DJ Abs on (Yet) Another Global Financial Meltdown

Groovers,

OMG!  We wake to find panicked newspaper headlines of another global financial meltdown, with lots of extra exclamation marks for extra emphasis!!!!!!!!!! 

Sigh - if only everyone read DJ Abs on the GFC back then and calmed down all this could have all been avoided ...

The hysteria of the media when there is a stock market downturn is silly at best and irresponsible and dangerous at worst.   Markets are like herds of cows - they are quite stupid, scare easily and once scared can do a lot of serious damage. 

The fact is yes - America and Europe have a huge debt problem and yes that needs to be fixed quite soon or they risk default.    BUT the productive capacity of these economies, the real economy has not just suddenly shrunk by 10% over night... 

This problem that has been creeping up for many years and is hard to tackle and everyone keeps trying to sweep it under the carpet.  Still - no need to get all hysterical about it.  

As DJ Abs said so wisely in his first article in the GFC, economies today are far, far larger than they were in the Great Depression and the risk of widespread hardship and economic collapse is nil. 

DJ Abs' learned colleague Professor Gai of Oxford scholar clever chappie land, once wrote a learned piece of Argentina's debt default.  It caused the real economy to shrink by 20% and that is dreadful and careful debt management can avoid this but at the end of the day Argentina and other heavily debted nations can and do recover.  America's debt level was higher in 1946 as a percentage of GDP than it was today and it recovered.   

Interestingly one of the problems with governments is unlike individuals or corporations they can't just go bankrupt or insolvent, clear their debts and start again.  Their debt gets inherited from generation to generation condemning the highly debted nations to long term poverty as much of the government income and spending goes on paying the interest bills on the debt and not much else.  I should also point out that it was a Democrat, Bill Clinton, that brought America back into surplus and a stupid Republican George Bush that squandered it and caused the problems Barak is facing today.  So much for the conservatives being better economic managers...

Anyway, enough rambling.

Groovers relax -  DJ Abs will write to Barak and whathisname (British PM) and a few others and sort it out.  

And BTW groovers if you want a far more interesting and learned piece of European debt crisis and why the Greeks need a kick up the rear and the Irish don't,  refer to DJ Abs learned spiritual and economics adviser Polarious for more wisdom....

Until next time,

Peace Love Respect Drugs and Rock n Roll


DJ Abs