Clem Chambers: Where to for Europe and the euro?

Over the last few months TV interviewers have wanted to ask me only one thing: what is going to happen to Europe and the euro?

The answer is simple and fast approaching: a big dose of inflation that will nuke the debt. There is no quick fix. Most of Europe is bust and, outside of default, the way out is long and hard.

People go bust quickly. They are unable to build up huge debts easily and it’s only princelings and fraudsters who get a chance of going ‘bang’ for more than a million. Next along the scale of financial firepower come corporations. They can go bust for a billion because they can stretch their solvency with all sorts of accountancy tricks. They also have a more direct route to banking cash flow than an ordinary person.

Only countries, however, can go bust on the truly titanic scale of hundreds of billions. They print their own money or, in the case of Greece, their friends do.

During the last decade’s credit bubble, governments took advantage of new financial engineering methods to completely cook the books, deep frying them in debt. In the process of doing so, they ransacked all kinds of assets, both their own and, by proxy, yours.

The global state spending binge is spread over the map. From stupid sculptures in front of enormous state buildings, to pointless, (but impossibly expensive) tramways and giant bridges to nowhere. Add on fat state salaries, non-jobs, gold plated pensions, budget-filling road works, subsidies and committees of all kinds, shapes and sizes, and you get a spending binge that has maxed out the credit of the world’s democracies...

Excerpted from an article originally published in the Jan/Feb 2012 issue of YourTradingEdge magazine UK. All rights reserved. © Copyright 2012, Your Media Edge Pty Ltd.
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