Dear rss free blog,
Greetings
from Mudlark Manor beside the River Thames where we are spending the night before flying off
to Berlin. We will go from a country where stimulus spending for
saving the UK banking sector continues to demand huge amounts of
government cash to one where the newest government plans to get rid of
its deficit.
Germany
can do this one of two ways: raising taxes or cutting spending. It is
not certain which way the Merkel govt will spring, but either tactic
risks derailing the German economy. Fiscal virtue sounds better than it would be in fact during the present crisis.
Just
because there are indications of a recovery and fluffy stock markets does not mean that growth
is assured. And in the major battered economies there is no risk of
inflation yet. Really. Truly.
Banks, households, and industrial groups are hoarding
cash. Moreover, there is high unemployment in double digits in these countries,
meaning not a possibility of wage inflation at least in the short
term. There are exceptions like Norway, Australia, Israel, India, and China. But not the countries I will go to on this trip.
More
for paid subscribers follows. It is about two little-known and boring articles of the Treaty of Rome which created the EU which affect the price of three of our recommended stocks.
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