What’s this? Christine Lagarde, IMF chief, said last week that the world’s nations needed to work together to avoid a 1930s-style depression.
But seeing the way they work together…and where they seem to be headed…we’d prefer an economic depression.
The idea of the world’s authorities is not to solve the debt problem, but to make it larger. One bank goes bust; they get a bigger bank — a central bank — to bail it out. One country goes broke; they get a bigger country to bail it out.
The US bailed out its financial sector. Europe has had trouble getting together to bail out its fringe nations. But gradually, in fits and starts, the pieces are coming together. We will all bail each other out. Then, we will all be bailed out. Together.
We need to act “as collectively as possible,” says Lagarde.
She means that we all have to accept more debt…in order to prevent economic depression. That is, all the feds’ horses and all the feds’ men are supposed to make sure that 1) stock holders don’t lose money…2) bankers don’t go broke…3) speculators don’t get wiped out…4) Top CEOs don’t lose their jobs… Daily Reckoning readers will note, with a wry smile, that these are precisely the things that OUGHT to happen.
Which also happens to be what an economic depression would accomplish… It’s why we have depressions…and why we need them. They don’t have to be long, drawn-out disasters. They can be short and sweet. But they have to get the job done.
for The Daily Reckoning Australia