The Euro meltdown

[Mr Jules]

Whoever american choose to elect in November, the same miserable mess will still be here in Europe. Can't help thinking a US president will keep eye on things here in Europe wondering how it will effect American jobs and living standards.

If Americans do feel the strain of the Eurozone meltdown, don't blame your president, blame us Europeans. The mess here has been mostly self inflicted.

At the moment, we are mostly blaming each other.

[Mr Jules]

Whoever american choose to elect in November, the same miserable mess will still be here in Europe. Can't help thinking a US president will keep eye on things here in Europe wondering how it will effect American jobs and living standards.

If Americans do feel the strain of the Eurozone meltdown, don't blame your president, blame us Europeans. The mess here has been mostly self inflicted.

At the moment, we are mostly blaming each other.

[D.A.L.U.I.]

Whoever american choose to elect in November, the same miserable mess will still be here in Europe. Can't help thinking a US president will keep eye on things here in Europe wondering how it will effect American jobs and living standards.

If Americans do feel the strain of the Eurozone meltdown, don't blame your president, blame us Europeans. The mess here has been mostly self inflicted.

At the moment, we are mostly blaming each other.

If only it would stay the "same miserable mess!"  It will only get worse IMO when our Congress has to deal with the debt ceiling, and the expiration of the "Bush" tax rates at the end of the year.  That could be the match in the dynamite factory!
Here,   I know one guy pretty well whose family company manufactures specialized roofing materials that are used for "older" i.e., 100 + year buildings.  17% of his bottom line for the last several years has come from sales to Europe--his equipment was imported from Italy.  Since the housing and construction crash there he's sweating bullets.  And there's no help for him coming soon. It's my personal belief that many here in the former colonies don't have a real grasp on how intertwined the European and American economies really are since that's not a subject that can be discussed in the small time frames permitted by our news culture.  Also, apparently based on nothing more than the news that they were "working" on a Spanish solution, NYSE went through the roof yesterday.  No one seems to be aware over here that the size of the problem is still being audited!  You've got to know how big the problem is before you can even think about the prospects of a successful fix.  Also, the shell game that the Spanish are playing to avoid the austerity penalties being placed on them is almost laughable.  In any event, the structural solutions to the problems of the European banking system are several years off--even if they can agree on a closer union regarding banks.  How to sell getting closer in a system with all those problems must be a difficult sale.  Then there was one comment that I found really interesting--bond returns for US treasuries and the German equivalent are at record lows--that's a lot of money moving to safe harbor, a whole lot of money.  One banking commentator remarked that those numbers could be the first indicator that a bank run is already on and money from the troubled euro zone countries is moving out of the euro zone or to Germany!
But it's not all without a joke.  At the recent annual festival held by our Greek Orthodox community here--the oldest in the nation--a friend who's a member of the congregation said that she had talked with her relatives in Greece.  They said the joke they had heard was that Angela Merkel when she landed at the Athens airport was asked at customs, "Occupation?", "No," she answered, "just a holiday!"    Good to see that a sense of humor still exists!

[Laser Man]

Here's the irony: we have congressmen and senators running around saying the U.S. debt is so out of control that we're the next Greece, yet U.S. government securities are trading at record low yields because the U.S. is seen as a safe haven.  Since these are professional investors making the move, we'd have to conlcude either they are foolish or that the U.S. is not the next Greece.  If you take the latter as the case, then Congress should be able to 1) raise the debt ceiling (which by the way covers existing debt, not future debt) without fear 2) work out a plan which prevents contraction of the economy in the near-term and addresses the debt in the long run.  But that won't happen as long as politicians keep misreading macroeconomic signs and doing the wrong things. 

[Mr Jules]

Meanwhile, in the run up to the Greek general election on Sunday 17 June, the debate is hotting up.


"Ilias Kasidiaris, spokesman for Golden Dawn, threw a glass of water at Rena Dorou, a member of the radical left Syriza party, when she made a reference to a court case pending against him. He then turned on Liana Kanelli, a Communist party member, and slapped her several times on her face."

No translation required.

[OMBrandon]

The sad truth is that our economies are tied together in a very real way. As Europe goes, so will the rest of Western civilization. If you look at collapse from a statistical perspective, we in the US are doing worse than Greece and our number will come up rapidly after the EU collapses.

Brandon

[Mr Jules]

The sad truth is that our economies are tied together in a very real way. As Europe goes, so will the rest of Western civilization. If you look at collapse from a statistical perspective, we in the US are doing worse than Greece and our number will come up rapidly after the EU collapses.

Brandon

Absolutely.

In the summer of 2007, we started to realise the extent of the US sub prime lending market. Three months later, there was a panic run on a British bank which was in danger of running out money. A year later, the British government had to bail out one very large bank, merge two other big ones, and nationalise another two more.

Of particular concern was the British bank, RBS. In October 2008, RBS came within 2 hours of collapse. A senior RBS executive on his way to a crisis financial meeting with the British government told his spouse to go to the ATM and withdraw a load of cash - just in case.

When banks fail, people panic. After all, what happens when you can't access your salary ?

[D.A.L.U.I.]

If you look at collapse from a statistical perspective, we in the US are doing worse than Greece 

Actually, the US is doing remarkably better than the EU as a whole, our unemployment is between 8 and 9 %, high yes, but the EU as a whole is at 11+%, and Greece is getting up to 20.  So, no we're going to get hit too, but the EU is in far worse shape. 

[Razor X]

If you look at collapse from a statistical perspective, we in the US are doing worse than Greece 

Actually, the US is doing remarkably better than the EU as a whole, our unemployment is between 8 and 9 %, high yes, but the EU as a whole is at 11+%, and Greece is getting up to 20.  So, no we're going to get hit too, but the EU is in far worse shape. 

The EU is in far worse shape.  Hopefully our leaders can learn from some of the mistakes that were made in Europe and make some policy changes to prevent us from ending up in the same mess.  But sadly, there doesn't seem to be any signs of that happening at the moment, and nothing will happen now until after the November elections.

[D.A.L.U.I.]

The following is a compelling article on the potential problems caused by the melt down in the eurozone and the writers' observations concerning the German, "Our way or the highway" insistence on achieving a solution based on austerity alone.  Frankly it's not a hopeful article.

http://www.spiegel.de/international/europe/the-germans-have-learned-nothing-from-history-a-838429.html

The latest news today would indicate that the German leadership is determined to drive the whole thing, including us, into the ditch! 

http://edition.cnn.com/2012/06/12/business/spanish-bank-loan/index.html?hpt=hp_t3

[Laser Man]

If you look at post-WW2 Germany, there has been a pathological fear of inflation because of the belief that the hyperinflation (and resulting chaos) of the Weimar Republic led to the rise of Hitler and the Nazis.  West Germans also have recent experience with the costs of re-unification wherein they had to bail out the struggling East.  Some economists have been calling on the European Central Bank to permit more inflation so that the debt burden that is crushing Greece, Ireland, Spain, Portugal and Italy can be alleviated.  Given Germany's history, you can see why they would prefer austerity to economic easing / stimulus / inflation.  Unfortunately, austerity has brought on massive youth unemployment, dislocation and misery, so that the nationalist parties are on the rise again.  The picture is not pretty.