Italian Government Forbids Any Bank From Failing. Future Steps Forbid Children From Crying, People From Dying and Bankers From Lying
Well, two out of three ain't bad. They'll never pull off the banker piece.
This new development announced by Italy's Prime Minister decreeing no failures is not unexpected. We are starting to see politicians across Europe attempt to trump one another in offering higher and higher levels of banking protection. Offers that aren't based on any type of financial ability to back their statements. A race to the bottom of the barrel compounded by unregulated capital. Berlusconi must have graduated from the Stalin School of Economics. Of course, after the G7 summit yesterday, we can conclude all politicians graduated from the same school. And, now we are about to see the consequences.
We have already said quite a few times that globalization has peaked, but if every major country across the globe moves down this path of guaranteeing no failures, the unintended outcome will be an even further muting of economic growth. It will have the exact same effect that tariffs had in the 1930s. There is no free lunch. If we are headed down this path, I would rather see a political decree that no citizens see any outright failures in lieu of no bank failures. In other words, that some type of marginal social safety net be provided so people aren't living on a street corner begging for food.
If life were only so simple. If politicians could wave their magic wands and make all of their promises come true. They endlessly promise us these notions and most of us endlessly believe them. Or, want to believe them. Or, hope to believe them. Politicians would have us believe stock markets go up forever, everyone on earth will be rich beyond our wildest imaginations, there will never again be world hunger and global conflict will be vanquished. Remember, it was just a year ago when most everyone in G7 nations came close to believing this. Maybe even you. And, at the root of that belief system were the same political lies. We'll see if it works on the way down as well as it worked on the way up.
This new development announced by Italy's Prime Minister decreeing no failures is not unexpected. We are starting to see politicians across Europe attempt to trump one another in offering higher and higher levels of banking protection. Offers that aren't based on any type of financial ability to back their statements. A race to the bottom of the barrel compounded by unregulated capital. Berlusconi must have graduated from the Stalin School of Economics. Of course, after the G7 summit yesterday, we can conclude all politicians graduated from the same school. And, now we are about to see the consequences.
We have already said quite a few times that globalization has peaked, but if every major country across the globe moves down this path of guaranteeing no failures, the unintended outcome will be an even further muting of economic growth. It will have the exact same effect that tariffs had in the 1930s. There is no free lunch. If we are headed down this path, I would rather see a political decree that no citizens see any outright failures in lieu of no bank failures. In other words, that some type of marginal social safety net be provided so people aren't living on a street corner begging for food.
If life were only so simple. If politicians could wave their magic wands and make all of their promises come true. They endlessly promise us these notions and most of us endlessly believe them. Or, want to believe them. Or, hope to believe them. Politicians would have us believe stock markets go up forever, everyone on earth will be rich beyond our wildest imaginations, there will never again be world hunger and global conflict will be vanquished. Remember, it was just a year ago when most everyone in G7 nations came close to believing this. Maybe even you. And, at the root of that belief system were the same political lies. We'll see if it works on the way down as well as it worked on the way up.
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