Interesting post ( sorry for not writing in Hebrew)

A few comments

11.      Spain is in dire straits but the problem IS NOT the public debt (app. 60% of GDP ) ,the problem is the private sector. Just for the illustration, according to various sources there are more than 1 Million  new houses unsold , out of  a total of more 3 million empty ( Spain needs app.300 k units per year ) . Multiply this by whatever reasonable price and you´ll get a frightening figure , much above the banks´ provisions .These houses were financed somehow and the debt lies somewhere ( probably at the Banks´ balances ) unpaid. This is the big question that the Spain did not deal with yet. Let alone the huge indebtedness of common people (more than 100% of disposable income) that will suffer as soon as REAL interest rates increase

.

2.      If Korea was the trigger for the last turbulences, I would expect a devaluation of the Japanese Yen

 ( in Euro and USD ) . That did not happen ( yet?) so I tend to agree with you.

3.      Final and general comment : The crisis is much deeper than a liquidity crisis, it is a result of decades of wealth and income accummulation in few hands and the relative impoverishment of mass consumers , a relatin that harms aggregate demand ( subconsumption) , just look on capital utilization and unemployment figures to grasp the magnitude of unused resources due toa lack of effective demand . Government and central banks stimulus are very short sighted since it´s impossible to run deficits forever ( unless you believe in a huge Keynesian multiplier ....and it seems that marketes do not believe ) or not to enter into a inflationary circle , so they pray that the private sector ( or China , or Brazil…) will recover. I have serious doubts that mass consumer can recover at a record unemployment environment and that the developing world can shift from an export oriented policy into internal consumption without serious social consequences. (PS I wrote about that in previous blogs more than a year ago and I feel a bit like the “Cato the Elder”… )

סחטיין על הבלוג,

אין ספק שחסרים דולרים בעולם, השאלה היא מתי ברננקי יספק אותם...