Aren’t prices supposed to go down when you have a recession? Well yea unless you have devalued your currency so much that no one takes the “promise” of its value seriously. And when your currency is not attached to any rational measure of value promises is all you will get from the Government. Promises from governments have always worked out so well for those who have believed in them.
Well America watch carefully to see the predicament Iceland finds itself in because that is where we are heading…fun fun fun till the daddy (China, Japan and other buyers of US debt) takes the T-Bird (they stop buying our promises)…away. The fun is just beginning not ending. Green shoots indeed! Those clowns who are selling that crap should be prosecuted and jailed. Back in the day they would be tarred and feathered…for killing the light of the world (United States) the penalty should start there.
Iceland’s economy will shrink 8.5 percent this year and consumer prices will climb 11.7 percent, both the worst performances among the world’s 33 advanced economies, according to the IMF’s latest forecasts. As the rest of the world begins to recover, Iceland’s recession will stretch into next year, with the economy contracting 2 percent, more than any developed nation except Ireland. Iceland Shrinks 8% as Prices Increase 11% in Deepest Recession – Bloomberg.com
Neat that Central Banks the world over are starting to short the dollar…this is going to leave a mark. From a Barclay’s report:
No one wants to be caught holding too many dollars, and this rising reluctance is increasing pressure on the USD. This is an obvious USD negative, but it is also means that the ECB and the EUR are caught between a rock and a hard place. The capital flows into the EUR have very little to do with any euro area cyclical dynamism. If the ECB were the BoC, it would label the current EUR appreciation as undesirable “type 2” flows driven by capital flows that do not reflect fundamentals. However, as anyone who has been to the doctor knows, getting a diagnosis is not quite the same as being cured.
Hat Tip Zero Hedge where some of the finest reporting on the economy is going on right now.