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Well, it looks like the government, with usual speed, has finally figured out that we are in a recession. The National Bureau of Economic Research has finally come across this astounding revelation today. They are only a year late, of course. They now confirm that America has been in a recession since December of 2007.
http://www.courant.com/business/hcu-recession-1201,0,6693820.story
I realize, of course, that it might take a couple of months to have enough data to know this. But a year? Maybe I'm just out of touch with reality.
Jack Crooks
Jack Crooks points out a little-known event that took place in Ecuador on November 13. The country sort of defaulted on its bonds, by failing to pay the interest that came due. Instead of defaulting outright, it merely postponed payment until December 15. That's a bit like seeing a man leap off the Empire State Building and helping by putting a cushion on the pavement under him. Jack writes:
"Most investors are understandably fixating on the spectacle of the U.S. debt crisis and Washington's $7.8 trillion in loans, investments, commitments, and guarantees designed to end it. So when a significant deadline passed two weeks ago in a remote corner of the global economy, virtually no one noticed. It's a small event with big implications . . .
"Key date #1: Thursday, November 13. Seventeen days ago, the government of Ecuador failed to pay interest on its bonds it had sold to investors. Citing plunging oil revenues, the government postponed its interest payments for a full month.
"Key date #2: Monday, December 15. Fifteen days from today, Ecuador must make those interest payments plus interest for the month of November. If it fails--if Ecuador defaults on its government bonds--it's could be the first domino in a chain reaction of government debt defaults that will sweep the globe. . .
"Is Ecuador a big player? Of course not. But it's merely the first one."
http://www.moneyandmarkets.com/why-this-mouse-is-about-to-roar-28416
Jack goes on to say that the exporter nations in Asia and Europe face similar problems, not with the collapse of oil prices, but with the collapse of their markets in America. Russia is begging China for a $25 billion loan. "Its foreign currency reserves have plunged $122 billion--a full 21%--in just 3 1/2 months," he says.
These small export-driven countries, called "emerging nations," have borrowed a lot of money, but without exports, they will be unable to pay. Either their loans will be extended with more credit, or else they will default. The U.S. banks have loaned them $500 billion; Japan is on the hook for $200 billion. But the European banks have loaned them $3.5 TRILLION, which is 21% of the Eurozone's total GDP.
If Hungary and Ukraine default, along with Ecuador, it could start an avalanche, not only with other debtor nations defaulting, but also cause a collapse of the banks in Europe.
We have all seen how one relatively small event causes other events, and others, until finally the cumulative effect is huge. National defaults like this could be the next step in the economic collapse of Mystery Babylon.