The gathering momentum of worldwide deflation, and investor's flight to safety, is producing a dangerous credit crunch. Banks are not lending. Stock and bond markets, which have replaced banks as the primary source of capital, have ceased producing capital. The primary force of economic growth, consumer spending, is slowing fast. Real estate may be next investment to drop.
Cash is king.
As the world economy contracts, finance ministers met last week in Washington at the International Monetary Fund to plan a rescue. The Clinton Administration in paralyzed by scandal. Japan, the world's second largest economy, is semi-comatose. Its ineffectual government is viewed with deserved contempt by Japanese and with dismay by outsiders. Europe, saddled with chronic high unempoyment and bloated welfare states, seems headed into recession.