Posted by In recent times Newsweek has become one of the few Main Stream Media publications to even mention very bad issues – in fact we at Blinkinblogs have commented on this several times. I am not saying that we agreed with Newsweek all the time but we did tip our hat to their attempt at actual reporting – something that is sadly missing in MSM. Their most recent article on the topic of the economic crisis in Europe, starting with the Greece bailout, is an amusing one to be sure.
Let me quickly sum things up for you, but I also recommend reading the article. Basically the situation in Europe is as follows:
- Countries in Europe decided it was a great idea to have one common currency – the Euro – (except those crazy Brits!). Catch being of course that the countries of Europe forgot to make a financial governing body that oversaw that currency – oops.
- Because of the Euro things were great for a few years in Europe – with one side effect – countries that had a difficult time getting large loans to expand their own economies before could now gets lots of “cheap” loans – such as Greece. Thing is about those pesky loans is people expect you to pay them back – oops.
- Countries who got loans quickly realized they couldn’t pay them back when the world wide economy took a dire turn for the worse. The countries that lent them money and were also tied indirectly to those countries via a common currency quickly realized the trap they created and stepped on. The Euro takes a dive- oops.
- With no governing body on the Euro those who use it scramble to meet and discuss how they can fix the problem. Someone points out this wouldn’t have happened, or might have happened to a lesser degree had there been a financial governing body – oops.
- Nations scramble to fix things by issuing a 1 Trillion Dollar bailout. Read that again slowly. Macro-economists agree world wide – this will not solve the actual problem – Greece is told they need to clean up their act. Riots start in Greece – oops.
- 5 (maybe 7 depending on who you talk to) other countries in Europe start to show signs of decay. Things are looking ugly (this is today btw) – oops.
- Newsweek does an analysis of things – represented in the article I linked to – and they believe that if handled right things are going to be awesome in Europe – in 2020. Until then things will be ugly -riots, carnage, depression, probably suicides (I embellished on this list a bit – I apologize for my over active imagination). So good news! In ten years. Ooooooops.
- The USA government swears that our own economic future is not nearly as bleak as that of the European Union and the Euro. Only time will tell.
Happy Thursday!
masterful summation.
the primary funny thing (1.0) is our (human) inability to see patterns on the macro-scale and outside of a short-term horizon. our neocortex evolved to recognize fast, repeating patterns in the here-and-now.
funny thing 1.0.1: what is ailing europe is the SAME predicated as the sub-prime mortgage collapse here. easy credit (aggressive push of money on to those who could manage it least), a flash of panic corresponding to a drop in valuation, and those sub-prime mortgagees/countries/economic partnerships are now failing.
funny thing 1.0.2: this cycle has been prevalent even before the infamous tulip market collapse 300 years ago. lenders gladly gave money to the lower classes so they could speculate on flipping flowers, only for the bottom of the market to drop out and catch an entire socio-economic tier unprepared.
the only difference here is the time between boom-bust cycles is compressing.
funny thing 1.0.3: i am a self-professed capitalist. however, current news gives me cause for a pause. laissez-faire might not be the answer (if i’d written that just a decade ago i would be hit with pangs of guilt whilst branding myself a “pinko-commie!” in disgust)
i just want my government funded retirement to be there when I retire….and my money that I have saved to be worth something…..Right now my faith in that happening is not high.