Financial Markets Taking A Beating
Thus far in 2010, the financial markets have been taking quite a beating. The recent concerns in Europe over the likes of Greece, Spain, Portugal, and even Italy is creating some real problems and concerns in that particular part of the world. Greece has a very high debt load, Spain high unemployment, and Portugal is just plain poor.
“Anxiety about the health of the euro, which has spread from Greece to Portugal, Spain and Italy, is not simply a crisis of debts, rating agencies and volatile markets. The issue has at its heart elements of a political crisis, because it goes to the central dilemma of the European Union: the continuing grip of individual states over economic and fiscal policy, which makes it difficult for the union as a whole to exercise the political leadership needed to deal effectively with a crisis” – http://www.nytimes.com/2010/02/06/world/europe/06europe.html
Collectivist Government A Bad Idea
This is what happens when a collectivist government is voted in without much thought to the consequences. Whilst the idea of consolidating is attractive in some respects, it ultimately leads to substantially more chaos. Because EU is so large now, the problems and issues take longer to address and fix. In the meantime, a lot of negative things happen – job losses climb, credit lines tighten, and small businesses fail. I wonder how the stronger EU countries will react in having to bail out Greece and possibly other EU countries as well?
More Bailouts, Inflation To Follow
“While no one expects that the European Union will allow Greece or the others to default or the euro zone to collapse, European leaders and the Central Bank will almost surely have to bend the rules to provide guarantees or loans, if necessary. But even tiding over countries in trouble will not solve the main flaw in the euro: the sharp divergence of national economies that share a common currency without significant fiscal coordination, let alone a single treasury” – http://www.nytimes.com/2010/02/06/world/europe/06europe.html
This sounds like more money is going to be made available to the governments, and in fact this was exactly what was decided at the G7 convention in Canada just recently. This, of course, will create massive inflation.
Although this is issue is primarily concerned with certain EU states, it will undoubtedly affect not only other EU countries but also the United States.
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