The EU Situation (not an EU bashing thread).

[[KMA]Avenger]

This is a great article covering the worsening EU (as well as global) economic meltdown.


[spoiler]The future of the euro is hanging by a thread at the moment. The massive debt problems of nations such as Greece, Italy and Portugal are dragging down the rest of the Europe, and the political will in northern Europe to continue to bail out these debt-ridden countries is rapidly failing.

Could the end of the euro actually be in sight? The euro was really a very interesting experiment. Never before had we seen a situation where monetary union was tried without political and fiscal union along with it on such a large scale. The euro worked fairly well for a while as long as everyone was paying their debts. But now Greece has collapsed financially, and several other countries in the eurozone (including Italy) are on the way. Right now the only thing holding back a complete financial disaster in Europe are the massive bailouts that the wealthier nations such as Germany have been financing. But now a wave of anti-bailout sentiment is sweeping Germany and the future of any European bailouts is in doubt. So what does that mean for the euro? It appears that there are two choices. Either we will see much deeper fiscal and political integration in Europe (which does not seem likely at this point), or we will see the end of the euro.

That status quo cannot last much longer. The citizens of wealthy nations such as Germany are becoming very resentful that gigantic piles of their money are being poured into financial black holes such as Greece. In fact, it is rapidly getting to the point where we could actually see rioting in the streets of German cities over all of this.

All of this instability is creating a tremendous amount of fear in world financial markets. Nobody is sure if Greece is going to default or not.

Without more bailout money, Greece will most certainly default. If anyone does not think that one domino cannot set off a massive chain reaction, just remember what happened back in 2008.

Bear Stearns and Lehman Brothers set off a chain reaction that was felt in every corner of the globe. All of a sudden credit markets froze up because nobody was sure who had significant exposure to bad mortgages.

Today, the entire world financial system runs on debt, so when there is a credit crunch it can have absolutely devastating economic consequences. The financial crisis of 2008 helped plunge the world into the greatest recession that the globe had seen since the 1930s.

In the old days, nations such as Greece that got into too much debt would just fire up the printing presses and cover over their problems with devalued currency.

Well, those nations that are using the euro simply cannot do that. The government of Greece cannot simply zap a whole bunch of euros into existence in order to solve their problems.

Right now, major European banks are holding massive amounts of debt from various European governments on their balance sheets. Most of these European banks are also very highly leveraged. Even a moderate drop in the value of those debt holdings could wipe out a number of these banks.

The head of the IMF, Christine Lagarde, recently told Der Spiegel the following….

“There has been a clear crisis of confidence that has seriously aggravated the situation. Measures need to be taken to ensure that this vicious circle is broken”

Unfortunately, what Lagarde said was right. You see, the financial system in Europe is a “confidence game” and a “crisis of confidence” is all that it would take to bring it down because it does not have a solid foundation.

Just like the U.S. financial system, the financial system in Europe is a mountain of debt, leverage and risk. If the winds start blowing the wrong direction, the entire thing could very easily come tumbling down.

Over the past couple of weeks, the outlook in Europe has become decidedly negative. For example, one senior IMF economist is now actually projecting that Greece will experience a “hard default” at some point in the coming months….

I expect a hard default definitely before March, maybe this year

If Greece defaults, that would mean that the bailouts have failed. That would also mean that several other nations in Europe would be in danger of defaulting soon as well.

The consequences of a wave of defaults in Europe would be absolutely staggering. As mentioned above, major banks in Europe are deeply exposed to sovereign debt.

Regarding this issue, Deutsche Bank Chief Executive Josef Ackermannrecently made the following stunning admission….

“It’s stating the obvious that many European banks would not survive having to revalue sovereign debt held on the banking book at market levels.”

Yes, you read that correctly.

There are quite a few major European banks that are in imminent danger of collapse.

Even though there hasn’t been any sovereign defaults yet, we are already starting to see massive financial devastation in Europe. Just check out some of the financial carnage from Monday….

*The stock market in Germany was down more than 5%.

*The stock markets in France and Italy were down more than 4%.

*Royal Bank of Scotland was down more than 12%.

*Deutsche Bank was down more than 6%.

*Societe Generale was down more than 8%.

*Italy’s UniCredit was down more than 7%.

*Barclays was down more than 6%

*Credit Suisse was down more than 4%.

*The yield on 2 year Greek bonds was up to 50.38%.

*The yield on 1 year Greek bonds was up to 82.14%. A year ago it was under 10%.

Just like in 2008, banking stocks are leading the decline. We have another major financial crisis on our hands and there is no solution in sight.

As the financial world becomes increasingly unstable, investors are flocking to gold. In case you have not noticed, gold is up over $1900 an ounce again.

So what comes next?

