Would You Bailout The PIGS?
It seems like you can pretty much largely forget the fundamentals for the time being. We are unfortunately back in the grip of an ever-worsening credit crisis, and that seems to be all the market can focus on for the time being.
The euro nations are in serious trouble and in danger of not being able to ride this one out. It was always going to be a potentially explosive mix, putting countries with economies so diverse together.
For the record the sixteen members of the Eurozone are: Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.
It's one thing bailing out your own country, it's another entirely bailing out somebody elses.
For the euro it may be a case of the first crisis is one crisis too many.
At one end you have, the highly disciplined, but also slow growing, economies of Germany. And at the other end you find the faster growing but poorly disciplined countries such as Spain and Greece. As icing on the cake, you also have, countries that lack in both departments, such as Italy.
As Al Murray would say, you'd never sell that flat with that lot living next door would you?
It seems that the relative good times enjoyed by all since the euro's inception ten years ago, have simply papered over the cracks. During this time the PIGS appear to have made little effort to discipline themselves over debt.
Greece is clearly facing the biggest challenge. Public debt, which currently stands at about 95% of GDP, will grow to a whopping 555% of GDP by 2050 if the current pension and social security programme is left unchanged.
German Finance Minister Peer Steinbrueck now says that euro-region countries may be forced to bail out other members of the 16-nation bloc that face problems refinancing their debt.
Imagine the uproar here in the UK if we were in that situation. Things are bad enough for Gordon McBroon already.
What are the alternatives? Let euro members default on their debt? Break the party up and tell the PIGS to sort their own mess out? Or carry on printing more money like Zimbabwe?
Whichever way, "make your mind up time" is rapidly approaching.
The euro nations are in serious trouble and in danger of not being able to ride this one out. It was always going to be a potentially explosive mix, putting countries with economies so diverse together.
For the record the sixteen members of the Eurozone are: Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.
It's one thing bailing out your own country, it's another entirely bailing out somebody elses.
For the euro it may be a case of the first crisis is one crisis too many.
At one end you have, the highly disciplined, but also slow growing, economies of Germany. And at the other end you find the faster growing but poorly disciplined countries such as Spain and Greece. As icing on the cake, you also have, countries that lack in both departments, such as Italy.
As Al Murray would say, you'd never sell that flat with that lot living next door would you?
It seems that the relative good times enjoyed by all since the euro's inception ten years ago, have simply papered over the cracks. During this time the PIGS appear to have made little effort to discipline themselves over debt.
Greece is clearly facing the biggest challenge. Public debt, which currently stands at about 95% of GDP, will grow to a whopping 555% of GDP by 2050 if the current pension and social security programme is left unchanged.
German Finance Minister Peer Steinbrueck now says that euro-region countries may be forced to bail out other members of the 16-nation bloc that face problems refinancing their debt.
Imagine the uproar here in the UK if we were in that situation. Things are bad enough for Gordon McBroon already.
What are the alternatives? Let euro members default on their debt? Break the party up and tell the PIGS to sort their own mess out? Or carry on printing more money like Zimbabwe?
Whichever way, "make your mind up time" is rapidly approaching.