Jump to content

Recommended Posts

The crisis in Europe is getting worse as should be expected since the only solution that it being tried is Austerity and that has proven to be a disaster.Something to keep in mind for economic moralists out there is that the problem in Spain wasn't caused by run away government spending. Before the economic crisis Spain's government ran a budget surplus for many years and total Spanish Government debt was decreasing both in absolute terms and as a percentage of GDP. Spain had a housing bubble that burst and in combination with the World wide downturn plunged Spain into a deep recession. Now the normal way a country like Spain would handle this would be that the market would push the value of the Spanish currency down which would make Spanish exports more competitive and Imports less so. Since Spain is part of the Euro Zone that option doesn't exist and the only adjustment mechanism is internal devaluation which doesn't work and results in massive unemployment and deep recessions. The unemployment rate in Spain is 23% and youth unemployment is about 50%.The problems in Europe aren't just about overspending governments and the welfare state. The biggest problem is the single currency and the problems that a country has when it doesn't have it's own currency.This article from BBC is a really good explanation of Spain's situation.http://www.bbc.co.uk/news/business-17549970This one is from today.http://www.bbc.co.uk/news/world-europe-17826455

Link to post
Share on other sites
  • Replies 114
  • Created
  • Last Reply

Top Posters In This Topic

I haven't seen this covered in the mainstream media, but Spain apparently also banned Business Cash Transactions over 2,500 Euros.That should solve their problems.
It looks like they are banning cash transactions for businesses as a way to combat the black market and make large transactions more easy to track and make tax evasion harder.
Link to post
Share on other sites

I'm not one to stereotype, but Spain has a continued history of being its own worst enemy.Corruption and self serving decisions have ruined that countries place as a world leader every time they started to rise up.Its ingrained in their culture...and it is too bad.

Link to post
Share on other sites
Will Europe's crisis get worse before it gets worse?
One of the world's most respected finance ministers gave me his take on the eurocrisis in the wake of this past weekend's IMF meetings in Washington in a single word: "Bleak." Moments, later, in a separate conversation, frustration showed on the face of one of the IMF's top officials. He muttered his exasperation with the attitudes of top eurocrats, particularly those "with German accents." They failed to recognize, in his view, that their monomaniacal focus on austerity was sowing the seeds of its own political destruction. The people of southern Europe will only be squeezed so hard, he suggested, before they reject the deals, pending bargains, and economic prescriptions that Europe's northern powers are counting on to save the eurozone. At a party thrown by JPMorgan, former U.S. Federal Reserve Chairman Alan Greenspan reportedly opined that the European monetary experiment was doomed from the start due to the divergent views and national characters of the disparate countries participating in the venture.ARTICLE CONTINUED AT LINK ABOVE
Link to post
Share on other sites
yeah sure the crisis but what about the rain?!
It's ok, it stays mainly in the plain.
It's hard to imagine that these forums aren't as popular as they once were.
Link to post
Share on other sites
Will Europe's crisis get worse before it gets worse? QUOTE One of the world's most respected finance ministers gave me his take on the eurocrisis in the wake of this past weekend's IMF meetings in Washington in a single word: "Bleak." Moments, later, in a separate conversation, frustration showed on the face of one of the IMF's top officials. He muttered his exasperation with the attitudes of top eurocrats, particularly those "with German accents." They failed to recognize, in his view, that their monomaniacal focus on austerity was sowing the seeds of its own political destruction. The people of southern Europe will only be squeezed so hard, he suggested, before they reject the deals, pending bargains, and economic prescriptions that Europe's northern powers are counting on to save the eurozone.At a party thrown by JPMorgan, former U.S. Federal Reserve Chairman Alan Greenspan reportedly opined that the European monetary experiment was doomed from the start due to the divergent views and national characters of the disparate countries participating in the venture.ARTICLE CONTINUED AT LINK ABOVE
This is shocking to who? Europe in general is a tired old man who won't retire but can't lead anymore...they did it to themselves by creating generations of pussies. Just like our Democrats are doing to US.
Link to post
Share on other sites
This is shocking to who? Europe in general is a tired old man who won't retire but can't lead anymore...they did it to themselves by creating generations of pussies. Just like our Democrats are doing to US.
you should not waste time more often.
Link to post
Share on other sites
Europe. Rinse. Repeat.
So Spain has got the downgrade and now folks have worked themselves into a lather.The question remains, as it has for the last 18 months: what did you think was going to happen? And the truth is, it's going to happen again.This is not happening, primarily, because Southern European countries refuse to cut spending. Many of the countries may need to cut spending and regulation but these crises are happening because Southern European countries aren't growing and when you don't grow, your deficit blows up. Recessions do that (Mr. Ryan, take note).Europe has a banking crisis from under capitalized banks who hold rapidly depreciating assets (in the form of these government bonds) so there is a constant danger of insolvency and runs on them. It's not so different from the US banks in 2008 in that way. But, rather than directly recapitalize the banks a la TARP, the ECB is giving the banks cheap loans to keep themselves running. They are taking the money and calling in every loan they can to reduce their leverage. So it has set the stage for an awful credit crunch which undermines growth.Europe also has a direct growth crisis/fiscal crisis (depending how you are inclined to describe it).Southern Europe has had low productivity growth and Northern Europe high productivity growth. Normally, a country getting into trouble like that of Southern Europe would have a devaluation and use exports as their growth strategy. But locked in at the high exchange rate, S. Europe can't do that. Without growth and with the credit contraction from the banks trying to reduce their leverage because of the banking crisis, these countries' deficits are awful and likely to get worse. Even the most savage austerity really isn't going to fix this problem.CONTINUED AT LINK ABOVE
Link to post
Share on other sites

"European countries refuse to cut spending."I saw this part.

Link to post
Share on other sites
This Is a European Depression
There is no getting around it: this is a depression in Europe. In just the last few days, the governments of the Netherlands and Romania have collapsed, and real contraction has returned to the United Kingdom and Spain. I think it's really important that we use that word, too, depression. Anything else doesn't convey the severity of the economic circumstances in Europe's periphery, as I will show in the series of graphs which follow. The word recession exculpates. Only when we begin to call this crisis what it is will it get the sort of attention and resolution it requires. Point #1. This is a depression in our lifetimes. The collapse of industrial production in Greece, Spain, and Italy since 2008 competes with the industrial collapse in the United States after 1929.ARTICLE CONTINUED AT LINK ABOVE
Link to post
Share on other sites
A high school kid wrote that article. I'm not saying he's wrong or that it matters.
I know, that's pretty impressive.Austan Goolsbee who is the former Chairman of the President's Council of Economic Advisors linked to the article on Twitter
Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

Announcements


×
×
  • Create New...