Defending Capitalism from Old Europe's G20 Guillotine - by Nadeem Walayat
"Germany and especially France have fought long and hard against the anglo-saxon model of unfettered and weakly regulated free market capitalism for the past 30 years, and as a consequence of which have seen their economic power diminish in relative terms as the anglo-saxon capitalism model was adopted world-wide following the collapse of the Soviet Union.
However the United States and Britain have illustrated by their actions rather than their words that they intend on preserving casino capitalism in more or less the form that led to the financial crisis in the first place, and since the United States still carries much of the clout as the worlds financial and economic super power, coupled with its trustworthy air-craft carrier Britannia off the shores of Europe, then the U.S. and Britain are expected to get their way during the G20 meeting, despite the rhetoric from old Europe as the fact of the matter is that much of what will be discussed at the summit has already been agreed upon before hand for there was NO ROOM for FAILURE or significant DISAGREEMENT's, as the consequences of FAILURE would be to wake up to another day of potential FINANCIAL ARMAGEDDON when markets would again panic in reaction to summit failure. Therefore much noise from the French and German leaders, but they still signed on the dotted line.
The problem at the root of the crisis is I warned of a year ago is the off the balance sheet derivatives exposure that is many orders of magnitude greater than the stimulus packages of approx $3 trillion, were talking about sums north of $600 trillions. Therefore as warned off in April 2008 when the Bank of England made the first loan of £50 billion to the bankrupt banks, that it was a drop in the ocean and I just cannot see how even $3 trillion, or $5 trillion or even fiat currencies busting amount of $10 trillion can counter a $600 trillion imploding derivatives market. This to me, means very high inflation, as the only option the governments have to spend money the governments do not have, and therefore increased debt, print money to spend and monetize government debt and finance bailouts, will it result in hyperinflation ?, well we don't need to be at Zimbabwe style hyper inflation to see our savings wiped out by inflation. An annualized inflation rate north of 10% AFTER the current deflation will be bad enough to discourage savings and holding of fiat currencies, which supports my mega-trends outlook to take the current deflation as an opportunity to invest in commodities at bargain basement levels as well as prepare for much higher interest rates and hence lower bond prices"
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