Will European Depression Occur?

Discussion in 'Economy' started by Madeline, Apr 20, 2010.

  1. Madeline
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    Madeline BANNED

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    European economy is somewhat hard to follow, as the nations in the European Union are interdependent and yet independent. But before the Icelandic volcano erupted last week, serious concerns existed as to the stability of the economy of almost every nation there apart from Germany. Now that the volcano has erupted and that natural disaster has only begun to have its devastating effect, there is little hope that marginal nations (marginal as to their economies) such as Iceland, Greece and Portugal will be able to avoid defaulting on their debt instruments and showing others signs of severe economic downturns.

    Is there reason to be alarmed about the impact such failures will have on the US? If nothing else, there is likely to be no receptivity to any effort to restructure debt for California or New York...two of several states facing impending economic disasters of their own.
     
    Last edited: Apr 20, 2010
  2. Oddball
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    Oddball BANNED Supporting Member

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    Maybe Fornicalia and New York can be bought up out of bankruptcy by someone who has some business sense.
     
  3. Madeline
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    There is not much anxiety that the federal government would permit any state to fail, or default outright on its debt. I'm more concerned that if Europe settles into a depression, the US will suffer severely.
     
  4. Oddball
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    Most of Europe has been in self-imposed recession, or slothfully slow economic growth, for decades....How would anyone really notice if they went into depression?
     
  5. william the wie
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    william the wie Gold Member

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    By most classic economic definitions Europe has been in a depression since 1974. Of greater importance its age structure is likely to prevent recovery. Mississippi is still in default on debts from the 1830s. Nearly all of the provinces of Canada are belly up in all but name. I fail to see the problem. The relative importance of the left coast and the northeast may hit a steeper slope in their ongoing relative decline but that happens and has been happening for a while. Seems like same old same old to me.
     
  6. Madeline
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    So you guys see no effect on the US from a (more severe) European Depression? I'm not so certain I agree.
     
  7. Toro
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    Europe is not in depression.

    However, sovereign default is serious. If it spreads beyond Greece to Spain and Portugal, it could have serious ramifications.
     
  8. editec
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    editec Mr. Forgot-it-All

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    The EU is already in a recession, just as we are...and for the same reason, too.

    Their banking system and ours are in bed together, and always have been, too.

    The Bank of England used to be (no idea now) the largest shareholder in the FEDeral Reserve.

    Two different nations, one set of masters, folks.
     
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    Last edited: Apr 21, 2010
  9. Madeline
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    O, we are wedded to Europe economically that's undeniable.

    Remember the failure of Lloyd's of London, circa 2000?

    The press dealt well with the facts of the institution's growth, explosion and the fall out on investors. But what was less well-reported was that the failure of Lloyd's sent a shockwave through the insurance markets, especially in the US.

    TIME Europe | Special Report - A Brief History | 2/21/2000

    Suddenly, the market capacity for insured risks contracted violently. Where it had been fairly competitive or at least stable, suddenly there was a scramble to find coverage of any sort, at any price. And it was not just marine risks that experienced this contraction. All US property and casualty insurance and risks did...at the very least.

    But Lloyd's was also a predominate market for reinsurance -- the purchase or sale by insurance companies of insured risks to other insurers or reinsurers. The ability to reinsure was (and is) critical to the financial stability of most American insurance companies. And when that market contracted, the fallout was a real domino effect....it might be fair to say that Lloyd's collapse is the main reason liability insurance became almost impossible to buy for schools, etc. in the US. Many school districts chose to shutter sports programs rather than allow them to go on without insurance; still others bought coverage from questionable off-shore companies, only to be shocked when expensive claims were not paid or the company simply went out of business. And there are other easily traced aftereffects, along with whatever universe of "influences" on our economy you care to imagine.

    But the collapse of one business in one European nation is minute in comparision to a serious downturn in the economies of all European nations.

    I'm just a little fretful about the volcano and the European economy is all, guys. I am not as confident that it won't drag us down as you seem to be.
     
  10. Neubarth
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    Well, Dude, Germany just tripped into recession and Germany has been the economic muscle behind the European Community.

    Watch the rest of Europe collapse.

    With Europe we will then see the reality of what is happening in the US. It ain't gonna be pretty. Overall IP was down over One Percent last month. That does not bode well as we were hoping that the ten percent of our economy that was manufacturing would pull the rest of the Economy up with it. Looks like that is a dead dream and the skyrocketing Unemployment Insurance claims will continue to show more and more people are out of work. Granted, the DOL will lie like hell about the size of the workforce citing their phony survey, but that phony survey has allowed them to drop 30 Million workers from the workforce in the past twenty years, and we are at the point of total collapse.
     

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