Dainris An old paper prepared by Boston Consulting Group back inwarning that when all other avenues for resolving or rather, just kicking the can down the road the US-European debt crisis have been exhausted austerity, pump priming for growth, debt restructuring, ZIRP, QE, inflationauthorities shall have no choice but to resort to the age-old solution: The day after will not look pretty. I wish there was. Sort by Relevance Newest Oldest. First, the preamble from the old ZH post: How many people are busy and remain mentally healthyand contribute to wealth generation, vs the rest, is the key issue.

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Malabei Austerity — essentially saving and paying back — is probably a recipe for a long, deep recession and social unrest Higher growth is unachievable because of unfavorable demographic change and an inherent lack of competitiveness in some countries Debt restructuring is out of reach because the banking sectors are not strong enough to backk losses Financial repression holding interest rates below nominal GDP growth for many years would be difficult to implement in a low-growth and low-inflation environment Inflation will be the preferred option — in spite of the potential for social unrest and the difficult consequences for middle-class savers should it really take hold.

Fiscal paradises have to be outlawed. Public sector, money creation, and the trade flows. Only long bbcg investments bwck be financed with debt, and this distinction has to be enforced diligently. About 11 million US households suffer from negative equity their mortgage outstanding is higher than the value of their home. The Boston Consulting Group In putting an end to muddling through, the government might also embark on a major restructuring of the economy:.

We will surely make new mistakes, but hopefully, we shall learn from the past ones. Credit levels should not grow substantially never again. Economic temperature will be below freezing level for a time. To follow this path, they would need to convince themselves that the overall benefit of an economic restart outweighed the risk of moral hazard in some areas. Since the publication of Stop Kicking The Can Down The Road, a number of readers have asked us what would happen if governments persisted in playing for time.

One thing is certain: A correlation does not mean causality, but it is a sobering picture should Ben Bernanke and his team fail to reflate the economy. This site uses cookies. They excel at that. More than three years ago, the Boston Consulting Group came out with a first class report that used the following words as a subtitle: By continuing to use this website, you agree to their use. But specific relevant functions have to be effectively spinned-off the central government.

However, boosting inflation has not worked so far because of the pressure to deleverage and because of the low demand for new credit. As Warren Buffet explicitly admits, he does not get taxed enough. I wish there was. Good luck, politicians and holders of financial assets, you will need it because after Denial comes Anger, and only long after does Acceptance finally arrive. When you generate wealth you pay for it regardless of the fact you sold or notwith some flexibility to protect individual from overestimating the generation of paper wealth.

No fresh debt to pay for garden variety subsidies, or run of the mill expenses. As in Europe, this would also require the following initiatives. We need those great companies, but we have to induce them to split up into smaller units.

Back to Mesopotamia Global Geopolitics Which unfortunately means mwsopotamia there is an equity shortfall that will have to be funded with incremental cash which will have to come from somewhere.

This might then allow a rebalancing of trade flows. Notify me of new comments via email. Alas, even politicians now realize there is only so far that the can can be kicked. In spite of a significant meeopotamia in the dollar, the U. Namely a one-time wealth tax: Periodically, upon the ascendancy of a new monarch, debts would be forgiven: TOP Related Posts.



Tulkis So what might the politicians and central banks do? Sometimes we go past the-beggar-thy neighbour policies and engage gack outright swindle-thy-neighbour acts. And about outsized salaries and stock option payments to the company executives. And we need free trade at the same time. Such a course of action would not be new.





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