slapphead_otool

Are many people here following the brewing financial crisis is Europe?

http://www.abc.net.au/news/stories/2...m?site=thedrum

It seems like we are in for another bumpy ride - and this time it is sovereign nations in trouble, rather than banks.

Most of the attention right now is on Greece, which has a net external liabilities of 87pc of GDP, or €208bn (£182bn).

But Spain is worse at 91pc (€950bn), and Portugal worse yet at 108pc (€177bn);


For some reason Britain seems lumped in – although it isn’t part of the Eurozone.

Anyone got any feelings on this?

DeadVim

I think there are hidden depths to all of this financial stuff, many dodgy dealings yet to be uncovered.

And, in the end, if they are outed then I think it's a good thing for the long term but will mean a little turbulence in the meantime.

Will we learn from it? Unlikely.

Head for the hills and learn some self-sufficiency is my financial advice

(This is general advice, consider your personal circumstances and read the PDS before considering purchase ....
http://www.therussiansarecoming.com/...he_militia.pdf)

slapphead_otool

I admit i was always sceptical at how one currency (and associated financial controls, instruments and exchange rates etc) could span across so many countries of differing standards of living.

The answer would appear to be the same one used in the USA - debt.

Poor unemployed Americans (who’s jobs had been off shored) could still buy houses, TVs, new cars etc on credit, without any possibility of ever servicing the debt.

Now it looks to me like poorer European countries managed to keep afloat in a Eurozone by using exactly the same solution – debt.

The UK, not being tied to exchange rates, can at least devalue the pound and lift exchange rates to keep afloat. The Eurozone members don’t have that “luxury”. So either France or Germany bail them out, or the Euro collapses.

ABCDiamond

This bit was interesting

Germany should leave the euro

The idea came from a consultancy named Connolly Global Advisers, which suggested that if Germany left the euro, "the devalued rump euro would provide remaining countries with the escape valve they currently lack".

slapphead_otool

Presumably without the strong German economy, the Euro could devalue to a more realistic level.

I guess a number of Germans now wish they had never heard of the Euro.

MartinLuther

Something I read the other day said that Greece's economy was smaller than a lot of the German states. Technically the Euro countries aren't allowed to bail each other out but I reckon something will be done to help them along.

I reckon this is karma for side-lining the stability pact (designed to stop the smaller countries over borrowing) when France fell foul of the rules.

Amazulu

The general opinion I got on my many trips to Germany is that most people hate the euro.

stuckinblighty

One of the reasons i decided to leave the UK was the Eurozone slowly taking over,the Uk being dragged down by the new EU countries,and the Euro finally taking over the Pound.
Looks like the latter wont happen but it does look like Europe is still deep in doggy doodoo

Amazulu

I don't know which way to go on this. Some 'experts' are worried, others reckon it's not a problem. Either way, I think it still has a long way to run yet before it's over/sorted out (maybe a couple of years).

Greece and co (or club med as I have seen them referred to) are going to have to cut gov. spending drastically. This is going to hurt, as unemployment is already high (20% in Spain) and people are suffering. This will lead to civil unrest (strikes, rioting) in nations that have a pretty militant/hot-headed population already.

mohogony

Theres no financial crisis or recession down here in OZ, the developed worlds best performing economy

slapphead_otool

I think that is one of the major worries for economists.

Whereas the poor old long suffering UK citizens just grin and bear it every time the government stuffs up the economy (anyone remember the 3 day week?) the Greeks will be out burning the cities down, makings things look even worse.

I remember a friend telling me that the roads in Spain were wonderful and far better than the potholed shambles we had in the UK. As told him, enjoy those roads to the full, because your UK taxes are paying for them .

Even with all that influx of free money they couldn’t keep things under control.

Wol

The Euro was always a disaster waiting to happen: it may not collapse this time but at some stage it must.

All those differing economies - and, more importantly, financial attitudes - can't co-exist indefinitely without the cracks getting too large to paper over.

The Germans have been fed up with subsidising some of the Southern countries for years.

Amazulu

Yes, the euro can only really work if you have one government, economy, tax system, interest rate etc. I think this has been the agenda of the Euro-elite from the beginning - a European superpower with France and Germany running it.

MartinLuther

Off topic slightly but this is something that's always puzzled me. The Federal Reserve System in the US consists of the Fed itself and 12 separate reserve banks covering different districts around the country.

Do these 12 reserve banks run separate economies? Can they issue debt in their own right or control how much money is circulating in their district?

Anyone know how this works?

Centurion

There is an interesting 3 part documentary entitled "Addicted to money" in which the cause of the global recession and where we end up are analysed. The program suggests that countries have borrowed money on credit cards to pay back spiraling debt which in turn they can never repay.

I sincerely believe that the world may now face another downturn and needs to learn a very big lesson in that we cannot return to the way things were. The system does not work. As the OP article says - nobody can see a way out.

The only way forward as I can see is that a lot of countries have to bite the bullet and make some very very hard choices and suck the pain which has been merely put off. At least that might ensue the nations survival in the medium term.