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While we are all engaged in the OWS protests and hating those financial institutions that made this all possible, the economic crisis that brought us all this entertainment still bubbles on. Still on the verge of blowing it’s top. This time brought to you by the European banks and the money they have tied up in countries like Greece, Italy, Spain and yes even France. With France being the latest to get its debt downgraded.
With the likely hood of a Greek default being around 97% these days and the reluctance of the Germans and French to want to continue funneling money their way, the plan now is to re-capitalize the European banks that would be a risk when this occurs. But the people of Germany and France now have little stomach for that either and both Merkel and Sarkozy are on shaky political ground now. And in my opinion this would be like closing the barn door after the horse has left, kicked over the lamp, set it on fire and burned it to the ground.
Merkel herself flopping in the wind like a flag in a hurricane. First saying that any resolution would take a while to implement and then announcing that a solutions is nearly at hand. But the banks themselves are not happy about this solution saying that it puts a strain on them to keep so much capital on hand. Of course we all know that the real reason is that accepting the money would be tantamount to admitting they are in deep trouble and continued investing in them would be a really bad idea. By the way, continued investing in them would be a really bad idea.
Meanwhile Sarkozy and the French government are yelling that letting the banks fail and the governments default would mean the end of the Euro and Eurozone, that this would result in the return to the economic and political environment prior to WWII. (cue Glenn Miller and Arty Shaw music)
Add to that the Chinese economy is now contracting and of course the financial sector is blaming the decisions of the Chinese government on that. (Funny how they blame the government when things go sour and take full credit when they don’t)
What has this got to do with us ? Well for one thing our big banks are also heavily vested in the European economy as well. Remember Goldman Sacks ? The one who is most responsible for their troubles. It seems they have posted a third quarter loss. And they say it’s do to market volatility. Funny…they usually make out like bandits under those conditions. Guess they are slipping.
So if it all this goes down the way a number of people have been predicting, I seriously doubt that there will be riots in the streets as some politicos fear.
More like celebrations, I would think.
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The problems of Europe mirror ours in a lot of ways as does the beginnings of the same. The EU was far to willing and anxious to accept those countries of the former Easter Block. But many of them had economies that were in a shambles after the the fall of the former Soviet Union.
Some do to corruption and mismanagement, a lot because they were being sucked dry by the USSR just before it’s fall. The rebuilding was a far bigger strain than those in power had planned on it being.
Then came the financial sector who were convinced they could make a killing off of it all.
The old European Common Market countries – before the formation of the EU and fall of the USSR, were actually doing quite well. But like here greed and over reach now has taken it’s toll.
I’ve oft wondered about the so called conservatives both here and abroad since their financial policies have been anything but.
It’s not just Europe on an ‘event horizon’ but us given:
http://news.firedoglake.com/2011/10/18/the-next-bailout-bofa-moves-derivatives-into-insured-institution/
When those who hold derivatives are put to the ‘front of the line’ instead of depositers, when 75 trillion is 5 TIMES the annual GDP of the U.S., when the FDIC ALREADY doesn’t have enough money to cover all the insured deposits in the U.S., well, it doesn’t take much to notice the black hole at the center of the economy.
Sure wish some mainstream corporate media type would ask Obama what he means by a ‘sound financial system’.
The same thing Greenspan meant when he said it.
Truth is that Wall Street and the big investors know damn well how this is going to turn out which is why this duck and cover (their ass) move.
TYPO ALERT:
Horizon has only one “r”.
Otherwise, good article. Get ready for financial armaggedon. Coming soon to a neighborhood near you.
fixed