Monday, April 18, 2011

Europe (And you thought we had problems)

If you are wondering why the US dollar (and debt) was up the day the S&P downgraded the outlook on US debt, all you have to do is look at Europe. Greece Default Drive Risks Reviving Contagion as Bonds Plunge - Businessweek

Having bailed out Greece and Ireland and Portugal, the European bankers and policy wonks ensured everyone that Spain was in good shape.

Except for the fact that Greece probably can't pay for its debt even after the bailout, and may need to "restructure." That is European-policy-wonk-speak for "declaring bankruptcy."
Speculation by German officials that Greece may run out of alternatives to restructuring underscores their reluctance to spend more on bailouts
Germany, with the one economy in Europe that manages to pay its own way, has been "forced" to pay the bulk of the bailouts.

Spain's finances apparently wouldn't survive a Greek default.
The euro had its steepest decline in almost four months yesterday and Greek and Portuguese bonds tumbled, sending risk premiums to euro-era records as default speculation mounted. Otto Fricke, the parliamentary budget spokesman for Chancellor Angela Merkel’s Free Democratic Party coalition ally, said in an interview yesterday Greece may not make it through the summer.
Together with a few other things, you have to wonder if Europe is going to be able to hang together.

France stops Italian train carrying Tunisian migrants - latimes.com
French authorities barred an Italian train loaded with Tunisian migrants and European activists from entering its territory, angering Italian officials who on Monday formally protested what they saw as un-European behavior.

"I realize that every country has its own domestic policy concerns, but the EU requires open borders, and if we start to put up walls the union will go nowhere," Italian Foreign Minister Franco Frattini said.
Maybe that is the point.

1 comment:

Rich said...

"I realize that every country has its own domestic policy concerns, but the EU requires open borders, and if we start to put up walls the union will go nowhere," Italian Foreign Minister Franco Frattini said.

Actually not going anywhere is probably the best idea in a long time.