Well, on Wednesday Germany’s constitutional court is scheduled to announce its verdict on the legality of the latest bailout package for Greece. The court is expected to rule that the bailout package is legal, but if they don’t that would be really bad news for the euro.

However, whatever the court rules, the reality is that the turbulent political atmosphere inside Germany is probably a much bigger issue as far as the future of the euro is concerned.

Right now, Germans are overwhelmingly opposed to more bailouts. German Chancellor Angela Merkel’s political party just suffered a resounding defeat in local elections in Germany, and many within her own coalition are withdrawing support for any more bailouts.

This is going to make it very difficult to save the euro. At this point, Germans have very little faith in the currency.

Just check out what Bob Chapman of the International Forecaster recently wrote about the current atmosphere in Germany….

76% of Germans say they have little or no faith in the euro, up from 71% two months ago. This is what we have been stating for ten years. Long-term 69% to 71% have never wanted the euro. The poll is not at all surprising. The Germany people are saying we have put up with the euro and euro zone for long enough – we want out now.

Germans are also very much against even deeper European economic integration. For example, recent polling found that German voters are against the introduction of “Eurobonds” by about a 5 to 1 margin.

But Germans are not the only ones that are tired of the euro. The countries of southern Europe have come to view the euro as a “straightjacket” that keeps them from having the financial flexibility that they need to deal with their debts.

Many people living in southern Europe consider the euro to be a financial instrument that allows nations such as Germany to have way too much power over them. Just check out what Professor Giacomo Vaciago of Milan’s Catholic University recently had to say….

“It’s clear that the euro has virtually failed over the last ten years, even if you are not supposed to say that. We pretended to be Germans, but it was an illusion”

But if the bailouts fall apart and the euro collapses, we are going to see nations such as Greece fall into total financial collapse.

Just how desperate have things become in Greece? Just consider the following excerpt from a recent article by Puru Saxena….

In Greece, government debt now represents almost 160% of GDP and the average yield on Greek debt is around 15%. Thus, if Greece’s debt is rolled over without restructuring, its interest costs alone will amount to approximately 24% of GDP. In other words, if debt pardoning does not occur, nearly a quarter of Greece’s economic output will be gobbled up by interest repayments!

Without help, there is no way that Greece is going to be able to avoid a default.

Sadly, Greece is far from the only major financial problem in Europe. Portugal, Ireland and Italy also have debt to GDP ratios that are well above 100%.

As mentioned earlier, this is a massive problem for the financial system of Europe, because nearly all of the major European banks are leveraged to the hilt and they are massively exposed to government debt.

If you don’t think that this is a problem, just remember what happened back in 2008.

Back then, Lehman Brothers was leveraged 31 to 1. When things turned bad, Lehman was wiped out very rapidly.

Today, major German banks are leveraged 32 to 1, and those banks are currently holding a massive amount of European sovereign debt.

Overall, the entire global banking system has a total of 2 trillion dollars of exposure to Greek, Irish, Portuguese, Spanish and Italian debt.

If European countries start defaulting, the dominoes are going to start falling and things will get really messy really quickly.

There are two things that could keep defaults from happening.

Number one, Germany and the other wealthy nations in the eurozone could just suck it up and decide to pour endless bailouts into nations such as Greece and Italy.

Number two, the nations of the eurozone could opt for much deeper economic and political integration. That would mean a massive loss of sovereignty, but it would save the euro, at least for a little while.

Right now, the political will for either of those two choices is simply not there. That does not mean that the political elite of Europe will not try to ram through some sort of a plan, but the reality is that Germans are already so upset about what has been going on that they are about ready to riot in the streets.

Yes, the end of the euro is a real possibility.

If the euro does collapse, it would likely cause a financial panic that would make 2008 look like a Sunday picnic.

So what do all of you think about the future of the euro? Please feel free to leave a comment with your thoughts below….[/spoiler]


As much as i want to see the EU collapse, it wont be pretty and it will hurt all of us...but i would like nothing more than that communistic ideology assigned to the rubbish heap of historical mad ideas, and ANY politician/group of people/nations propose such lunacy again should be shot/bombed into oblivion!


We are in for some SERIOUSLY rough times!

[MEZZANINE]

As I said before with the failing EU economies we have a choice, bail out the nations who have debts they cant pay or bail out the banks again if the debts have to be written off. Either way the money goes to the banks.

The same thing happened a few years ago in the UK when people who had massive credit card debts they couldn't pay had their debts wiped out. Basically the people who borrow and spend irresponsibly get let off and the people who pay their way in life and live within their means pick up the bill. Same thing bigger scale.


We were told a few years back that day to day life required high street banks hence why they were bailed out, and to stop it happening again banks would be split so the high street side and the investment bank sides were kept separate and if investment banks made stupid investments & loans again we could let them go under like any bad business while the 'safe' & 'separate' high street side would keep trading.

