Bear Mountain Bull

…against the “Fiscal Insanity Virus”.

From Mish’s site:

Is Germany Turning Into A Planned Socialist Economy?

Inquiring minds are investigating the the makings of socialist “planned economy” in Germany. Please consider Berlin Sees No Limits to Economic Intervention.

As part of her efforts to combat the economic crisis, German Chancellor Angela Merkel is increasing the state’s influence in the market, buying holdings in banks and bailing out individual industries and companies. Is Germany turning into a planned economy?

The government in Berlin is undergoing an astonishing change of heart. Only a few weeks ago, Chancellor Angela Merkel spoke out against “arbitrary, unfocussed economic stimulus programs” and large-scale government intervention in the real economy. She made it clear that under no circumstance should “the government acquire permanent new responsibilities in the economy.”

But now, suddenly, it seems like the public sector’s economic intervention cannot be forceful enough for the administration. Last week, Merkel introduced the biggest economic stimulus program in German postwar history, as well as giving her blessing to a series of government interventions into companies and industries, the likes of which the country has not seen since German reunification.

The government has acquired a 25 percent share of Frankfurt-based Commerzbank, and it plans to purchase a majority stake in the ailing Munich-based mortgage lender Hypo Real Estate. It is looking into providing assistance to the highly leveraged Schaeffler Group, based in the Bavarian town of Herzogenaurach, and has made several hundred billion euros in additional guarantees available to companies.

With its investment and lending programs, the Merkel administration is promoting questionable merger projects, turning itself into something of an über-entrepreneur in many industrial sectors and, by placing the state-owned KfW in a key position, promoting precisely the financial institution that acquired the reputation of being “Germany’s stupidest bank” during the financial crisis.

“With this economic stimulus package, Germany is moving a step closer to the French approach to industrial policy,” warns Bert Rürup, chairman of the German Council of Economic Experts.

The Fiscal Insanity Virus has clearly struck German Chancellor Angela Merkel. In the UK, Prime Minister Gordon Brown, Bank of England Governor Mervyn King, and the Chancellor of the Exchequer Alistair Darling, all seem to be in the late stages of FIV as noted in Pound Sinks As Britain Teeters On Edge Of Bankruptcy.

Amongst world leaders there appears to be no immunity whatsoever against the ravages of FIV. And for all the talk of hyperinflation in the US, it appears that Bernanke is not doing much of anything that is not happening everywhere else too. This is precisely why it is highly unlikely the US dollar is going to collapse anytime soon.

Currency debasement is on relative terms. And relatively speaking, government leaders worldwide are all doing the same insane things. So if you are looking for a reason for gold to rise, there you have it. Gold is the only known cure for FIV. Get inoculated soon.