| maximrace said: What silver-tiger says is true... There is crisis not because of the problems in europe but because of the overreacting financial markets. |
The problems are VERY MUCH due to things within europe. That is the fact that you created one fiscal currency for a number of countries but didn't set a single fiscal policy.
It's like you and a bunch of friends renting a house for college... on the one hand you have countries like Greece, Italy and Spain who are charging up their credit cars to live the good life like their friends Germany and France despite the fact that their jobs aren't nearly as good.
Then you've got a bunch of other countries who are essentially living paycheck to paycheck... and a few with modest savings but also moderate debt,
Then you've got your responsible nations with a good job and almost no external debt who end up paying for everything and unless something changes are eventually left with two shitty options, abandoning their friends, take a hit on the deliquency payments and move on, or pay until you go bankrupt... and be even more screwed. These countries are Germany... and... well Germany really that's it. France is deceptivly "Paycheck to Paycheck".
Without the rule coming down it's completely unworkable long term, but once in DOES come down, and those soverign states give up control of their fiscal policy, are they really soverign states anymore?
They really aren't any different from Pre-Civil War United States after that.
What of course makes it even trickier is that a lot of these countries that are living paycheck to paycheck are relying on IOUs from the poor countries. That's why people often describe italy and spain as "Too big to fail, to big to save."
You could freeze all fiscal market activity and it wouldn't matter, becaue Greece and Italy can't pay their bills... and unlike Iceland who's debts were relavitly small do to their economy being small... Greece and Italy would cause HUGE problems everywhere and like send Spain, Portugal and a bunch of other states into bankruptcy... and the ECB isn't authorized to bailout soverigns.
