The 2012 Economic Global Outlook

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Some economists are saying the U.S. is looking at a mild recession in 2012.

Obama might be planning to kill the dollar – tough luck for savers, investors, pensioners and pension funds.

Europe will not fare well, perhaps worse than us.

Spain’s new government has warned that the latest national budget deficit could exceed last week’s upward revision as it sets the stage for another round of austerity measures. Read here: More austerity in Spain

Italy is suffering debt fatigue. “…A key stress point will be whether Italy can continue to raise money in the markets at affordable rates.

In the first quarter, it has to step up its borrowing to pay off euro 72 billion ($94 billion) in bond redemptions and interest payments…Overall, Italy will have to borrow over euro 300 billion ($392 billion) in 2012…” Read here: Star Tribune Sounds almost insurmountable to me.

Greece could be in free fall and might be moving into a depression. Economist Nouriel Roubini in a recent twitter message quoted a Reuters article stating that “Greek retail sales by volume fell 10.8 percent year-on-year in October with the slump picking up after a 6.5 percent drop in September, statistics service (ELSTAT).

Among their many problems, Greece has until February 8 to return 424.8 million euros from farmers that it paid compensation to in 2009 after Brussels determined that this money was an illegal state subsidy. Interest would be due on top of the returned funds. Greece plans to appeal in the European court.

Then there is the increasing poverty in Greece – with 3 million Greeks below the poverty line, 20% of the population.

The increasing view that the 50 percent haircut on Greek debt, held by private sector bondholders will not be sufficient, piled yet more pressure on local stocks on Tuesday on both the Athens exchange and the EU.

In general, the emergency borrowing by the EU nations from the ECB has continued unabated. Inflation has dropped overall from 3% to 2.8% which will make it easier for the banks to cut interest rates and loan money. Despite this upturn, the region is suffering from the steepest contraction since 2009 and is continuing to head towards recession. Read here: Eurozone inflation and recession

While Germany is doing relatively well, better than the United States, Andrea Merkel expects Germany to begin feeling the effects of the euro crisis in 2012.

The euro ended 2011 as the worst performing major currency. Worse still is the lack of economic growth on top of their high debt, deficits and austerity programs. There are no signs that the European economy will grow in 2012. Read more at spiegel.de

The Eurozone is facing numerous elections this year and we are looking at the possibility that the eurozone will spend huge amounts of money – they plan to monetize the debt – a huge mistake, but something to make it seem as if the situation has improved so leaders can win elections. It’s the same unsuccessful approach we used in this country.

Moving beyond the EU, Turkey is reporting an inflation rate of 10.45%.

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