Euro Crises

Challenge accepted, GC.

http://www.nytimes.com/2011/08/11/business/economy/credit-anxiety-hits-shares-of-french-banks.html This one is from last month and suggests France is at risk of a downgrade.

http://online.wsj.com/article/BT-CO-20110914-703737.html More recently, France is defiant, but two of their main banks were downgraded, which doesn't bode well. Though since the entire planet's banking sector is still more or less fucked right now, that was hardly a suprising turn of events. UBS will almost certainly be next, since they were on the brink even before the massive fraud (which reminds me, new thread needed!)

http://contraryinvesting.com/sovereign-debt-trouble/europe/cds-inversion-in-europe-investors-favor-corporations-over-france/ This one is a sarcastic financial blog. A guest author suggests it's time we accepted that sovereign default is inevitable in the current climate - France won't default, but some, including Greece, will, and France isn't going to have the easiest time of it in the near future.

The combined debts of Greece, Ireland, and Portugal are small enough to be easily handleable by the other countries. Spain is bigger, but they can still manage if it needed a bailout. However, Italy is completely out of the question.

Handleable by the other countries at what cost, though? It's not as if the other economies, even the relative powerhouses like the UK, France and Germany are floating atop the crest of a wave of mass surplusses... Bailing the weakened economies out would cripple them. Granted, we've already bailed them out, but they could still default entirely even after that.

edited 17th Sep '11 7:01:26 PM by CaissasDeathAngel

^ The UK is gripped in austerity measures as well thanks to Labour spending the country into practical bankruptcy. France is not looking well either.

Really, the only "Economic powerhouse" going on in Europe right now are the Germans and its only a matter of time til bailing everyone else out affects them as well.

Canada and Scandinavia =

When I said "we," I meant "Americans," not "tropers."

I mean, do I care that they're drowning in debt? Yeah. But "care" as in "feeling sympathy" and "care" as in "actually doing something" are two different things, and it's not really something the US would be involved with, so, unless it's a call to Pass the Popcorn, it's not really my problem at the moment...

Kinda Thread Hop:

India's in the EU now?

But, how's that relevant to the thread, your subjective attitude? Or are you simply trying to find out if you want to stay on it? Then I suggest just lurking.

As for your question: short answer: [C]. That is, financial crashes are highly contagious

edited 17th Sep '11 7:46:14 PM by JesusSaves

It explains why I know nothing about it—covering my later ignorant American questions—and carries the implication of "is this going to be a problem of the US later?" behind it...

Bailouts may be costly (though probably much cheaper than the up front cost if TARP is any indication), but doing nothing is infinitely worse.

At this point, there is no perfect solution, only a not completely terrible one.

edited 17th Sep '11 7:50:37 PM by storyyeller

@Deboss, India isn't a proper democracy yet, neither is Russia or Israel or Pakistan

Eh, most of the national debt accrued in the United Kingdom was to keep the economy afloat.

Erm, yes it is, and it has been since at least 1950.

Trudat.

However, to many Indians themselves, they see it as a sham democracy.

But anyway, I'm assuming the apathy we Brits show to the crises on the continent isn't good for us, right?

Storyyeller: Bailouts merely delay the inevitable, which is 'doing nothing because there's no money to do anything'.

Coming soon to a government near you.

Canada and Scandinavia =

Uh, no. Finlands entire government depends on whenever Greece falls or not. If they fall and we get hit hard, group of isolationist assholes called "The Finns"(Fuck them) are msot likely to be the next government. Which spills disaster to us in my mind.

Currently the assurances(or what you call them) are the problem to us, sicne governemt promsied we wouldn't go mindlessly into bailouts but now we can't agree excatly what these assurances are.

edited 18th Sep '11 5:01:48 AM by Mandemo

^^ Actually there is enough money. As has been pointed out before, the finances of the euro zone taken as a whole are not bad.

What about those in the EU but outside the Eurozone? Events in the Eurozone will affect them too (especially Ireland & Britain)...

Ireland does use the euro, and in fact, has already been bailed out. And Britian isn't a big problem at the moment.

Anyway, the fate of the non euro members of the EU is a political question, not an economic one.

edited 18th Sep '11 5:51:09 AM by storyyeller

We'll see about the truth (or otherwise) of that before the year is out. I'm betting on domino defaults leading to total collapse of the single currency by next summer.

edited 18th Sep '11 5:49:35 AM by InverurieJones

I know Ireland uses the Euro, and it has been bailed out (Britain did some of the bailing out, I do watch the news you know...). Britain, from the inside, isn't quite as rosy as you'd imagine.

It might be a Political Question, but Economic Factors will certainly be involved, so whatever happens in the Eurozone does matter for those EU Member states outside the Euro, at least in trade terms, if not in other areas.*

...and that will hit everyone, inside and outside the Euro in the EU. And those outside the EU as well.

edited 18th Sep '11 6:39:38 AM by Greenmantle

This is what I've been saying. Countries do not exist in isolation for the most part anymore, especially when part of a political union (EU) and an economic union (Eurozone). One country forcibly leaving either one of those, particularly the latter, has serious implications for the others, especially those already on the brink, and it could easily push them over.

I'm wondering if we should go the route of a different Greek - Solon - and just pardon all the debts.

Sounds like a fairly clean solution to me. That, and not allowing banks to coin money out of thin air in the form of debt anymore. That's completely unsustainable.

Holy shit this looks more and more like the plot of Control. So that is what Kimimaro did, metaphorically speaking?

Problem pardonin all debts is following: if we pardon the debts now, how can we guarantee that they will be paid in future? What about those who loaned that money in first place?

It could create situation where politicians(the idiotic atleast) think they can just keep going as current and people will jsut forgive them.

Well, how about some sort of penalty to the politicians rather than the State?