for example, endangers operations in Belgium, even raising questions as to whether rules governing the operation of the single European market might have been breached.

As for co-ordination between the US and China to resolve international monetary imbalances, the Chinese central bank has twice called, within the past three months, for the international financial system to be restructured and the dollar replaced as the world reserve currency. Were that to take place, it would cause a rapid decline in the global position of American capitalism, which has enjoyed enormous advantages from the dollar’s role as world money.

Failing international co-operation, Zakaria warns, there will be “more crashes, and eventually there may be a retreat from globalization toward the safety—and slow growth—of protected national economies.” The development of just such a situation in the 1930s led directly to World War II. It would have even more devastating consequences today.

In the end, Zakaria concludes that a “moral crisis” may “lie at the heart of our problems”. Most of what happened over the past decade was legal but “very few people acted responsibly.” However, he continues, none of this happened because “business people have suddenly become more immoral. It is part of the opening up and growing competitiveness of the business world.”

Zakaria does not choose to develop this point, because to do so would make it all too clear that this “moral crisis” is itself an expression of the crisis of the capitalist economy.

The very processes associated with the rise of finance capital have made the dividing line between legality and illegality, not to speak of morality and immorality, ever-more blurred.

In a world of multi-million and multi-billion dollar financial transactions involving the use of complex derivatives, where the value of a financial asset can be altered by changing the value of one or other of the variables in the mathematical model on which it is based; where the more complex and obscure a financial derivative is, the greater the profit going to the seller; where vast fortunes can be made from financial gambling, and where a firm that does not employ the latest dubious methods to boost the bottom line faces being gobbled up by an asset stripper financed with junk bonds, what price ethics?

Moreover, the growth of a financial oligarchy, which dominates and controls the entire political system, means that any rational reform of the present order is impossible, even if a solution were available.

The productive forces of the global economy—the complex and powerful racing car, to use Zakaria’s analogy—created by the combined intellectual and physical labour of the world’s working class, have developed on an immense scale. But they can no longer be left in the hands of a ruling elite that has lost the historical, political and moral right to remain at the wheel. That is why a socialist revolution, and the transfer of political power to the hands of the working class, has become a historical necessity.

The National Inflation Association is pleased to announce that its first ever documentary, Hyperinflation Nation, surpassed 25,000 views on YouTube within 36 hours of its release and is currently the third top news video of the day.

Hyperinflation Nation features Peter Schiff, Ron Paul, Jim Rogers, Tom Woods and Gerald Celente; and is dedicated to preparing Americans for hyperinflation. The documentary shows how Federal Reserve Chairman Ben Bernanke was wrong about the Real Estate and automobile markets; and how the Federal Reserve’s monetary policy could lead to the destruction of the U.S. dollar.

Hyperinflation Nation goes into detail about the gold, silver and agriculture markets, and explains how they could become the new boom industries of the next decade.

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PART 1

PART 2

PART 3

“Crony capitalism” is a term often applied to foreign nations where government interference circumvents market forces. The practice is widely associated with tin-pot dictators and second-rate economies. In such a system, support for the ruling regime is the best and only path to economic success. Who you know supersedes what you know, and favoritism trumps the rule of law. Unfortunately, this week’s events demonstrate that the phrase now more aptly describes our own country.

On Monday, the Supreme Court refused to hear an appeal from Chrysler’s secured creditors based on the government’s argument that the needs of other stakeholders outweighed those of a few creditors. In this case, the Administration concluded the interests of the United Auto Workers outweighed the interests of the Indiana teachers and firemen whose pension fund sued to block the restructuring. Given the enormous financial support that the UAW poured into the Obama campaign, such partiality is hardly surprising.

When making their investment in Chrysler just a few months ago, the Indiana pension fund agreed to commit capital because of the specific assurances received from the company. In allowing this sham bankruptcy to be crammed through the courts, we have shredded the vital principal of the rule of law, and have become a nation of men, rather than one of laws.

The risk that legal contracts can now be arbitrarily set aside will make investors think twice before committing capital to distressed corporations. Oftentimes enforcing contracts imposes hardships. That’s precisely why we have contracts.

Without absolute faith that deals will be honored, it will be extremely difficult for U.S. companies to borrow money. This will be particularly true for those companies already struggling with too much debt. Without the ability to issue secured debt, how will such companies access the necessary capital to turn around? If secured creditors cannot count on the courts to enforce their claims, they will not put their capital at risk. What good is being a secured creditor if courts can allow the assets securing your claim to be sold for the benefit of others?

Another problem with the government imposing losses on secured Chrysler creditors is that in its bailouts of financial companies (like Citigroup and AIG), the government took steps to specifically pay back creditors, even when those creditors should have been wiped out. This inconsistency and lack of equal protection further undermines faith in our economy.

