US Action News

Every facet of global manufacturing is slowing …

Things in Europe just continue to get worse and worse, and yet most people in the United States still don’t get it.

So if you are an American, don’t laugh at what is happening over in Europe at the moment. We are headed down the exact same path that they have gone, and we are going to experience the same kind of suffering that they are going through right now.

The first structural problem is preposterous labor work rules in Italy, Spain, and Greece. The second structural problem is the ECB and the euro itself. One size interest rate policy cannot possibly work in a mix of cultures and work rules.

The vaunted German export machine is sinking into the abyss.

Financial markets all over the globe are very nervous right now because if the Spanish government ends up asking for a full-blown bailout it could spell the end for the eurozone. There simply is not enough money to do the same kind of thing for Spain that is being done for Greece.

The truth is that the financial crisis in Europe has not been cancelled – it has just been put off for a few weeks or a few months.

Throw in the fact that it seems everybody (governments as well as consumers) is in debt, nobody has any money, credit issues are becoming increasingly burdensome to deficit financing to artificially stimulate growth via the government intervention route, all these factors are forming a perfect storm for the oil market to face some major headwinds for the next 5 years.

Right now the ingredients for a “perfect storm” are developing in Europe. Government spending is being slashed all across the continent, ECB monetary policy is very tight, new regulations and deteriorating economic conditions are causing major banks to cut back on lending and there is panic in the air.

If you thought the euro would help Europe, you thought wrong. The Euro made a disaster in Spain, Portugal, Ireland, Greece, and Italy. It’s time to abandon that failed idea.