Steinbrueck fears possible inflation crisis

[D-Mack]

Steinbrueck fears possible inflation crisis
04.11.09, 07:00 AM EDT



BERLIN, April 11 (Reuters) - German Finance Minister Peer Steinbrueck is worried the world may face an inflation crisis in the medium term, after the economic crisis ends, due to large amounts of liquidity being pumped into the market, he said.

In an interview with Saturday's Bild newspaper, Steinbrueck said there was no alternative at present to the investment spending that governments around the world are using to fight the economic crisis.

'But at the same time what causes me to be concerned is that the next crisis is already being pre-programmed because of all the enormous debt-financed counter measures being conducted worldwide,' he said.

'There's so much money being pumped into the market that there could be a threat of an overloading of the capital markets when the economies start expanding again and a threat of worldwide inflation,' he added.

Steinbrueck said inflation, which is an especially sensitive issue in Germany because of its history with hyper inflation in the 20th century, is not an immediate problem.


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http://www.forbes.com/feeds/afx/2009...fx6280423.html

I guess everybody will get hit....

[vanvaley1]

Re: Steinbrueck fears possible inflation crisis

What's a 'medium' term? Well, I guess I shouldn't be so inquisitive. At least he said the economic crisis will end some time in the future years. Good call.

Speaking of which...1913 was a good year. Wasn't that when the Fed was established? If we consider the value of the dollar going down as inflationary, hasn't the dollar been in decline since that horrendous decision? If so, he's a bit slow on the pickup of inflation. Has anybody ever come up with an 'acceptable' level of inflation? How do they figure that out? Conversely, how do they figure out what is an unacceptable inflation rate?

I have images running through my mind of some savant genius gnome locked away in some elite's castle dungeon figuring these questions out for a loaf of bread, a fifth of Scotch, and a maiden fair. Gnomes are allergic to wine.

[D-Mack]

Re: Steinbrueck fears possible inflation crisis

I'm surprised the leap guys think Europe will have it easier to get out of it.

3. Is the crisis as serious in Europe or Asia as in the USA?
LEAP/E2020: The major difference is going to be between, on the one hand, the USA (and its directly related countries such as UK, Canada, Mexico, Israel,…) and, on the other hand, the Eurozone and the core of Asia’s economic powerhouses (China, Japan, South Korea).
EU member states outside the Eurozone will be affected more severely than Eurozone ones, as already explained in previous GEABs. And some of them, more integrated to the US economic and strategic sphere such as UK for instance (or Switzerland, regarding the financial sphere), will be at least as affected as the USA, if not more. Within the Eurozone we will see a 'normal' recession or more probably stagnation or small magnitude stagflation with growth comprised between minus 1 and plus 1 percent until 2011; while in the USA we are talking of a long-term depression (about a decade, as we described in GEAB N°23), with negative growth of an average of minus 2% for the coming 2/3 years, therefore involving social unrest, loss of global clout, and so on and so forth. UK will follow a similar pattern.
To put it simply: within the Eurozone, on average and contrary to the US (and UK), we do not foresee a decade-long loss of manufacturing capacities, a huge housing bubble, a collapse of top financial institutions, a general bailout of an increasing number of major companies in all kinds of sectors (banks, insurances, manufacturers,...), a deficit situation at every level (local authorities, federal authorities, households, trade, payments,...), etc... Therefore the consequences of the crisis are of a ‘manageable nature’ even by mediocre leaders such as those we have (of course, it would be better if there was great leadership). While in the USA or in the UK, unless leaders from historic proportion emerge in the coming 6 months, the course of the crisis is doomed to be a tragic one.
In Asia, or more precisely in the powerhouse triangle China-Japan-Korea, the situation is somehow intermediary between to the USA and the Eurozone. In 2009, this region will certainly experiment a major slowdown, equivalent to a strong recession due to its growth needs (even if growth figures keep being positive, they will be too small to answer the region’s needs in employment for instance). At LEAP/E2020, we tend to consider those three countries as a common entity because we anticipate that, due to the crisis, in 2009/2010, they will rapidly move closer to one another in order to stimulate their own rescue. After a strong shock in 2009, they will rapidly move forward to resume a region-centric growth. This of course will come at the expense of the links of each of these three countries with the USA.
http://www.leap2020.eu/Thirteen-ques...15e932795939a8

[Slimprofits]

Re: Steinbrueck fears possible inflation crisis

in fact we are in the process of researching the merry adventures of Peer Steinbrueck, the German finance minister and now head of the German bank bailout effort. Steinbrueck, it seems, was instrumental in encouraging the expansion of German public bank investments in US toxic assets. Several German bankers say that Steinbrueck personally oversaw the growth of the on and off-balance sheet financial operations of German landesbanks that will ultimately cost the German people dozens if not hundreds of billions of Euros in subsidies. So far, the German political establishment refuses to discuss or even acknowledge the role of Steinbrueck in creating this disaster. More on this next week.

http://us1.institutionalriskanalytic...ub/IRAMain.asp

[Starving Steve]

Re: Steinbrueck fears possible inflation crisis

The Bank of China quietly buying over 1000 tonnes of gold is a dead give-away of no confidence in Ben Bernanke and the Federal Reserve Board now.

I never liked this Bernanke from the moment Bush appointed him. This is a serious mistake, maybe a fatal mistake. But the shocker is that Obama has kept Bernanke onboard in his new administration when Bernanke should have been sent back to Princeton from day-one.

If Bernanke was worth keeping, he would be an expert not on U.S. history and the Depression but on the Latin American hyper-inflations of the 20th Century, especially those of the late 20th C. He should have studied where the fatal mistakes were made in monetary and federal policies in Latin America so that the Federal Reserve Board might not now duplicate those same mistakes here.

Geithner should also be given his walking-papers. Terrible! Again, this all goes back to the issue of the garbage that passes for economics in our universities to-day.

Maybe Bernanke and Geithner told the Bank of China to buy gold? That would be just as bad of an omen for America and the world, maybe even a worse omen!

I am beginning to see world paper money, especially American paper dollars, as a liability and a major risk.

[jtabeb]

Re: Steinbrueck fears possible inflation crisis

I am beginning to see world paper money, especially American paper dollars, as a liability and a major risk.

Beginning to see, huh. Well good for you!

[Jay]

Re: Steinbrueck fears possible inflation crisis

... figuring these questions out for a loaf of bread, a fifth of Scotch, and a maiden fair.

I'd do a lot for that.