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French leading presidential candidate prays for inflation

The leading in polls presidential candidate in France Francois Hollande obviously is praying for a massive money-print and galloping inflation as a mean to fight the EU debt crisis. In an radio interview he pointed 2 possible ways of going out of crisis. Both ways do not request anything from governments, but charge with responsibility the European Central Bank (ECB). The first way is the interest rates to be decreased (now they are at record low of 1% and in fact much more decrease is nowhere). The second way is to be allowed to ECB to buy directly government debt financing this way the governments.

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The welfare state is poisonous for EU

A very interesting article by Frederic Erixon is published at Bloomberg. It is called "To Thrive, Euro Countries Must Cut Welfare State". It is worth reading it. It is very edifying... I would confirm its thesis, that the main problem of Europe (and USA too, I can add) is the welfare state that stimulates the lazy consumption and represses working and entrepreneurism. It is a logical absurd to guarantee rights (such as minimum income) without guaranteeing obligations against them. In fact the welfare state is a poison for the society. It can destroy the society entirely. The progress and growth are based on real work, and not on government programs and social rights.

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Geithner dreams more and more money-print...

Timothy Geithner started the betting on the new political poker, named CR-2 (ceiling rise - 2 round). After the government calculated that the current ceiling will be reached this year, the Congress combinations started for a new increasing of the limit of money the government can borrow. So playing the demagogue, the Treasury Secretary advised lawmakers this time not to make a scandal from the case, but to pass the needed legislation quietly and wisely. Mr Geithner blamed last year scandal in Congress for damaging the confidence in USA and destabilizing the economy.

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Are the Chinese clever with the fixed yuan rate?

China decided to allow its currency to strengthen by 0,5% more, after widening the trading gap of yuan to 1%. This is the response to the global pressure for removing this export-advantage that helps its economy to rise faster by selling goods cheaper and attracting investors with lower expenses (mainly - labor). In fact, China is doing nothing, just as has done the same for years. So small currency changes can influence only speculators on FOREX market, but not the real economy.
But are the Chinese more clever than EU and USA, or not so much clever?

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Spain is betting on a new money-print round

The yield on Spanish bonds is again rising, passing for some moments the first crucial line of 6%. And that is just the beginning. At the same time Spanish government is doing... nothing. When the new yield-rise started the prime minister Mariano Rajoy said nothing but "situation is extremely difficult". Some days later the economy minister Luis de Guindos declined to rule out a rescue of almost bankrupted country. So all that Spanish officials are saying is that they are not absolutely sure the country will not need a bailout.

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