Ongoing European Debt Crisis

Hey, I noticed there wasn't a thread for the ongoing Europe-wide Sovereign debt crisis so I decided to make one and rather make one each time there was news, I thought there should be a mega thread.

Eurozone's growth has stalled, says EU

Eurozone crisis: The possible resolutions

Germany and France 'discussing' radical overhaul of EU

What's the matter with Italy?

Should we feel sorry for Greece?

Tales from Portugal's debt crisis

Debt crisis: while Rome burns, the eurozone fiddles

Eurozone crisis: What it means for East and West

So, basically, the story of this saga so far is that Greece is facing savage and brutal austerity measures which is choking off Economic growth and making the problem worse. Italy is suffering because of anaemic growth since 1995 but has managed to cover itself by high inflation. Ireland is on the road to recovery after the bank bailouts crippled their economy. Spain is suffering from high unemployment after the construction sector when belly up. French and German banks are heavily exposed to Italian and Greek sovereign debt. Finally, the United Kingdom may be faced with a double dipped recession.

edited 10th Nov '11 6:11:31 AM by whaleofyournightmare

Rumors have begun circulating that France and Germany are in preliminary talks to disband and dissolve the Eurozone.

The house of cards comes crashing down...

Breaking up the Eurozone would be bad for Germany because then their exports would be to expensive for the Southern Europeans to afford.

Also:

EU Could Face 'Deep, Prolonged Recession'

Greece needs an entire restructuring of their government if this is to work out. They can't continue doing what got them there in the first place.

^ Neither can Italy, Spain, Ireland, the UK, Portugal...basically half the continent of Europe, Eurozone member or not is in that boat where they cannot possibly continue business as usual.

Well Greece was the major catalyst to this whole thing.

And why can't I help but feel like you are smirking smugly over this whole thing?

Part of the reason for Spain's high youth unemployment is that it also has a broken two tiered job system. Meaning that it's basically impossible for new workers to find jobs.

Also Tom, the UK and Ireland are doing fine.

edited 10th Nov '11 9:23:29 AM by storyyeller

So, I just took a shower, and I had an idea—as is what seems to happen so often for me in the shower—that seemed rather sound, at least in theory.

I was reading Krugman's blog, and he was talking about how the Euro was the "worst of both worlds"—it removed monetary policy flexibility, but kept the "you're on your own" mentality of individual national currencies. However, Britain isn't in the Euro, is it?

Therefore, my proposal is thus: the British national debt is £966.8 billion, or about 1.3 trillion in $USD. That's honestly not so bad, from an American perspective.

So... could we, as the US, just buy all the British national debt and forgive it, and then they could skirt by the worst of the crisis? I mean, we obviously can't do it for the whole Eurozone—they don't like us much at the moment, we don't really owe them like we owe Britain, and most of all, we couldn't afford such a thing—but just Britain? I think we could handle that.

It would let Britain sort of... reset... and hell, maybe we could convince the ANZAC nations, Canada, and the rest of the Commonwealth to chip in some. Either way, would it work? It sounded alright in my head, but...

Tom, Ireland changed their ways and will be able to rejoin the bond markets soon but yeah, Greece was fucked because people were bribing tax collectors to look the other way.

Good luck convincing voters to spend a trillion on saving something from Europe.

I've been told that avoiding taxes was like a national sport in Greece.

edited 10th Nov '11 9:24:54 AM by Thorn14

We have enough debt of our own. Why should we randomly give trillions to other countries?

I've heard Ireland is set to begin possibly making a recovery, the UK not so. Doubly so with a seemingly impending double dip (and long) recession.

Why not? Britain sticks its neck out for us on every stupid thing we do, and then when they have a problem suddenly it's too much to ask to help them out? That's not even that much money, in the grand scheme of things. We could make that back in a decade if we cut the military by a third and attacked pork, subsidiaries, etc.

Whether its a good idea or not is irrelevant.

no one is going to ask tax payers to spend 1 trillion on EUROPE.

I'd say that at least 30% of Americans wouldn't give two shits if the entire continent sunk.

edited 10th Nov '11 9:29:08 AM by Thorn14

Only because the 2 biggest markets we export too are in the shitter >.>

I would. I wouldn't even play fair, if I had to.

