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Financial contagion from Europe is pushing global economies toward the brink, and the risks of slipping into worldwide recession are rising significantly.
China's exports have plunged to half their year-ago levels. Factory orders in Germany, Europe's economic powerhouse, are slumping as China weakens. Australia and Indonesia have cut interest rates to ward off damage from Europe, while Japan, Britain and Brazil have slashed their growth forecasts.
From Beijing to Washington and Sao Paolo, top financial officials are worried their economies will be sucked into the maelstrom by Europe's inability to unify around a debt strategy.
High yields on Italy's and Spain's sovereign debt, hovering around 7 percent, are putting severe funding strains on banks, infecting the global financial system, which in turn undermines confidences and upends growth.
"It's a scary situation," said Mike Feroli, chief U.S. economist for JPMorgan Chase.
"Unless Europe really goes pear-shaped, we should avoid recession. But each passing week without a resolution we are doing more damage, and it's hard to see how this will stop."
On top of Europe's woes, add an intractable U.S. Congress fighting over how to cut the U.S. budget deficit, and the risks are mounting of political mishaps that upset a gradual healing of the global economy.
"It is stunningly easy to slip into recession," said Tom Porcelli, U.S. chief economist at RBC Capital Markets.
U.S. lawmakers face a Wednesday deadline to deliver a plan to slash $1.2 trillion to $1.5 trillion from the U.S. budget deficit over the next 10 years. Porcelli is concerned that failure to reach an agreement, which looked increasingly likely, would cause lawmakers to backtrack and attempt to push through a new law to repeal the automatic triggers to impose budget cuts. Such a move would stoke financial volatility and worsen an already vulnerable outlook.
"For the second time in three years, global economic recovery is at risk," Roach said in a note to clients.
What we need to understand is that what’s happening here transcends national borders. It’s not one country against another. It’s the people of these countries, our countries, versus the financiers, political sycophants, and sociopathic power brokers who are interested only in their own personal gain and glory.
The Greeks could easily have gone the way of Iceland and simply defaulted on their loans. Instead, the globalist insiders positioned within the legislative halls of their government sold them down the river when they forcibly implemented bailout and austerity measures at the behest of the IMF and international banks. By doing so, they offered as collateral all of Greece’s assets – and we mean all of them including ancient sites, islands, energy resources and even the Greek people themselves.
This is the international law agreement between Greece and the Troika (European Commission, the European Central Bank and the International Monetary Fund) directly from the Greek parliament. In one of the articles they say that if we are unable to repay the debts that they allowed them, unconditionally, the right to come here to Greece and confiscate everything.
Our Parthenon, our Olympia, Delphi, our islands, the petroleum…anything.
Greece has quit (given up) all of its national rights [sic] (given up its sovereignty) over all of its assets and all of its human beings. So, the human beings are equal, for them (international financiers), to our assets.
-Dr. Dimiris Antoniou