The message here is clear: loan money to financial entities with friends in Washington and no matter how risky the loan, taxpayers will bail you out if it goes bad. However, loan money to a unionized manufacturer, even if prudently secured by real assets, and you have as much chance of getting your money back as finding Jimmy Hoffa’s body.

As if this wasn’t bad enough, testimony on Thursday from former Bank of America CEO Ken Lewis revealed a concerted effort on the part of Fed Chairman Ben Bernanke and former Treasury Secretary Henry Paulson to pressure Lewis into hiding relevant financial information regarding Merrill Lynch losses from B of A shareholders. Recently released e-mails make it clear that the government threatened to remove corporate leaders if they failed to go through with the merger and keep quiet about the losses.

Again, the justification for the interference seemed to be the “greater economic good” the merger would serve. The right of B of A shareholders to be informed that their company was about to buy a financial black hole was clearly considered to be an acceptable sacrifice.

More importantly, the fact that two of the highest-ranking government officials can conspire to violate both securities laws and private property rights is abhorrent to everything America supposedly stands for. If they get away with it, which I believe they will, the precedent and the message will be chilling.

As a broker who specializes in foreign investments, I am always wary of political risk. I must consider how the threat of arbitrary government action could undermine the value of my investments. However, recent events show that political risk is now greater here than abroad, and U.S. assets, which have historically traded at premium valuations based on faith in our legal system, will soon trade at discounts to reflect this new threat. The fear of having contracts abrogated or property rights violated when doing so serves some contrived greater good will substantially raise our cost of capital and further reduce our competitiveness.

June 13, 2009

Peter Schiff is president of Euro Pacific Capital and author of The Little Book of Bull Moves in Bear Markets and Crash Proof: How to Profit from the Coming Economic Collapse.

Retail sales fell in March as soaring job losses and tighter credit conditions forced consumers to cut back sharply on discretionary spending. Nearly every sector saw declines including electronics, restaurants, furniture, sporting goods and building materials. Auto sales continued their historic nosedive despite aggressive promotions on new vehicles and $13 billion of aid from the federal government. The crash in housing, which began in July 2006, accelerated on the downside in March, falling 19 percent year-over-year, signaling more pain ahead. Mortgage defaults are rising and foreclosures in 2009 are estimated to be in the 2.1 million range, an uptick of 400,000 from 2008. Consumer spending is down, housing is in a shambles, and industrial output dropped at an annual rate of 20 percent, the largest quarterly decrease since VE Day. The systemwide contraction continues unabated with with no sign of letting up.

Conditions in the broader economy are now vastly different than those on Wall Street, where the S&P 500 and the Dow Jones Industrials have rallied for 5 weeks straight regaining more than 25 percent of earlier losses. Fed chief Ben Bernanke’s $13 trillion in monetary stimulus has triggered a rebound in the stock market while Main Street continues to languish on life-support waiting for Obama’s $787 billion fiscal stimulus to kick in and compensate for falling demand and rising unemployment. The rally on Wall Street indicates that Bernanke’s flood of liquidity is creating a bubble in stocks since present values do not reflect underlying conditions in the economy. The fundamentals haven’t been this bad since the 1930s.

The financial media is abuzz with talk of a recovery as equities inch their way higher every week. CNBC’s Jim Cramer, the hyperventilating ringleader of “Fast Money”, announced last week, “I am pronouncing the depression is over.” Cramer and his clatter of media cheerleaders ignore the fact that every sector of the financial system is now propped up with Fed loans and T-Bills without which the fictive free market would collapse in a heap. For 19 months, Bernanke has kept a steady stream of liquidity flowing from the vault at the US Treasury to the NYSE in downtown Manhattan. The Fed has recapitalized financial institutions via its low interest rates, its multi-trillion dollar lending facilities, and its direct purchase of US sovereign debt and Fannie Mae mortgage-backed securities. (Monetization) The Fed’s balance sheet has become a dumping ground for all manner of toxic waste and putrid debt-instruments for which there is no active market. When foreign central banks and investors realize that US currency is backed by dodgy subprime collateral; there will be a run on the dollar followed by a stampede out of US equities. Even so, Bernanke assures his critics that “the foundations of our economy are strong”.

As for the recovery, market analyst Edward Harrison sums it up like this:

“This is a fake recovery because the underlying systemic issues in the financial sector are being papered over through various mechanisms designed to surreptitiously recapitalize banks while monetary and fiscal stimulus induces a rebound before many banks’ inherent insolvency becomes a problem. This means the banking system will remain weak even after recovery takes hold. The likely result of the weak system will be a relapse into a depression-like circumstances once the temporary salve of stimulus has worn off. Note that this does not preclude stocks from large rallies or a new bull market from forming because as unsustainable as the recovery may be, it will be a recovery nonetheless.” (Edward Harrison, “The Fake Recovery”, Credit Writedowns).

Read the full article on Global Research.