"Britain isn't a part of Europe, you fools! It doesn't even have the same currency. They're just riding the wave, and as soon as we give them their shot they'll drop that shit like it's hot!"

Do I like it? No. I'd honestly rather help all of the EU out. But we can't. We can, however, save Britain, and I think we should.

@USAF Russia took your idea and is applying it to Greece since Russia can afford it with oil wealth.

We have no such wealth to spare.

As for the debt crisis, with Berlusconi stepping down, and his successor being a respected economist, Italy might actually recover faster than Greece, which has yet to even pick a replacement for Papandreou.

edited 10th Nov '11 9:32:51 AM by FFShinra

When people in the US talk about cutting the budget, the only thing that is universally popular to cut is foreign aid. People seem to think it's 20% of spending and if we dropped it we could get our finances in order. Foreign Aid not going up by a couple orders of magnitude. Doing so would require both parties agreeing on it, and would likely result in a successful third party take over of the entire government (House, Pres and a chunk of the Senate) in 2012.

Really? Clever Russia, clever. Making nice with Europe by helping them out in the bad times. I like your style.

We could do the same thing. Hell, we could just buy half the British debt and forgive it and I imagine it would help a lot.

Edit: Well, in theory, we could just take the entire foreign aid budget and make it all towards Britain for awhile, in terms of buying up debt and hopefully forgiving it.

edited 10th Nov '11 9:34:28 AM by USAF713

BAD IDEA! The foreign aid budget isn't about helping poor people, it's about paying some countries not to attack other countries. Redirecting it to Britain would help the british at the cost of likely kicking off a war or two (gotta figure most cases wouldn't actually fight, but some would).

I like the brits, I don't want to start up some wars to help their finances.

edit: This is addressed to the post above, not Shinra

edited 10th Nov '11 10:10:03 AM by Oscredwin

Why is it the US's responsibility to pay other people to not be stupid? They won't learn until they've bombed themselves into the ground, like everybody else had to go through. After all, Europe would be a very different—and probably less pleasant—place today without the World Wars.

Is it terrible? Yes. We live in terrible times.

I'm not going to shed any tears for Berlusconi's political demise, that's for damn sure. Corruption, scandals, being known as a collossal jackass, almost like Boris Johnson but scarier and with real power, none of these brought him down. It was the humble economy that pulled it off.

The UK isn't doing brilliantly, but compared to continental Europe...actually, it is. We're in a much better position than even the likes of France or Germany because our currency isn't going to sink. If the Euro implodes, it will hit us very hard, but the others more so because they're in it. Eurosceptics will be screaming "I told you!" but really, we need to help our friends and trading partners out. Ireland has the same problem Greece does, of massive issues with actually claiming tax from people. Seriously, the number of Irish who have been done for tax evasion is ridiculous, and corruption is worn on the Greek economy like a warm fur, impossible to remove and very comforting (to those wearing it).

The issue with Italy, for those who don't know, is one that's been known for years - the economy is too big to bail out. Greece is much smaller, so it can be bailed out, just. Italy cannot, and its interest rate levels have risen to the point where it's struggling to avoid national bankruptcy.

Adding to that, continental Europe was almost continually at war for the middle half of the last millenium - 1300s to end of the 1900s, it was war, war, war, all the time amongst everyone! Look it up, some interesting history there, actually, even beyond the obvious (Napoleon, Crimea, etc)

edited 10th Nov '11 10:02:03 AM by CaissasDeathAngel

@Oscredwin - I wasn't talking about the foreign aid money (which is a piddly amount). I'm talking about outright buying out 1.5 Trillion in British debt. For THAT the US does not have the money to spare. No one does.

^ And ask the bigger question: What do we the US get out of it? Nothing. We get another trillion on top of debt we can't afford and no tangible economic or monetary benefit in return.

Well, the immediate benefit is that we help the people who basically rubber-stamp everything we do to not implode completely. After all the nonsense on our part that Britain has backed, I think we owe them quite a bit.

Would it help if we even just bought half the British sovereign debt?