YEARS HAVE PASSED

SO WHY HASNT THIS HAPPENED ?

WHY ARE WE STILL VULNERABLE TO THIS BS ?

So long as investment banks and high street banks are linked making them an essential public service the investment banks have a win/win situation, they bet on things, they win they make a profit, they lose, the taxpayers pay off the debts. Its totally WRONG !!!!

[[KMA]Avenger]

I take it you haven't been following the news MEZ...not that you can find this kind of news on the web BUT...more and more mergers are taking place, making the "to big to fails" even bigger.

I've forgotten the names of the banks but 2 that stuck in my mind were JP Morgan merging with another American bank, and the biggest French bank Societe Generale.

Also, Switzerland is now pegged to the Euro through the banks which will most likely infuriate the Swiss people because this will decimate their wealth.

More and more power is being consolidated into fewer and fewer hands mate.

[MEZZANINE]

I take it you haven't been following the news MEZ...not that you can find this kind of news on the web BUT...more and more mergers are taking place, making the "to big to fails" even bigger.

I've forgotten the names of the banks but 2 that stuck in my mind were JP Morgan merging with another American bank, and the biggest French bank Societe Generale.

Also, Switzerland is now pegged to the Euro through the banks which will most likely infuriate the Swiss people because this will decimate their wealth.

More and more power is being consolidated into fewer and fewer hands mate.

Pfft Swiss wealth, Nazi gold and numbered accounts for tax evaders, criminals & terrorists to hide money in, stuff em' Hope they go bust lol

You know the Swiss, the most neutral country in the world have the highest number of guns per person in the world, even more than the USA, and most bomb shelters per person.

As for the banks I dont mind investment banks merging, or high street banks merging. Whats gets me is that high risk investment banks are linked to essential high street banks. We were promised by politicians that they would be separated and they have not been because they bought their way out of it with the most heavily funded lobbying and political donations, bought their way out of it with OUR MONEY

[[KMA]Avenger]

OUR MONEY

Now that's ironic, i've been screaming those same 2 words for years now and got laughed at by SO many people. nobody cares that we have foot the bill for the banks (and other organisations) high stakes gambling, they love having the value of their money slashed, they love paying for others to get away with literally the biggest heist in world history...they love it all of it and more!

[Kit-Fox]

Removed

[[KMA]Avenger]

You're excessively optimistic there, and your argumentation includes too many "if" to work (without these "if" it would be a huge disaster).

Realistically talking (I mean without including too many "if" which wouldn't be likely to happen) require in your plan that Greece becomes a strong exporter and minimalist importer. That's one of the arguments I remind to people who sing "Let's leave the Euro and live by our own money it will be awesome". Funnily enough, Germany (the one who sacrified the best currency in whole Eurozone to join the Euro) would be, due to their big focus on exports, probably be the one who would suffer the least in the *longterm* from dropping from the Euro, that, of course, if the Mark would be successful in the longterm (Germany is the unique nation of high currency high exports, out-of-prices competitiveness etc...). However, they wouldn't do that, simply because of ideology based on their own XXth century-currency reasons: strong currency that is the Euro is a logical step after the strong Mark, risks to go back, even for a short amount of time, to a low currency is a risk they will not take, and that's why they are that strict with Greece and other countries in troubles Eurowise.
Italy is I think the only nation among the formerly cheap currencies of EU who would manage to suffer the least due to their sizeable exports (far from as big as Germany's, but much bigger than Greece and bigger than Spain). I know that's rather scholar to say exports are the key of survival throughout money value drop, but that's rather true, isn't it?

Rank Country Exports Date of
information
...
2 Germany $1,303,000,000,000 2010 est.
...
8 Italy $448,400,000,000 2010 est.
9 United Kingdom $410,300,000,000 2010 est.
...
16 Spain $253,000,000,000 2010 est.
...
65 Greece $21,140,000,000 2010 est.
...

http://en.wikipedia.org/wiki/List_of_co ... by_exports

Jim, currently not a single nation on this planet is backing their money with anything other than the faith of the nation/Govt and look what's happening as a result of having your money controlled by private interests who are printing worthless paper.

If Greece backs the Drachma with Gold they can lend out their Gold to say, the Chinese and get a great return. and Gold is only going to go up so Greece's money will also gain even more value due to the depression we are in (yes it is a depression as i told you guys in 08 when gold was what 830$ an ounce...anyone seen the price of gold lately?). with a gold backed currency the options are almost limitless. think about it, Businesses would flood into Greece, as would investors bringing with them HUGE investments making even more capital available...i don't care how big Germany is as an exporter, they still have worthless money regardless if it's the Euro or the Mark, and paper money backed by nothing is dead.

