Best of the Week
Most Popular
1. Crude Oil Price Trend Forecast - Saudi's Want $100 for ARAMCO Stock IPO - Nadeem_Walayat
2.Gold Price Focusing on May Cycle Bottom - Jim_Curry
3.Silver, silver, and silver! There’s More Than Silver, People! - P_Radomski_CFA
4.Is the Malaysian Economy a Potemkin Village - Sam_Chee_Kong
5.Stock Market Study Shows Why You Shouldn’t “Sell in May and Go Away” - Troy_Bombardia
6.A Big Stock Market Shock is About to Start - Martin C
7.A Long Term Gold Very Unpopular View - Rambus_Chartology
8.Stock Market “Sell in May and go away” Study When Stocks Are Down YTD - Troy_Bombardia
9.Global Currency RESET Challenge: Ultimate Twist - Jim_Willie_CB
10.The Coming Silver Supply Crunch Is Worse Than You Know - Jeff Clark
Last 7 days
Stock Market Ideal Cycle Low Near - 21st May 18
5 Effects Of Currency Fluctuations On The Economy - 21st May 18
Financial Conditions are Still too Easy for the Stocks Bull Market to End - 21st May 18
US Stock Market Elliott Wave Predictions for 2018 and Beyond - 20th May 18
Are You Still Fearful of Cryptos? - 20th May 18
US Stocks - Why I am Short-term Bearish, Medium-term Bullish - 20th May 18
Looking for a Turn in Gold Price - 20th May 18
GDX Gold Mining Stock Fundamentals 2018 - 19th May 18
Semiconductor Stock Market Canaries: Chirp, Warble… Soon a Croak and Silence? - 19th May 18
Three Drivers of Gold Price - 18th May 18
Gold Market in First Tertile of 2018 - 18th May 18
What Happens Next When Small Cap (Russell) Leads the Stock Market - 17th May 18
Negative Signs for EUR/USD? AUD/USD - Battle - 17th May 18
DOW Jones and CRUDE Oil on a Cliff Edge, Waiting for a Nudge! - 17th May 18
Gold Price No More Subtleness – It’s Show Time! - 17th May 18
VIX Cycles Point to Stock Market Correction - 17th May 18
Trump Sounds End Times Armageddon Trumpet for Jerusalem, Israel Evangelical Prophecies - 16th May 18
Our Next Stock Market Dow Fibonacci Price Targets – Get Ready! - 16th May 18
The Coming Copper Crunch - 16th May 18
Stock Futures Are on a Sell Signal - 16th May 18
What to do When the IRS Comes for Your Property - 16th May 18
IS BITCOIN ANONYMOUS? - 16th May 18
Bitcoin Tide Might Have Turned - 15th May 18
UK Online Gambling Market Grows According to UKGC - 15th May 18
Stock Market Study: What Happens Next when Dow Goes Up 8 Days in a Row - 15th May 18
Fibonacci Price Ladder Points to Higher Stock Prices - 15th May 18
U.S. Dollar Rally Is Doomed - 14th May 18
Gloomy Scenarios for the Fed That Should Boost Precious Metals - 14th May 18
US Dollar One Reversal Too Many - 14th May 18
SPX futures are higher, but so is VIX - 14th May 18
Precious Metals and Miners NUGT – The Sleeping Giant Trade - 14th May 18
Is This The Netflix Of Cannabis? - 14th May 18
US Quest for Iran Regime Change: Will EU Sustain the Nuclear Deal - 14th May 18
Stocks Bears Last Stand - 14th May 18

Market Oracle FREE Newsletter

Trading Lessons

Europe's Financial Fiasco: Migrating to the United States?

Economics / Deflation Jun 05, 2012 - 09:28 AM GMT

By: EWI

Economics

Best Financial Markets Analysis ArticleFew Americans realize that the Great Depression started in Europe.

Now as then, the global economy is fragile.

The economy is clearly vulnerable to a debilitating wave of debt deflation. The threat is approaching quickly from an important source: Europe. The same sequence of events occurred in 1929, when deflation started overseas before lapping onto U.S. shores. In Germany, for instance, real GDP fell 1% in 1929 after growing 8.2% in 1927 and 2.8% in 1928. Other economic indicators peaked as early as 1927. At the time, economically-weak Germany was the equivalent of today's so-called PIIGS (Portugal, Ireland, Italy, Greece and Spain).

Financial Forecast , January 2012


Lending in France also began to decline as early as 1927-28. And about a year before the October 1929 crash, net capital inflows fell in several European countries. In other words: European economies began to deteriorate before the Great Depression began in the U.S.

In Q4 of 2011, the eurozone was already nearing zero economic growth, vs. the U.S. and Asia:

Also, a chart from our May 2012 Financial Forecast (data through May 3) shows European stock markets headed south before the S&P 500:

We know that deflation started in Europe just prior to the Great Depression; today the risk is "contagion." With this in mind, consider the evidence that a deflationary trend may already be unfolding in the U.S. Here are some recent headlines:

  • Illinois Faces 25% Cost Increase to Borrow $1.8 Billion -- Bloomberg (4/30)
  • States Scaling Back Worker Pensions to Save Money -- Associated Press (5/1)
  • Cash-Strapped NY Town Cancels July 4 Fireworks -- WNBC-TV (5/9)
  • Half of Detroit's Streetlights May Go Out as City Shrinks -- Bloomberg (5/24)
  • CBO: Fiscal cliff likely to cause recession -- CNNMoney (5/22)
  • No 'Barn Burner' for Job Growth -- CNBC (5/4)
  • Student debt clock strikes $1 trillion -- CBS Moneywatch (5/8)
  • Shortfall in California's Budget Swells to $16 Billion -- New York Times (5/12)
  • [Senator] Coburn: U.S. "going to get another downgrade" -- CBS News (5/23)
  • Home Prices Hint at Slow Housing Recovery -- Wall Street Journal (5/29)

Here are recent headlines about Asia:

  • Japan's jobless rise stokes slowdown fear -- Marketwatch (5/29)
  • Hedge Funds Circle as Japan's Asset Bubble Grows -- Bloomberg (5/21)
  • World Bank warns of China slowdown -- CNNMoney (5/23)

Mounting evidence notwithstanding, most economists still say nothing about deflation. Then again, most economic observers were equally mute about deflation before the Great Depression.


Don't Invest Another Dime Before Reading This Free Report at Least 3 Times

When the markets were still going up at the beginning of 2012, were you warned that they would soon go down? Get up to speed and ahead of the markets now. Read the 10-page May 2012 Elliott Wave Financial Forecast from Elliott Wave International - FREE for a limited time. Get the complete big-picture forecast for U.S. and Europe -- financially, economically and socially.

Download your free 10-page Financial Forecast report now >>

This article was syndicated by Elliott Wave International and was originally published under the headline Europe's Financial Fiasco: Migrating to the United States?. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

About the Publisher, Elliott Wave International Founded in 1979 by Robert R. Prechter Jr., Elliott Wave International (EWI) is the world's largest market forecasting firm. Its staff of full-time analysts provides 24-hour-a-day market analysis to institutional and private around the world.


© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules