A Eurozone Horror Show for Friday 13th
If French President Nicolas Sarkozy wasn’t the superstitious type before Friday, he surely is now after ratings agency Standard and Poor’s stripped France of its AAA credit rating.
Austria also lost its AAA rating, while several other eurozone countries for whom AAA status is a distant memory, including Italy and Spain, were further downgraded. The announcement reflects continued skepticism by financial markets that Europe is serious about tackling its debt crisis, or capable of doing so.
As if that news wasn’t bad enough, talks between Greece and its creditors broke down Thursday, raising the possibility that the next round of bailout cash for the country will be withheld, and increasing the likelihood of a “hard” Greek default which could spark a new banking crisis.
The rash of downgrades also further dents the fragile credibility of the European bailout fund, which depends on several of the affected countries, notably France, for funding. Announcing the downgrades, S&P said: “Today’s rating actions are primarily driven by our assessment that the policy initiatives that have been taken by European policymakers in recent weeks may be insufficient to fully address ongoing systemic stresses in the eurozone.”
The downgrade of France is especially significant because it finally puts paid to the myth of France leading Europe as an equal partner with Germany — France is now well on its way to becoming just another euro basket-case. The news is a humiliation for Sarkozy, and it may well put paid to his dwindling chances of victory in April’s presidential election.
The probable winner, Socialist Francois Hollande, has already pledged to reverse Sarkozy’s modest pension and employment reforms, and renegotiate the deal to shore up the eurozone which was agreed in December of last year. His election would likely hasten the end of the eurozone in its current form.
Go for a socialist France, stick your head in the guillotine, your pompous arrogance is about to wind up in a basket.
what’s pompousness? resistance the Anglo-Saxons diktats !
soon, you’ll be not able to tell us what to do, the chinese will re-educate you
BTW your über-capitalism model isn’t a success for you, where is the american dream today?
without your big Armada, and thousands bases, your dollar would be a mere souvenir !
The problem is that the US has turned AWAY from capitalism. That is why both the US and the EU are going downhill at a rapid pace. China is slowly but surely embracing capitalism, which is why we all will be working for them someday – and at very low wages.
Actually this is what many large institutions want, lower ratings and eventual default, especially with Greece. The Debt they hold will only be redeemed if Greece defaults. Once Greece defaults the debt is rolled into bundles and US Taxpayer will be given the tab.
It is same technical finance that occurred in 2008 with Corporations. It is not until they are in default that taxpayers are placed as collateral for loans and debts and paid off in full by the government to the title holders.
The same is now occurring with Nations, there is no downside for them in a default as debt is shifted to taxpayer for repayment.
“Debt they hold will only be redeemed if Greece defaults.”
Yep, that will allow them to cash in on their CDS. Otherwise, they are left holding a few pennies on the Euro at best.
One can’t help but feel we’ve all crossed the event horizon and it’s only a matter of time before we are crushed.
“If French President Nicolas Sarkozy wasn’t the superstitious type before Friday, he surely is now …”
I don’t think anyone needs to be superstitious to know that he’s looking forward to a change of address. Promised big, did nothing until he managed to con his groupie girlfriend to shack up, spent a couple of years canoodling, realized he’d actually done nothing at all and started rounding up gypsies to compensate … and that’s when the financial crisis struck. He tried to fight back by banning the burqa and telling the UK not to lecture him (rosbif scum!), but I fear it’s not going to be enough.
If only he’d held back. Then he could blame everything on the socialists and clean up at the next election.
Anyhow, this whole thread gives me a chuckle. It’s a bit like the the passengers on a sinking ship, seeing a boat in the distance that’s run out of champagne and shouting “ha – you’re in trouble now!”
Meanwhile, australia’s still doing well. Eventually the problems of the rest of the world WILL catch up with us, but in the meantime our biggest problems are rising house prices and skills shortages.
You know … you guys would probably find it pretty easy to emigrate.
Techno @ 4, It is only a matter of time down under as well. The current bunch of socialists have taken Australia’s net debt position from about $100 Billion positive to $100 Billion negative and a budget surplus from $22 Billion to $50 Billion deficit since 2007. Our manufacturing and agricultural industries are in rapid decline because of a stupid Carbon Dioxide tax and massive and accelerating regulation and interferrence from the Federal Government busy bodies. All that is left is the resources industry and this is now faced with a super profits tax and a slowing Chinese economy. We still have two more years of these incompetents before the next election and I give our economy about a year before we line up with most of the other western economies as another basket case.
Oh, please.
We didn’t have “100 billion positive”. If you’re talking about the future fund, go check the reports. In 2008 it had about 50 billion in assets. It currently manages about 90 billion. Yes, the ALP has increased it. Betcha didn’t know that.
Yes, the government has run deficits. And they’ve done it pretty wisely, too. They’ve done it to keep the golden egg of retail sales, economic confidence and our miracle property market ticking over. And it worked. And the fact that inflation has stayed steady suggests that they did it just about spot-on. It’s all very well to talk about minerals, and they are an important source of government revenue, but the bulk of that industry is a long way from the south-east, and its mere existence wouldn’t have stopped a collapse in other economic sectors had confidence crashed or the credit dried up. We are more than a dirt-digging nation, you know. We export more services and manufactured goods than minerals.
For all the noise from The Australian about waste, the school building programs worked (yes folks – our government dumped a packet of money on upgrading school buildings and infrastructure to stimulate the construction sector during a downturn and three independent inquiries have shown that, despite the speed of planning and implementation, the value for money was actually very good – within a few percent of market benchmarks. And this has, believe it or not, been a massive stick for our opposition to beat the government with – assembled americans, what do you think about that? Just curious how you’d feel if the fed decided to efficiently improve all your school buildings to keep people in jobs?). The insulation rebates (which actually led to an INCREASE in safety, not a decrease, as – again – The Australian would have you believe) was intended (and succeeded) to reduce electricity demand growth while somebody works out what to do about a proper energy strategy. Something that the last government also kicked down the road with the solar scheme. Again, it paid off.
Now, for the record we have a couple of hundred billion in federal public debt, or less than than 20% of GDP. Big deal. We wait out the slow-down and pay if off in a few years. Meanwhile, people still have jobs and a whole lot of companies didn’t go under, taking their asset values with them, undermining our banking sector, property sector, market confidence and so on. There’s nothing that racks up a government debt quite like revenues dropping because the economy disappeared – so you’d probably need to work out the impact of that before moaning about the current, much better, state of affairs.
It’s easy to govern when things are going well. When the world’s major economies are collapsing around you, things are a little bit trickier. Yes we have china, but japan is our biggest export market, and the US isn’t far behind china. China alone only accounts for around 13% of our two-way trade. It’s not the whole show.
“Our manufacturing and agricultural industries are in rapid decline because of a stupid Carbon Dioxide tax and massive and accelerating regulation and interferrence from the Federal Government busy bodies.”
(1) They’re in decline because our standard of living, property prices and high dollar mean it’s so much more competitive to move industries elsewhere. Barriers to international trade are falling, too. It’s the same problem the US faces. And britain.
(2) There is no carbon dioxide tax. It doesn’t exist yet. So how on earth can it be affecting industry? The last 10 years of electricity price hikes have also had nothing to do with a non-existent carbon tax. Try again.
(3) The greatest increases of government regulation on business in recent years have been the GST and Work Choices. Care to reconsider?
“We still have two more years of these incompetents before the next election”
Sadly, people like you still believe what they read in the tiser, the hun, the terrorgraph and so on. Which is to say, you’re massively ill-informed. So yes, it is possible that malcolm turnbull will be PM after the next election. I can probably live with that, though.
“I give our economy about a year before we line up with most of the other western economies as another basket case.”
Yeah, but people like you have been saying that since 2007. Every year it’s the same story, and you never seem to remember.
“The probable winner, Socialist Francois Hollande, has already pledged to reverse Sarkozy’s modest pension and employment reforms, and renegotiate the deal to shore up the eurozone which was agreed in December of last year. His election would likely hasten the end of the eurozone in its current form.”
No kidding. Who could have seen that one coming. Europeans will never, ever, change. The social-welfare state is in their DNA now and it can never be taken out of them. Even seeing how disastrous socialism was for Greece, now the French want to RETURN to those failed policies and reverse Sarkozy’s modest pension and employment reforms. Think abaout that. A country that was giving outrageous benefits to its people now want to give them back. More, if possible, considering that a Socialist is about to beat Sarkozy. So let me get this straight. Greece AND Spain have both gotten rid of their Socialist leaders because they were spending them into the poor house, but France now wants to ELECT a socialist leader to get all of their welfare goodies back. Yes, that does sound like a recipe for success, right? I wonder how much lower their rating will go after that happens?
This sounds like Ohio and Wisconsin. Yikes. They can vote for all the feel-good free stuff they want, but in the end, the economy will adjust itself — harshly — on its own.
Europe is going under because many of it’s members refused to get their spending under control, as such they are about to experience the joy of economic collapse, just like Argentina did in 2001. Look at Greece right now for a preview of what’s coming down the pipe.
But don’t worry, with a debt to GDP ratio over 100%,$1.5+ trillion dollar deficits as far as the eye can see, 10,000 new SS retirees everyday, massive unfunded pension liabilities and a Congress that cannot bring itself to cut spending on anything even gay cowboy poetry, we won’t be far behind.
If we are lucky we may even be able to kick the can just past the 2012 Presidential elections.
Party like it’s 1929…
Not quite.
Europe is going under because each nation can set its own economic policies without much interference by the European Union, while still having to use the euro as its currency.
If a nation decides to spend more money (either for social programs or to fight wars), all that usually happens is that their currency loses value as more of it gets on world currency exchanges. IOW, the currency is devalued.
But Greece no longer has the option to devalue the drachma–because the drachma no longer exists.
The European Union has turned out to be a gigantic bait-and-switch. They gave the Europeans economic union (the euro as common currency) as a supposed down-payment on eventual political union (common taxing and spending policies). But they never got political union, and now nations like Greece have become albatrosses around the necks of better run nations like Germany.
When it comes to common political decisions, the European Union is just as weak as our original Articles of Confederation, and perhaps even weaker. We had to get rid of our Articles of Confederation and create a new Constitution with a stronger Federal Government, in order to avoid precisely the kinds of problems that Europe is now struggling with.
If they had the drachma and devalued it their debts would only go higher.
“Europe is going under”
Europe isn’t going under. Get a grip. What – you think there’ll be a big fire-sale with an “all must go” sign out front, and everyone in europe will have to move out or something?
They’re having a rough time, though. No doubt about that. I guess they had it coming. They’ve been able to paper over corruption in the mediterranean states because stability never shook the foundations. Now stability is gone, and few countries can’t keep up the charade. Germany and france knew this going in, and they still saw the benefits (they could have vetoed any country they wanted to).
So the house of cards comes down and the dodgy habits of the past go out the window. It had to happen. Europe will be financially stronger after they sort this out, because it has to be.
The euro isn’t going to disappear either. The costs of trading between numerous different currencies was too high, and it was holding europe back. Imagine the US trying to do business if every state had its own floating currency. Why on earth do people think the EU would want to return to that?
But I am getting a chuckle from seeing americans poke fun at europe’s problems. Let’s all try to remember what started this global mess – america’s dodgy banks not managing their loans, lying to one another about risk and assuming that assets would endlessly keep appreciating. Thanks, guys.
“The euro isn’t going to disappear either. The costs of trading between numerous different currencies was too high, and it was holding europe back. Imagine the US trying to do business if every state had its own floating currency. Why on earth do people think the EU would want to return to that?”
Would you bet on that? The Euro will end, split or those countries with uncontrollable deficits, who refuse to deal with them, will be kicked out. Just a matter of time.
A bet? If there was a way to implement it without letting you know who I am (there’s no way I’m giving out personal information on this site) then I’d happily take that bet. The euro is going nowhere.
Like I said – what would it cost the US to do business if there were numerous currencies all floating separately, and transaction costs at borders? Not to mention the costs of running those individual economic borders rather than one big one around the outside? That’s what the eurozone was meant to put behind. It was costing too much to operate. Individual countries might think about cutting themselves loose, but the short-term advantages will be dwarfed by the long-term downside. Nope, germany is just going to have to bail the lot of them out. Then they’re going to have to pull their collective socks up and start running sensible economies. It had to happen eventually.
Greece is just going to have to start paying its taxes, and italian bureaucrats are just going to have to start doing their day jobs.
“Like I said – what would it cost the US to do business if there were numerous currencies all floating separately, and transaction costs at borders?”
Not relevant to the topic.
“Not to mention the costs of running those individual economic borders rather than one big one around the outside?”
You mean like circa 1992–it’s been done in the past, but the EU economic zone was sold as a means to elliviate international trade, not surplant national goverments with a super-state.
“Individual countries might think about cutting themselves loose, but the short-term advantages will be dwarfed by the long-term downside.”
I don’t believe that. The increased customs cost is nothing compared to economic disaster member states drag down the rest of the European markets. That won’t stand for long.
“Nope, germany is just going to have to bail the lot of them out. Then they’re going to have to pull their collective socks up and start running sensible economies. It had to happen eventually. ”
Who is they? Germany will run out of money soon enough as their own off balance sheet liabilities are insurmountable and will not be possible to meet. The only reason Germany is agreeable is because they are already sitting on piles of member state junk debt.
“Greece is just going to have to start paying its taxes, and italian bureaucrats are just going to have to start doing their day jobs.”
Really– who is going to enforce all that and how? Like expelling them from the club if the don’t? What is actually the “stick” to get those states in line?
Blowhard…..
You missed your calling, you gave me a chuckle…..(HARD TO COME BY, CONSIDERING THE SH..T LOAD OF TROUBLE WE ARE IN)..
GAY COWBOY POETRY…?
PARTY LIKE IT’S 1929…?
YOU ARE A RIOT…. & DON’T KEEP YOUR DAY JOB…..
DAVID
Here we go again, the old ping pong game; one day the EU is on the edge of doom and then the next day there is a miraculous rebound. The news media has become so steeped in lies that it cannot report any reality anymore. This has been a result of the Obamization of the American State. The European socialists continue to spend and spend, pamper and pamper and their American counterparts in the current regime do the same. There is not enough money in all the world to finance this insanity; yet the “narrative” goes on. The only sensible investment is food, ammunition and a safe redoubt where one can grow his own food and protect his family. Leave the big cities to the socialists they can fight over the last crust of bread. BTW the world of breads and circuses is still out there; look at the superbowl, the excitement over something called the kardashians and all those chinese made tech toys.
Reminds me of the old saying about Germany compared to Austria, during WWI: “In Germany, things are bad, but not desperate; in Austria, things are desperate, but not bad.”
I think the correct translation that the situation in Germany is serious but not desperate, while in Austria it’s desperate but not serious.
Shouldn’t the article tease be “Un-economics catches up with Europe”?
A comparison of the US and Europe over the last 100 years illustrates the main problem with free markets – they make socialism look bad by comparison. If only we had a way to rid our markets of the taint of competition, the filthy lucre of innovation, the craziness of creativity and just settle down to the blessed sameness of stagnation. Oh, wait, we have two ways – the Democratic and Republican parties.
When we talk about “capitalism” we mean “free markets”. When the major parties talk about “capitalism” they mean fascism. Crony capitalism is fascism, it’s “private ownership but government control over the means of production”. It’s the government picking the winners and losers, with all of us ultimately being the losers.
Yes, let’s by all means discuss what the “right type” of capitalism is with the French leading the way. Because blaming the “wrong” type of capitalism is working so well for France and the necrotic Euro waterslide park that is their economy.
We should not fear that the Socialists and small c communists and their propaganda machine will drool with an orgasmic sneer at our simpering pleas to our mean, mean capitalist ogres who make money in the free market the “wrong” way, and how we really, really, truly, cross my heart and kiss my foot honest to goodness believe in the GOOD capitalism…it’s only the mean, ugly, horrible person BAD capitalism that we are talking about…with our Socialist and small c communist brethren’s heavy breathing in our ear…that we don’t like.
The assault on the free market by the buffoons who wish to portray only SOME of the free market as Larry the Liquidator…and want us all to watch and applaud as their socialist and small c communist propagandist friends take that and run with it…is just a peachy, wonderful, high moral ground altar upon which to sacrifice our economy to those who mean to destroy it.
Seizing Europe was a breeze. There was the thought here that we were made of a little stronger resistance to the idiocy of the “free lunch” nightmare. But, as recent events have proven, the propaganda against the free market is a widespread disease. The Hollywood portrayal of the “bad capitalist” has taken hold here…and while some use it for cheap political snits…willing to trash the country as collateral damage in a hissy fit…there is no shortage of those who will race to trash the free market parroting the slanders against the only system that can save the world’s fiscal fiasco.
But, let’s not let anything get in the way of our fanatical support of a single flawed and erratic candidate. Let’s continue down the path, sputtering platitudes about “bad capitalism”. Heaven knows, THAT’S more important than…you know…taking back the reins from the small c communists.
Let’s make half hour propaganda videos, filled with lies and inaccuracies about “bad capitalism” in order to attack a single candidate…who…heretofore, was NOT gaining traction…and let’s make him a martyr for the free markets. Brilliant.
I have NOT once…ever…promoted a milquetoast candidate. But, I will continue to suggest that assaulting capitalism and trying to make fine point distinctions (by people who don’t understanding a figging thing about private equity), and then feeding that foolish frenzy to the small c communists to run with it…is just a perfect poster for this entire “B” team campaign season.
Ignorant, incredibly clumsy, oafish, self-absorbed, inane.
Let’s wipe the slate clean and get all these clowns out of the way of saving this land of ours.
So far, this has been a disgrace. Europe is the model of the current administration. And all the chumps who fell for the Hollywood Larry the Liquidator propaganda need to pray that they haven’t just sealed our fate to follow that path of destruction.
Nice comments.
I don’t know that Europe is the model of the current US socialism; you don’t need a model to follow; you just need to reject reality and prefer an imaginary, fictional utopian world where each-is-equal in their capacity to consume. Except for the Elite Rulers, who vacation at Martha’s Vineyard, Costa del Sol and Hawaii.
The problem with this utopian world where everyone has the same capacity-to-consume (except, remember, the Rulers) is that it focuses solely on ONE phase of the triadic process of an economy. There are three parts to the economic process: Investment, Production…and then, Consumption. The basic act of an economy is: to produce wealth. Wealth can be understood as ‘energy’.
In order to get those desired goods/services to consume, somebody has to make or produce them. That’s Production.
And somebody has to build the infrastructure – the factory, the technology, the engineering tactics, the chemical formula..to enable Production. That’s Investment.
Capitalism says that the first two should be in the private sector; that is, private citizens can decide to set up an industry, do the research, develop the technology. That needs MONEY. They invest their own money.
Now, this process is key. It’s filled with RISK. What if the consumer doesn’t like their products? Capitalism inserts VALUE into a product. It’s either a good or bad product. Socialism rejects value; you have to consume it.
What if this industry’s products aren’t purchased? Should the govt step in and pour in tax money to ‘save jobs’? Remember, that tax money comes from potential purchasers of goods/services. Take it from purchasers..and there’s nothing purchased. Not even those unwanted goods built by this failing company.
The govt and its tax money has to stay out of investment. If a business can’t produce value – it MUST FAIL. Solyndra.
Then, after Investment, they Produce the goods/services. This is the zone of the worker. Jobs. If unions drive up the cost of production, the company will fail because the consumer can’t afford those costs. Or, the company goes overseas.
If govt puts in so many regulations that the costs of production are driven up (limiting work hours, three guys to work on one task, too many pollution regulations etc)..well, the company can’t function.
The final phase is Consumption. This is where the consumer must have a choice, because that enables evaluation of quality. If the govt puts in regulations that protect certain industries and reduce choice, then, corruption of the product inevitably sets in…Always.
And in this phase, the product MUST produce a surplus, i.e., wealth. This is vital. The govt MUST NOT TAKE this wealth. The wealth must remain private and is put back into Investment (expand the factory, develop new technology) and Production (hire more workers). An economy is based around this capacity-to-produce wealth. ..and the wealth is then re-invested back into the economy and so on.
The Obama-Socialist ideology focuses only on the last phase: Consumption. It totally ignores the first two phases of Investment and Production. Weird. The problem with focusing only on Consumption and taxing away the means to Invest and Produce means that the economy dries up. The govt then is forced to borrow money to pay for its citizens to Consume. It can’t get enough in taxes because it has dried up the capacity-to-produce wealth. Borrowing..is disastrous.
Europe has done the same, taxing the capacity for Investment and Production from its citizens until it is now a dehydrated and dessicated empty shell. The fact that it has set up the Euro as its ‘valuation currency’ simply meant that various zones of Europe could move further into socialism, borrow from the others..and spread the rot of socialism faster and further.
Well said. It’s going to be a hot summer.
At some point, to keep the scam going, I ponder when a global currency will be rolled out as the next great saving grace?
I’m not hitting on ratings agencies. I just wish to know what kind of animal they are, in this jungle of free market rides. I have done my research.
First, these agencies have no presence in the DOW or FTSE. They are not corporate bodies. So, the market cannot rate them.
Second, where do they get money from? From subscribers. Like, say, Microsoft wanted an opinion on Intel. Maybe, they don’t have the resources or the secrecy to do ‘due diligence’. Likewise, many companies would like investment analysis but don’t have the time or resources themselves. So, enter the ratings agencies, who will perform this essential function for their clients.
That’s fine. But when did these ratings guys go from vetting companies to sovereign countries? I would place the timing to the rise of bond markets. And before that, to the expediency of sovereigns to borrow from private investors. That’s where their power lies. Governments have tried to skirt the bond investor by printing money. But it was already too late. Who else would buy govt bonds?
So, who gains and who loses when a ratings agency downgrades a whole sovereign currency? Obviously, the country loses. And the bond investors gain, because they get more bang for their buck. And, the ratings agency gains because their clients are happy to reward them for windfall.
Perhaps we should drop the “e” and call it what it is: CONomics.
This really wasn’t news. By the time rating agencies get around to lowering their ratings, everybody already knows. Don’t laugh at the Euros trying to stave off a debt crisis…..with what else, more debt. The U.S. is only one step behind him and with Barry’s foot on the gas peddle of spending, we’re set to go over the cliff with them. The only question remaining is when and how to get prepared for it.
“By the time rating agencies get around to lowering their ratings, everybody already knows. Don’t laugh at the Euros trying to stave off a debt crisis…..with what else, more debt. The U.S. is only one step behind him and with Barry’s foot on the gas peddle of spending, we’re set to go over the cliff with them. The only question remaining is when and how to get prepared for it.”
Agreed. I’m debt free and into commodities…. water, food, fuel, silver, and lead.
Where is Oliver Kamm now? LOL!
Havent been able to follow him since he went behind a pay wall….which he is probably very thankful for, these days.
LOL!
The Euro was never going to work without fiscal union between the Euro countries, the quicker it dies the better.
I don’t think the US has anything to be cocky about. The same kind of bad news coming out of Europe now, will soon be coming from the US.
