The Fire Next Time: The Euro Financial Crisis – Recession Risk in 2012

Posted by AzBlueMeanie:

This is what I have been warning you about. The toxic assets that the banksters of Wall Street created to gamble with in the casino capitalism of Wall Street, which nearly destroyed the world's financial system and our economy, were also sold to European banksters.

Because of the Euro financial system, Europe is unable and, more importantly, unwilling to do what is necessary to deal with these toxic assets (any more than the U.S. has dealt with these toxic assets). Recent efforts in Greece and Italy were to protect the banksters of Europe, not fundamental economic reforms.

The result is that the fire next time will be a recession that begins with the Euro financial crisis, and which will spread like a contagion to the U.S. and the rest of the world economy. This time events are out of our control to do anything to stop it or to contain it — especially with a Tea-Publican Congress that believes in fanciful nonsense, that the "invisible hand of the free market" should be allowed to perform "creative destruction" of the world's economy. What should be destroyed and thrown on the ash heap of history is this disproven and discredited conservative economic theory.

Talking Points Memo reports CHART OF THE DAY: 50% Chance Of Another Recession… Because Of The Euro:

Here’s why you should be worried about the spiraling demise of the Euro.

Travis J. Berge, Early Elias, and Oscar Jorda, Economists at the Federal Reserve Board of San Francisco, have analyzed the domestic and international factors that threaten the American economy. What they found suggests that the risk of another recession in the next several months is alarmingly high — and largely out of our control. Downside risks within the U.S. are pretty low, but taken together with external factors, particularly the escalating crisis in Europe, the likelihood of another U.S. recession jumps above 50 percent.

Here’s the graph:

Look at the thick blue line in this graph. It combines the risks to the economy from both domestic and external factors. Per the authors: “Viewed through the domestic lens, the immediate risks of recession appear to be low, but gradually increasing. International risks, though less precisely measured, are the mirror image. Risks are highest in the very short run, but then fade. In combination, the data suggest vigilance.”

More than that, “[i]t indicates that the odds are greater than 50% that we will experience a recession sometime early in 2012.”

As the authors note, “the fragile state of the U.S. economy would not easily withstand turbulence coming across the Atlantic.”

Because 2012 is an election year, all you will hear from Tea-Publicans and their echo chamber in the corporate media is that "it's all Obama's fault!" Sorry, but no. It is 30 years of conservative economic theory and the casino capitalism created by the banksters of Wall Street. We cannot solve this problem until we fundamentally reject this fraudulent economic system.