Europe’s problem is Austerity?

Discussion in 'Politics' started by miami_thomas, Nov 15, 2012.

  1. miami_thomas
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    miami_thomas VIP Member

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    It is absolutely incredible that they are still blaming all the problems in Europe on the austerity measures and not on the debt. Austerity measures are a result of too much spending accumulating into a huge deficit that grew into too much debt. What are they supposed to do if not raise taxes and make cuts? They can’t keep spending and borrowing at the interest rates being offered. They think things will get better but they are mistaken because they think eventually we can just go back to spending enormous amounts of money with low taxes and borrowing to cover the difference. That and they obviously are not taking into consideration the fact that the US will be the next credit bubble to bust and it is going to be so big that it will certainly set of a chain reaction unlike any ever seen. We thought all the previous credit bursts were bad just wait until this one hits.


    Euro zone falls into second recession since 2009 | Reuters
     
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  2. longknife
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    longknife Platinum Member

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    Europe is a prime example of what's going to happen here!!!

    There will come a time when all the gimme-gimme programs go broke and people will no longer be able to get their handouts.

    When that happens, you'll see the same rioting and looting as is going on in Europe.

    It's coming libs - you're getting what you voted for!!! :mad:
     
  3. waltky
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    waltky Wise ol' monkey Supporting Member

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    Double-dip recession comes to Europe...
    :eusa_eh:
    Eurozone slides back into recession
    Nov 15,`12 -- The 17-country eurozone has fallen back into recession for the first time in three years as the fallout from the region's financial crisis was felt from Amsterdam to Athens.
     
  4. Matthew
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    Matthew Blue dog all the way!

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    Europe has the same problem as we do=DEBT. They're being forced to CUT.

    The left doesn't understand or doesn't care.
     
  5. ilia25
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    ilia25 I can do math

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    They were not supposed to face the debt crisis in the first place! Look at Japan, it has more debt than the worst offender -- Greece, but Japan has no problem borrowing at 0%.

    European periphery problems happened not because they had too much debt, but because the European Central Bank refused to buy it in unlimited quantities.
     
  6. g5000
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    g5000 Diamond Member

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    There are six ways for a country to mitigate debt:

    1. External devaluation, a.k.a. "printing money". This option is not available to countries like Greece because they are part of the Euro. Only the ECB can devalue the currency. The ECB has resisted doing this, but is now giving it serious consideration.

    2. Internal devaluation. Raise taxes and lower wages, a.k.a. "austerity measures". This is what the troubled countries have been trying. But the problem is that their austerity measure cannot go deep enough to cover the bills that are due, so they have to keep rolling over their debt by borrowing ever larger sums of money to pay the old debt plus interest, thus creating a snowball effect.

    3. Interest rate deduction. Negotiate with one's creditors for lower interest rates. The troubled countries have been doing this as well, via the ECB. But the troubled countries STILL can't pay down their debts because their economies are shrinking faster than their debts.

    4. GDP growth. The GDP of the troubled countries has been shrinking. The exact opposite of where they need to go. Less GDP means less revenue, which means less ability to service one's debts.

    5. Default. Throw up one's hands and give creditors a haircut. This is the inevitable outcome for the troubled countries in Europe. Right now, creditors are playing a game of hot potato. Rotating the debt hoping not to be the last one holding the potato and taking the loss. Sooner or later, the day of reckoning is coming, and then the shit really hits the fan. It's the second collapse of the global derivatives bubble, identical to the one in 2008.

    6. Bailout. Getting rich countries to pay your debts. Figure the odds of that happening. Zilch.

    .
     
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  7. ilia25
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    ilia25 I can do math

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    No, the crisis hit many European country because they could not borrow in their own currency. Same thing could never happen to the US.
     
  8. Koios
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    Koios Recreational Kibitzer

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    I don't think so. I think the Med Countries, greece, italy, etc. are the problem. They over-borrowed, in part due to the free-flowing capital vis a vis credit default swaps, which our banks cooked up after we gutted Glass-Steagall. It was easy money, and they over borrowed.

    Germany, France, UK are still major players and having to carry the water for other EU member states who acted irresponsibly, albeit with some German, French, UK (and US) banks doing the lending willy-nilly.

    Blame to go around. But restore Glass-Steagall seems like the no-brainer first step on the road to fixing the mess.
     
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    Last edited: Nov 15, 2012
  9. g5000
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    g5000 Diamond Member

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    At last, someone else who gets it.

    .
     
  10. Oddball
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    Oddball BANNED Supporting Member

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    Well, it's a good thing that our central banksters would never ever buy up federal debt to float their spendthrift irresponsibility.

    Oh, wait.....
     

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