Only 10 years ago, TEN did these EU nations think a NWO-type union of ‘The Euro’ would endure. Much like Hitler’s ’1,000 Year Empire’ which lasted but a few years. Leaving only rubble, decay and death.
Much akin to the Reich, the Euro suffers from improvisation, irrational hasty decisions and absurd expectation.
A ‘United Europe’ when introducing the Euro. A shame Germany had Greece (junk), Italy, France, Austria, Cyprus & Spain (junk status), (Finalnd, Ntherlands & Luxembourg o the negative watch) Slovakia, Slovenia & Malta hitched a wagon to their star.
Be prepared to see more idiotic Greek temper tantrums in the Athens streets this week.
Eerily similar to our squatters err ‘occupiers’ crying foul for THEIR poor decisions & mistrust though encouraging MORE government influence/control of our day-to-day. Moronic.
They’re not done yet. The feet of clay are still up for a last dance.
Who takes S&P seriously?
They’re the same clowns who rated mortgage backed securities AAA!!!
exactly !
it’s also why Moody didn’t follow it,and that France is still rate AAA with the appreciation “stable country”
and 8,5 billons euros of shorts were traded at lowest interests than a month ago !
So S&P –> “dans ton cul” !
and for those that expect a socialism regime, it won’t happen, Hollande need to differency himself from Sarkozy for electoralist reasons, but in reality he will follow the same policy, BUT, don’t forget Marine LePen isn’t far bind them in the polls, and she still is gaining points, that the medias don’t want to publicy !
So Portugal now has the same junk bond status as Egypt and Italy little better.
Europe is experiencing the crushing consequences of basic economics; every society must produce more income than they spent, or over time, their economy will collapse. Their politicians, since WWII, created several social myths, which are now destroying their societies. After the slaughter, they opted to wholly rely for their defense against the USSR, on America. This saved oceans of money for several generations. They created the EU to directly compete with America, being richer and larger. To achieve this goal, they established a common currency and basic rules on national debt creation. However, many nations did not have the political will to discipline themselves. They cheated; ran up irresponsible debts, assuming, when push came to shove, that each was too big to fail. The PIGS assumed they would have to be bailed out, but the debt has hit critical mass, too big for everybody, including workers, yet to be born, can pay.
If European history is a guide, what comes next is unemployment, hunger, violence, and war. They will seek a strong man to get things working again.
Their short history into green energy has proven with mathematical certainty that nations which ignore basic engineering economics will suffer grievously. Green energy costs are about five to ten times the cost of the technologies which work, dirty coal, and dangerous uranium. If a significant portion of their energy comes from costly green technologies, it can break even a wealthy nation. Several nations are seeing an entire generation of young college educated works leave; they see no future in their homeland.
Economics is simple. A very few can make a bigger pie, others cut the pie, and everyone needs a slice. If you make a smaller pie, you suffer. If unions, or corporations, through their purchased politicians slice the pie so they get a larger piece, the producers suffer. If you purchase a bigger pie than you can afford, somebody has to pay the bill. Politicians are masters of kicking the can (the due and payable bill) down the calendar, but the financial rating agencies got wise, or got guts, last Friday.
Due to an integrated global market, and stupid policies at home, America has followed unsustainable economic policies similar to the centrally governed EU. We are experiencing the same results. It is sad but not complicated.
I think one explanation for the Eurozone’s problems is their faith that a very slow transition to a de facto version of the United States would succeed.
Europe is in a no-man’s land between one country and independent states. They need to make up their minds or reality will do it for them since a loose confederation with some powers here and none there will not do.
THE THREE EQUIDISTANT FRIDAY THE 13THS
Friday the 13th was the first of three such days this year equally spaced by 13 weeks. Also 13 (the number of American Liberty) is profoundly inauspicious for the statist Barack Obama. This year is likely to be Obama’s worst year with the European debt crisis putting an end to his presidency.
Click my name and read my piece, Obama, the 2012 Election and the Three Equidistant Friday the 13ths.