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Economy is like a inflated balloon. 
The national broadcasting corp in Greece has closed down . It proved to be too much of an economic burden for the debt ridden govt. The economic meltdown story of Greece and for that matter, spain, Italy, Portugal, Cyprus is yet to unfold fully.

The economic science as we know it has only started 100 years back, since the advent and modernisation of the banking system. The banks lend money and earn interest on it. The business runs on the money taken on interest from the bank. The whole system can run without a hitch as long as the banks get their money back.

However defaults form an integral part of the banking system. It is only when the banks are left with assets for collateral which lose their value for some reason that the system collapses.

In 1930 , the economic depression lasted for almost 10 years. Unemployment in the US rose to 25 percent and in Europe went up as high as 33 percent.

The next great depression is already happening. It just hasn't reached the us yet.
Compare the present unemployment rates in Europe-
Portugal 17 percent, spain 27 percent, Greece 27 percent.

These are figures which are similar to that of the great depression of 1930.

Overleveraging in banks is one single reason for any economic collapse. Deutsche bank in Germany is leveraged in derivatives to more than 70 trillion usd which is nearly 30 times more than the ttl GDP of Germany !!!. Derivatives as we know are instruments which can collapse in a very short time in any market collapse. This phenomenan is rampant . Govts taking the so called precautionary measures are akin to Hitting the can down the road, which is not sustainable.

If this is so then where will the economy go. It is our contention that the balloon is not inflated enough as yet. The markets inspite of the downturn in economy, overleveraging of banks, high inflation and deflation in certain commodities, are slated for one final burst up before the final collapse. Once the present downturn in the markets is completed , the markets are slated for higher levels .

However the above mentioned downturn will take at least one to two years to complete.
Following are few interesting statistics
#3 Two years ago, Portugals unemployment rate was about 12 percent. Today, it is about 17 percent.
#4 The unemployment rate in Spain has set a new all-time record of 27 percent. Even during the Great
      Depression of the 1930s the United States never had unemployment that high.
#5 The unemployment rate among those under the age of 25 in Spain is an astounding 57.2 percent.
#6 The unemployment rate in Greece has set a new all-time record of 27.2 percent. Even during the Great
      Depression of the 1930s the United States never had unemployment that high.
#7 The unemployment rate among those under the age of 25 in Greece is a whopping 59.3 percent.

 

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