Thousands of refugees from Libya and Tunisia are flooding Italy who respond by encouraging illegal immigration and demanding huge cash aid from EU, because its more lucrative than the ailing tourist industry. Never mind the consequences.
UK government are salivating at the prospect of USD200 per barrel for UK Oil.
Meanwhile in Greece the revolting population continues to demand more cash aid..... it was pointed out the problem is that Greek citizens refuse to pay taxes!
So this begs the question, why were they allowed entry to the EU?
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By Mike Conlon | March 7, 2011
If this is economic recovery, then I want no part of it.
Another week has begun with the US dollar weakening and everything else going higher, as the Fed’s attempts to force-feed “recovery” have accelerated the pace of inflation fears. Oil is trading at 106 and change, and gold is reaching new highs in the 1440s. Turn on the television and all you will see are reporters standing outside of gas stations, complaining about the high price of gas.
Almost every major economy is raising interest rates (except for New Zealand who will be cutting rates after having had to deal with not one but two earthquakes in the last 6 months), yet Bernanke and the Fed keep turning that blind eye. Why are they so afraid of higher, normalized interest rates?
The reason is this: housing prices. Somewhere along the way in the madness of the housing bubble, consumers became convinced that the best time to buy a home was in a low-interest rate environment. With low rates, prices move higher. So what happens when rates move higher? You guessed it, prices go lower. However, once you buy a home, the price you pay is fixed and final. Interest rates on the other hand, can be variable and consumers have the option to re-fi to get the best rate.
So what has been happening to housing prices since we’ve had this zero interest rate policy (ZIRP)? They’ve gone lower. So Bernanke decided that since he can’t have rates lower than zero, both QE1 and QE2 would help him push rates to below zero, which is where the REAL rate of interest is today. And still, housing prices have declined.
After seeing that this hasn’t worked and realizing that banks, the government, and the Fed itself are all on the hook if housing prices decline further due to the Fed having to raise interest rates, Bernanke decide to turn a blind eye to the inflation around him, and is attempting to scare people into buying homes for fear that prices are going higher through general inflation.
But only a complete lunatic would be looking to buy a house today, with the price of food and energy rising, which is essentially going to take money out of a consumer’s pocket and prevent them from spending it elsewhere. Businesses will lose revenue and have to lay people off, contributing to further unemployment.
This doesn’t sound like a recipe for success to me. The Dollar is tanking, Libyan unrest is picking up driving oil higher (though don’t think for a second that the conspiracy theorists don’t see this as a major cover-up), and people are beginning to panic. This isn’t going to end well.
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It never was going to end well.
Does this sound familiar to European Expats?
Singapore property buyers beware.
