Tuesday, 12 July 2011

Could Europe's Political Project Go the Way of the US Confederacy?


Inflation's Killing Optimism - Europe When The Dust Settles

Most of this week's global economic overviews are finally bringing inflation into public view. UK house prices may edge up a little, but the inflationary impact will continue to erode any real gain. The housing market is still subdued because of limited access to finance, especially for first time buyers; the prospect of not making any real gain for 10 years, according to PWC report, is hardly an incentive to invest - even then, the gain is estimated at only a 53% chance. Better to rent and save in a bank if you want to be sure of a return?

In Brazil, consumer demand is pressing inflationary buttons, which risks export capacity and inward foreign investment.

Add a tumultuous European finance system and the risk of hyper-inflation following defaults, and all stoicism takes a tsunami still battering.

When the dust settles, Europe will look more like a nation state, a stronger, more stable federation. The alternative is a constant cycle of doom and bust.