In the spirit of trying to help folks understand what's hitting them; I'll share a metaphor that hit me, today, as I was attempting to respond to yet another bit of absolute nonsense in the mainstream media "financial chatter" pages.
So! The Eurozone leaders have reached an agreement! Hallelujah!! Hot Diggety! Man, now I can get some sleep; Happy Times Are Here Again!
I desperately need to find some more boggles, somewhere; I've gone through my entire supply at this point, the mind can't boggle any more; I've just used them all up. Here was my reply to one of the professional pundits, pontificating about "well, except for a few details" all is now, clearly, perfectly well.
"Nope. Fantasy is just not enough, anymore.
"Let's see if I can put this in terms the "econoastrologers" can actually understand.
"What they've just done is put more gasoline into the Automobile of Europe; which is stalled, engine dead, on the side of the road.
"Thing is; gasoline is not the problem. The problem: the engine has a cracked block; cracked wide open. It's broke- and dead; and all the gasoline in the world, will not fix it.
Folks will hop back in the driver's seat; turn the key a few times- and the engine will not catch. Once again, they'll be out on the road trying to flag down help. But the engine block will remain cracked."
If you're reading all those financial sector headlines, and shaking your head a bit, mumbling to yourself; "but, that really doesn't make sense..." you're entirely correct.
It's the "Real Economy" that is truly broken. That's the phrase the econo-astrologers themselves use for it. Jobs? Work? Value creation? We ain't got none; can't see any in the pipeline, either; not here, not in Europe, not in China.
Eventually, the Real Economy has to pay ALL the bills for the debt; principle, and interest. And nobody has fixed it. The block is cracked; we're going to need a new engine- and nobody currently on the world radar has any clue of where to find one. And just maybe; there isn't one.
Quite possibly, that's why they avoid talking about the Real Economy. They have no idea what to say; and it's too depressing to dwell on. Bad for the markets, dude.
Oh, and incidentally, Big Oil is loudly announcing that they've siphoned another huge block of real money out of the Real Economy; $20 billion in the first quarter, just for Exxon and Shell. That'll help; as that money moves from Joe Lunchbox's savings into the stockholders' portfolios. And; of course, it's not Big Oil's fault; they just can't help it when prices go up.
Now if that doesn't cheer you up! I just don't know what will!!
:-)
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Update; next day; CNN Money headline: European Rescue Sugar Rush Wears Off.
Fancy that. It's dawned on them that "this may not be enough." To succeed, there must be economic "growth" - and there is none, they know. So, are they now addressing the real problem? Don't be silly!
"Prime minister Silvio Berlusconi (Italy) has pledged to enact broad reforms to cut spending and boost economic competitiveness. But analysts say implementing those reforms could be difficult given the current political climate in Italy."
In our automotive metaphor, he's saying "We're going to install a new high efficiency fuel injector!"
You can put new wax on the car, too- but the cracked block is still not going to work.
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1 comment:
"Big Oil is loudly announcing that they've siphoned another huge block of real money out of the Real Economy"
Oh dear, that's the problem right there. The solution is a little more difficult to find, and more difficult to implement, as the people who make the money have the legislators in their pockets.
Until these enormously huge business are brought back into line, they will continue to drain economies of money. Business cannot be self-regulating; it simply isn't in the interest of business to be so, which is why we must reply on government, but while politicians are bought and sold, there will never be a happy ending.
And on that happy note ...
Cheers,
Lesley.
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