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Posts Tagged ‘European debt crisis’

NYT: The reckoning is coming to Europe

May 23, 2010 Leave a comment

Hey, guess what?  LIBERALISM. DOES. NOT. WORK. 

Across Western Europe, the “lifestyle superpower,” the assumptions and gains of a lifetime are suddenly in doubt. The deficit crisis that threatens the euro has also undermined the sustainability of the European standard of social welfare, built by left-leaning governments since the end of World War II.

Europeans have boasted about their social model, with its generous vacations and early retirements, its national health care systems and extensive welfare benefits, contrasting it with the comparative harshness of American capitalism.

Europeans have benefited from low military spending, protected by NATO and the American nuclear umbrella. They have also translated higher taxes into a cradle-to-grave safety net. “The Europe that protects” is a slogan of the European Union.

But all over Europe governments with big budgets, falling tax revenues and aging populations are experiencing rising deficits, with more bad news ahead.

With low growth, low birthrates and longer life expectancies, Europe can no longer afford its comfortable lifestyle, at least not without a period of austerity and significant changes. The countries are trying to reassure investors by cutting salaries, raising legal retirement ages, increasing work hours and reducing health benefits and pensions.

[...]

In Rome, Aldo Cimaglia is 52 and teaches photography, and he is deeply pessimistic about his pension. “It’s going to go belly-up because no one will be around to fill the pension coffers,” he said. “It’s not just me; this country has no future.”

Changes have now become urgent. Europe’s population is aging quickly as birthrates decline. Unemployment has risen as traditional industries have shifted to Asia. And the region lacks competitiveness in world markets.

According to the European Commission, by 2050 the percentage of Europeans older than 65 will nearly double. In the 1950s there were seven workers for every retiree in advanced economies. By 2050, the ratio in the European Union will drop to 1.3 to 1.

[...]

In Athens, Mr. Iordanidis, the graduate who makes 800 euros a month in a bookstore, said he saw one possible upside. “It could be a chance to overhaul the whole rancid system,” he said, “and create a state that actually works.”

At the end of the day, two plus two always equals four, no matter which country you live in.

Europe is only beginning to realize the big steaming pile of crap it’s gotten itself into.  Meanwhile, here in the United States our elected overlords would rather not get into the lifeboats, but are content to climb back onto the Titanic.

During the healthcare debate, the favorite mantra of the pro-reformers was that the United States was “the only Western nation” that didn’t “provide” healthcare to its citizens.  This is emblematic of the entire progressive doctrine–that government not only can provide for the cradle-to-grave well-being of its citizens, but it’s imperative that it must do so.  All of it of course, paid for by taxing the productive class and/or public debt.

This is a recipe for a Euro-style disaster.

Ineptitude abounds in Europe

May 20, 2010 Leave a comment

Markets are down big all over the world and Wall Street opened sharply lower.

Worries about Europe’s sovereign debt crisis are the backdrop for all of this, precipitated earlier this week by Germany’s decision to place a ban on all naked short selling, in an attempt to stop the bleeding.  The fools.

The market overlords are scratching their heads, wondering why their magic pixie dust isn’t working.  If you want to attempt to understand why markets are crumbling, look at idiocy like this:

Asian stocks tumbled, with the Nikkei at a three-month low, amid worries there about the European debt crisis, market regulation and growth in China. Plus, riots in Thailand that saw 30 buildings torched including the stock exchange, a massive shopping mall and a TV station, added a layer of unease to the region.

“I’m convinced the markets are really out of control,” said German Finance Minister Wolfgang Schaeuble. ” That is why we need really effective regulation, in the sense of creating a properly functioning market mechanism.”

And this:

[...]The German government faces a stormy debate in parliament this week over its participation in the €750bn stabilisation plan for the eurozone and the move on a transaction tax could persuade the opposition Social Democrats to support it.

Berlin has promised to give credit guarantees up to €150bn as part of the stabilisation package, if weaker eurozone economies come under renewed pressure in the capital markets. The finance minister rejected domestic criticism of the rescue, saying it was essential to preserve the stability of the euro.

[...]

He expressed disappointment at the market reaction. “We would rather see the markets react a bit more positively,” he said. “But when the euro was launched, its exchange rate to the US dollar was lower. So we’re not getting too worked up about it.”

Got that?  It’s the MARKETS that are the cause of the problem.  Those silly markets, refusing to abide by the temporary bandaids bailouts and other lame measures that Europe’s central bankers have put in place to try and stop the sell-off.

Of course, they want to use the volatility to take more control, implement more regulation on the markets.

Such hubris and arrogance.  The “markets” are not acting “out of control”.  The markets are RE-acting to the ineptitude and ignorance of central bankers and European leaders!   The out-of-control spending, the deficits, all of it unsustainable.  The markets (investors) realize this and are acting accordingly.  There’s a big difference.

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