Eurozone debt crisis

[mulberryhawk]

Spain ran a budget surplus of 2% in 2007 and a debt to gdp ratio of less than 40%, Ireland likewise had a primary budgetry surplus and a debt to gdp of 20% in 2007.

It was only when the debts of the private sector banks were transferred to the government balance sheet that debt to gdp exploded.

Remember these two countries specifically were hailed as the posterboys of the EU success story. Strictly adhering to the rules set out in the maastrict treaty. anyone remember the "celtic tiger"....

These rules which were broken by Germany and France initially.

Greece we know was and is still a basket case where goldmans helped them fiddle their books to conceal their mountaineous debts prior to eu entry.

[superfrank]

UK GDP for June -0.7%.

hardly a surprise when the EU is out biggest export market.

i'm sure we'll now get calls for more govt spending, plan B etc.

i always said there would be no lasting recovery until the medicine is taken and the economy set of a path of restructure.

[jimrobo]

true the figures were low but it was completely expected. Dampened by a lot of construction due to the weather which is fair enough. Just look at how we have been affected as an industry and we are small fry. No wonder the GDP has been down the last quarter.

Next quarter will be a boost. Especially with the olympics so its not all doom and gloom!

[giulio2010]

Next quarter will be a boost. Especially with the olympics so its not all doom and gloom!

2011 the Royal wedding
2012 the olimpic games
2013 the champions league final
2014 Iran Invasion ( if nothing good happens in the next 2 years)

[superfrank]

2008-? economy burdened by massive debts, an ageing population, a 3rd rate education system, a bloated public sector, poor infrastructure, high land prices, globalisation, a reliance on financial 'services' and credit expansion...

if only they'd cancel those pesky bank holidays and royal weddings everything would be fine

[Euler]

The Crisis in 1000 words—or less

An interesting angle.

http://www.debtdeflation.com/blogs/2012 ... s-or-less/

[superfrank]

The Crisis in 1000 words—or less

An interesting angle.

http://www.debtdeflation.com/blogs/2012 ... s-or-less/

that's a great article - i don't agree with his solution (although it's better than the current policy of printing money and giving it to banks).

best bits:

When this debt finances genuine investment, it is a necessary part of a growing capitalist economy, it grows but shows no trend relative to GDP, and leads to modest profits by the financial sector. But when it finances speculation on asset prices, it grows faster than GDP, leads obscene profits by the financial sector and generates Ponzi Schemes which are to sustainable economic growth as cancer is to biological growth.

The last Depression saw debt levels fall from 240% to 45% of GDP over a 13 year period, and the ensuing period of low debt led to the longest boom in America’s history. We commenced deleveraging from 303% of GDP. After 3 years it is still 10% higher than the peak reached during the Great Depression. On current trends it will take till 2027 to bring the level back to that which applied in the early 1970s, when America had already exited what Minsky described as the “robust financial society” that underpinned the Golden Age that ended in 1966.

[superfrank]

slightly off-topic but it seems that bad weather affects mortgage lending too

http://www.bbc.co.uk/news/business-18984004

This week the British Bankers' Association (BBA) reported that new mortgages approved by its members but not yet lent - a key indicator of forthcoming trends - had dropped by 11% in June compared with the previous month.

It blamed the exceptionally wet weather.

maybe people have to fill in their applications in the park.

[switesh]

Not quite related to Eurozone debt crisis, but this video discusses sensible solutions to address the financial crisis.

I'd recommend most people to watch it (especially the Fed).

At 7 mins in the video Sal offers MUCH better alternatives to approach the problem rather than printing and stuffing the banks.

Bernanke and Paulson - I hope you're watching this video.

http://www.khanacademy.org/finance-econ ... ral-hazard

Regards,
Switesh

[superfrank]

markets rally on more printing news...

ECB will act to save euro, says Mario Draghi
http://www.bbc.co.uk/news/business-18998083

The European Central Bank is ready to do "whatever it takes" to support the euro, its president has said.

[jimrobo]

its been a crazy day! Literally the markets went mental as those words came out of his mouth! it was a risk on buy buy buy fest!

[andyfuller]

Boris has a plan to bail out both Greece and Spain:

http://www.bbc.co.uk/news/uk-politics-18995166

[Iron]

Greece 'on the brink' as cash reserves dry up - http://www.telegraph.co.uk/finance/fina ... ry-up.html

Eurozone leaders don't half like cutting it fine!

Jeff

[Euler]

ECB press conferance isn't going so well by the sound of it!

[Iron]

Reading between the lines, it's looking like Italy and Spain will basically need to sign over their national sovereignty if they want any help from the ECB...

Jeff