On Friday (7/27/12) the U.S.'s and some of the other stock markets soared for the second straight day based upon a joint German and French announcement promising to save the euro and presumably rescue nations like Spain and Italy sinking in their own debts.
What got lost in the celebration was a statement also issued Friday by the German Central Bank (Deutshe Bundesbank) saying, "Government deficits must not be financed through the central bank printing money."
In other words, the promise a day earlier by the European Central Bank's President to print money to support the economies of financially failing Euro nations is null and void as far as the German Central Bank is concerned. And Germany has the biggest European economy.
As for Friday's joint German and French promise, you can forget that as well, for Germany won't participate and France, the Euro Zone's 2nd largest economy, does not have the financial resources to conduct such a rescue and it too is sliding into Recession.
Meanwhile, Spain, the Euro Zone's 4th largest economy is falling into a Depression with 25 percent unemployment, 53 percent unemployment among youths 16-24 years of age. And Italy, the Euro Zone's 3rd largest economy is falling almost as fast as Spain.
Throughout the Euro Zone consumer and business confidence is weakening, as it is weakening in the U.S. as well. In September, 2008 when Lehman Bros. went bankrupt, it nearly took the global financial system with it, as confidence collapsed and global markets froze.
Today, what we have is not a European financial crisis but a global financial crisis, a Lehman Bros. on steroids. The sooner the world finally recognizes this, the sooner we can all work together to solve it, before it completely devours all of our economies.
Dick
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