The Coming European Apocalypse

[Joanne98]

Ground zero of yesterday’s wild stock market ride was the Greek debt crisis. Germany approved the austerity/loan deal that Europe hopes will stabilize the crisis, but everybody pretty much understands that it won’t. This is a decent enough summation of what’s happening:

Desmond Lachman: The market has figured out that Greece is insolvent. They really can’t address their budget deficit by the amount that the IMF is asking them to do without sinking their economy. That means the market is realizing Greece can’t repay the $400 billion of sovereign debt they’ve got.

And then the bigger problem is that the markets are looking at Portugal and Spain and Ireland and the concern is that the European banking system is vulnerable to these crises because the European banks own these bonds. Spain has a trillion in bonds, and when you add Portugal and Greece and Ireland, you’re talking $2 trillion. If there’s a default on that, these bonds are in French, German and Dutch banks. So it’s not just think rinky-dinky little economy, you’re talking about the whole European banking system. Greece is like Bear Stearns. But there’s a few Lehmans out there. And the question is, what happens if they come unstuck?

>>>>>>>>>

Citigroup is talking about a 20% US market dip as a result of the Greek crisis. And rumors are rife about insolvency at the European banks, which have their tentacles extended across the globe. Obviously there’s a strong possibility of a ripple effect here.

There are two major problems here. Greece underestimated its debt and now cannot take on the normal means to untangle it; namely, break away from the euro and devalue their currency.


http://news.firedoglake.com/2010/05/07/the-coming-european-apocalypse/

[dixiegrrrrl]

1. roh oh......dominoes.

[HereSince1628]

3. The European union...too big to fail. Just like the US

So, China will keep buying securities, at least until it secures complete control of the northern hemisphere.

[JDPriestly]

9. Meanwhile, we can't even produce our own shoes and socks.

And, those of you who live in cold climates, how do you plan to heat your homes once the oil spigot is turned off?

We need to become energy independent --- NOW. There is not time to waste. And obviously drilling off-shore is not the answer.

[NoNothing]

11. I can't speak for anyone else

But I heat my home with natural gas.

[CLANG]

12. Me too, and if that goes I'll just burn stuff in the fireplace.

[truebrit71]

2. Hmmm...not very rosy..

..

[harun]

4. Maybe Greece needs the Turks to come back to Supervise them.

[HereSince1628]

7. Which will bring back a Vlad the Impaler to SE Europe?

Why did all those colleges and universities drop their Western Civ requirements?

[Warpy]

5. What's happening is that all the funny money that has been created

through derivatives on debt is quickly evaporating. Since a lot of that funny money has been keeping the stock market inflated, the air is going to be let out of that, too.

I still think the real value is 6500-7500 but that we're very likely to see a plunge far below that point, much the same way it did during the first 4 years of the Depression.

We're likely to see another peak as the Greek crisis is averted temporarily, but the rest of the PIIGS countries will make it a short one.

[Demeter]

6. It's Only Money

and fake money, at that. The obscenely wealthy are discovering the limits to greed. Just a little more foolishness on their part, and it's 1789 all over again.

[DJ13]

8. There comes a time when even the wealthy have to lose

Thats why the EU and the IMF are so desperate to stave off a Greek restructuring, but it wont work.

[LongTomH]

10. Here's the best paragraph................

The second problem is that Europe’s central bankers are basically sociopaths who care more about fighting ghosts of inflation than human beings. They did little in monetary policy to forestall this crisis when it presented itself, and they plan to do little in response now. They’ve just failed to act, and in effect welcomed this kind of crisis.

One more time: The Shock Doctrine comes to Europe!