Oldspeak: ““Ultimately there is going to be a price all around the world to be paid for this and the longer it continues the bigger that price is going to be.” – Peter P. Schiff, President Euro Pacific Capital “When the world’s financial bubble blew, the solution was to lower interest rates and pump trillions of dollars into the sick banking system. “The solution is the problem, that’s why we had a problem in the first place”. For Economics Nobel laureate Vernon Smith, the Catch 22 is self-evident. But interest rates have been at rock bottom for years, and governments are running out of fuel to feed the economy. “The governments can save the banks, but who can save the governments?” Forecasts predict all countries’ debt will reach 100% of GDP by next year. Greece and Iceland have already crumbled, who will be next?” The bailout bubble will inevitably pop. It is many times larger than any other financial bubble yet seen and it is global. Corporations world wide are being bailed out by governments, but as we’ve seen in Greece, Iceland, Spain, Italy, Portugal, governments themselves are collapsing under weight of the bailouts. Now governments need bailouts, ceding control to technocrats who go about the business of privatizing public assets, cutting social services and increasing taxes to facilitate extraction of the government and nations resources. Conditions are very much similar to those that existed in 2008 before the last collapse. When it pops this will be the mother of all bubbles. Interest rates are at or near zero across much of the world. There is no more rate lowering to be done to make possible more “stimulus packages”. It will be very interesting to see how thing proceed past that point. My guess is not well.