Greece would not even need to compete with Germany, before Greece joined the Euro they had a MASSIVE global shipping industry, thanks to them joining the EU that's all gone, they could bring all that back and put the nation back to work. don't worry about Greece, they would do great without the Euro if they follow a gold backed plan....

On the other hand, if Greece leaves the EU or are booted without doing the above, they will be screwed, even war with Turkey would suddenly become a very real possibility.

[[KMA]Avenger]

Sorry for the double post...


2 Men who signed us up to the Maastricht treaty and rammed it down the throat of the British people which helped to produce the worst Tory defeat in 150 years, John Major and Lord Hesketh have FINALLY seen the light.
John Major has gone public and wants us to claw back the UK's power he gave away to the EU: http://www.dailymail.co.uk/news/article ... ssels.html

While Lord Hesketh who was a big time player in the Tory party has defected to UKIP.


In the mean time though, that fool of a PM of ours is insisting "we are better off inside the EU and that he will not grant the British people the right to a referendum", which helps to prove that he has broken his word/pledge and that this has nothing to do with being in a coalition and compromise is why we wont see him keep his promise to the British people....

Sounds like a dictatorship to me!

[[KMA]Avenger]

Well, the EU under the IMF has now approved a 1 "T"rillion Euro bailout for all the country's that need it. that 1 "T"rillion will be leveraged to 5 "T"rillion using derivatives...the very same financial instruments responsible for the 08 crash will now used to solve the problem...that's like i stand in front of a wall and head-butt it till my head is a bloody mess and a doctor tells me i need to keep head-butting the wall to fix my head.
This is going to cause hyperinflation. the printing presses have not stopped printing money (which is going to all the banksters) since all the bailouts were agreed globally. now they are going to put those printing presses into super overdrive.

Just so we know what this means, the banksters say that we the people owe 1.5 "Q"uadrillion to them. WE the people are paying them for making bad bets...

The banksters are laughing their arse off and we the people are asleep at the wheel

These Banksters are financial terrorists, they need to be locked up or better yet, hung until dead dead dead!

[MEZZANINE]

Well, the EU under the IMF has now approved a 1 "T"rillion Euro bailout for all the country's that need it. that 1 "T"rillion will be leveraged to 5 "T"rillion using derivatives...the very same financial instruments responsible for the 08 crash will now used to solve the problem...that's like i stand in front of a wall and head-butt it till my head is a bloody mess and a doctor tells me i need to keep head-butting the wall to fix my head.
This is going to cause hyperinflation. the printing presses have not stopped printing money (which is going to all the banksters) since all the bailouts were agreed globally. now they are going to put those printing presses into super overdrive.

Just so we know what this means, the banksters say that we the people owe 1.5 "Q"uadrillion to them. WE the people are paying them for making bad bets...

The banksters are laughing their arse off and we the people are asleep at the wheel

These Banksters are financial terrorists, they need to be locked up or better yet, hung until dead dead dead!

Sad but true, as said before it's a win/win for banks, when they make high risk loans they either get repayments at high risk interest rates ( massive profit ), or if the debts cant be repaid the losses are covered by us taxpayers.

I heard that the Greek rescue package devalued Greek Government bonds by 50%, and even with the bailout it will take them until 2020 at current repayment rates to get their national debt down to 120% of GNP, assuming of course the GNP not only does not drop but rises as predicted, and assuming a change of government at next election doesnt decide to take other action.

[[KMA]Avenger]

The truth is finally starting to leak (very slowly) out to the mainstream: The EU's architects never meant it to be a democracy
http://www.telegraph.co.uk/comment/colu ... cracy.html


Regime Change in Europe: Do Greece and Italy Amount to a Bankers' Coup?
http://www.time.com/time/world/article/ ... 50,00.html

[Legendary Apophis]

"Isn't it more important to save democracy than to save economy"

I think this quote sums up pretty well what some people think (included articles you quoted) about the Greek and Italy recent changes, what they forget however is, if you "save democracy and let economy go" (anyway these PM aren't meant to stay there eternally and will be replaced in few years anyway, due to how these have to respond to Parliaments and would need support from Parliament), you would more than likely have the populist leaders get into office due to receiving very high scores as it often happens when things are *really* down in economy (because their speech/program seduces when economy is on the ground, and even below the ground). Whose ideas regarding economy are of your liking and other euro sceptics too, but you know my opinion about their ideas.

Let the boat sink or try to fix it to let it go in the seas again. These political systems in Italy and Greece cannot let dictators get in power, if that's your fear.

[[KMA]Avenger]

Here's an idea i've NEVER stated before...LET THE **Filtered** BANKS FAIL!