I have learned that watching what people do is much more important than listening to what they say. Back in 2008, financial authorities in the United States insisted that everything was gone to be okay. But we all know now that was a lie. Well, right now financial authorities in the U.S. and Europe are once again trying to assure us that everything is under control and that we are not headed for a global recession. Unfortunately, their actions are telling a very different story. All over the world, bailouts are flying around as if the end of the world is coming. Governments and central banks are stepping in with gigantic mountains of money to prop up bond yields, major banks and even stock markets. What we have seen over the past few months has been absolutely unprecedented. So why are such desperate measures being taken if everything is going to be just fine? Unfortunately, debt problems are never solved with more debt, so these bailouts really aren't solving anything. We are still headed for a massive amount of financial pain. It would just be nice if the authorities would quit lying to us and would actually admit how bad things really are.
Today it was announced that the European Central Bank has agreed to make $638 billion in 3 year loans to 523 different banks. Never before (not even during the last financial crisis) has the ECB loaned so much cheap money to European banks at one time.
This move by the ECB made headlines all over the globe. CNBC is calling them "ultra-long and ultra-cheap loans".
European authorities are hoping that European banks will use this money to make loans to businesses and to buy up the debt of troubled European governments.... AGAIN! Read the full story at source
If the global financial system was in good shape, all of these bailouts would not be happening. These desperate measures are a clear sign that something is up. The financial authorities of the world are doing their best to keep the system together, but in the end they are not going to be able to prevent the collapse that is coming. The world is heading for incredibly hard economic times.
So is the end of the world coming? No. But to many in the financial world it may feel like it. The coming global recession is not going to be fun. We have now reached a point where it has become "normal" for governments and central banks to throw money at one financial crisis after another.
At one time, bailouts were so unusual that they provoked a great deal of outrage. Today, bailouts have become standard operating procedure. The bailouts will continue to get larger and larger, and authorities all over the globe will do their very best to keep the house of cards from coming crashing down.
Unfortunately, they will not be successful.