The incredible incompetence of the West

LagardeLast week I was speaking to small-medium sized printers. Clients are not paying bills for their past orders, the cash-flow has stopped and new orders have been reduced by up to 75%. Given the lack of cash-flow and that the money for the rest of the 25% will probably not be coming anytime soon, printers have started taking loans from banks to pay for salaries and wages.

So, basically, small businesses are strapped of cash and are expected to make sacrifices while banks keep making money on interest rates, fees and commission, not to mention the profits they are making from the orgy of the bond-market and the liquidity measures taken by the ECB.

What does the general public get in return? It gets austerity and a social welfare pay-cheque.  Meanwhile, we are lead to believe that eventually, when the pandemic is over, everything will be ok, and that all the liquidity spurred by debt will somehow stick.

So, small business get crushed, the general public gets austerity, governments get loaded up on debt, banks keep making profits, the public officers, civil-servants and the central bankers get to keep their pay-cheques and the oligarchical corporations get to take-over all the scraps that fall into the dead ground. Sounds like corporate-fascism to me. But let’s not call it that. Let’s not be hyperbolic. Let’s say, this is a temporary economic downturn which is being addressed by our heroic central bankers with their excessive liquidity measures.

Bullshit.

If you would have gone back five years ago and you would have told people that central banks would have been printing all this money, they would have told you that you were insane. Now, as we are living the insanity in real-time, we are beginning to slowly realise that our leaders are incredibly incompetent and totally reckless.

Yes, as if we don’t know the obvious, already – that whenever the economic problems of a country were solved by printing excessive amounts of new money, the economy and the monetary-system crashed.  No, I am not saying the Dollar will crash – it doesn’t seem like it and no one wants Russia or China to be the new global currency leaders. In fact the Dollar may go as well much higher and the Euro keeps getting crushed. However, even the fact that we are contemplating and discussing these issues is a clear indication of the gravity of the situation we are in.

What I’m mostly afraid of is that currently, no Western leader has the proverbial balls to do what is required: stop the bond-buying orgy, restructure the debt and the banking system, introduce debt-jubilees and bring real relief to small-businesses and the general public. So, let’s keep hoping that somehow, things will be better instead. Until then, dangerous political forces may swoop in and do unpredictable stuff which may be even scarier.

 

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