This is a death spiral with no way out. From a real estate bust that began in the U.S., the European economies are now crumbling in stages as we predicted 1 1/2 years ago. Portugal, Ireland, Italy, Greece and Spain are insolvent and so are the U.S. and England. Soon after, the strong economy of Germany will fall and so will the economies of China, Japan, South Korea. Not only will nations have trouble paying their bills, so too will companies as they default on their obligations, causing other unpaid companies to default.
Take Greece for example. To get another bailout, the government is to lay off 30,000 people, raise taxes and slash other overhead such as retirement benefits including to those senior citizens already collecting them, all to raise money to pay its creditors, such as giant banks. What do you think will happen to Greece as unemployment mounts and spending is slashed? Their economy will tank. Panicked creditors will demand even tighter budgets that will never materialize as Greek citizens replace their government and possibly withdraw from the Euro. Yesterday, Greek workers held a nationwide strike shutting down the country. The next such strike is scheduled for October 19th.
The spreading contagion will hit banks, mutual funds and other big financial organizations which will have to take huge write offs. Some will even seek new government bailouts, U.S. banks among them. But the situation will quickly grow worse as more European nations go bust. Please, if you haven't yet done so, slash your overhead, cross train to protect your job and develop your marketable skills. We are in for a financial tsunami of epic proportions.
Dick
To learn more, please see http://www.nytimes.com/2011/10/05/business/global/europe-finds-slope-ahead-is-growing-ever-steeper.html?_r=1&nl=todaysheadlines&emc=tha2 and http://online.wsj.com/article/SB10001424052970203388804576612261343333114.html
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