Europe debt crisis stirs recession fear

news.yahoo.com...

A dark cloud has settled over the world's financial markets, as growing numbers of people are concluding the debt crisis in Europe could hammer global growth — and even bring back recession barely a year after a patchy recovery took hold.

Government officials — whose job it is to boost confidence — downplay that risk, but many economists are warning that the much-feared — "double-dip" recession could be starting in Europe.

It would be the next ugly chapter in the global financial and economic turmoil that began three years ago. And now as then, what is striking is the inter-connectedness of everything — how near-default in Greece and weeks of dithering in Germany have affected commodities like oil and gold and, with demand and confidence waning, have bludgeoned stock markets around the world in a way that rattles ordinary people saving for retirement from Korea to California.

In 2007, the bad debt connected to repackaged subprime mortgages started undermining banks and hedge funds, and by early 2008 confidence in the system was slipping fast.

This time it is the exposure of banks everywhere to sovereign debt — the IOUs of governments — whose value has been falling for months.

The sheer size of the European economy is a factor, said Mauro F. Guillen, director of the Lauder Institute at The Wharton School in Pennsylvania. "If European demand goes down, global growth will slow down," he said.

"A European economy that lags is not necessarily enough to put the world economy back into recession. But a European economy that cannot stabilize its currency and capital markets certainly will push the global economy back into the red." Nicholas Colas, ConvergEx Group chief market strategist, told The Associated Press. "A double dip is a possibility."

What the link goes on to say is that this will be the same as what happened in '08 basically. But unlike '08, we don't have the money to bail anyone out, and it is soverign debt. Which means entire nations will collapse, not just banks.

We could be looking at a domino effect of collapsing economies across Europe spreading across the world leading to even stable nations being forced into austerity measures and massive protests and riots.

The unemployment rate in the USA is 9.9%, imagine another recession, by the time (if) it is over our unemployment rate could be double that. Then add that China's exports will no longer be needed leading to a Chinese recession, our whole world will go to sh*t.

If there is any time for a war, coups, civil wars, or even world war; that time would be then.

This is almost exactly the same as the Great Depression when there was a stock market crash in 1929 and an even bigger crash in 1932.

Do you know why this second bigger crash occured? Becasue the U.S. administration under Hoover refused to put into place a stimulus package. If the U.S. and other western powers do not extend their stimulus packages things are going to get a lot worse.

An austerity programme is not the way forward. If you cut now the GDP and economy will contract actually resulting in a bigger deficit, such as in Ireland. Austerity programmes are politically driven economics. It leaves any remaining state industry open to private takeover from the big corporations of our world.

In the U.K. that means the NHS.

nevermind. disregard this post.

[edit on 21-5-2010 by Solomons]

reply to post by Solomons


Absolute bollox mate i'm afriad. The stimulus project is what actually stopped a complete and utter meltdown in the U.S. in the 1930's.

The fact that some corporate leaders and military minds were willing to launch a coup to overthrow FDR and install a Hitler/Mussolini type government( Corporatism ) is evidence that this stimulus and legaslative package launched by FDR was for the people and not the elites.

It was the military build up during the late 30's and 40's that bought the U.S. fully out of recession and into a boom phase, also state run.

Oh thanks, now i look like i'm posting to myself.



[edit on 21-5-2010 by Peruvianmonk]

reply to post by Peruvianmonk


The domino effect is there for all to see, what we have been lacking is wealth creation... the bailouts IMHO only ever brought the establishment time to setup those foundations... You need industry and a larger workforce to spread the pain of the repayment plan for the kinds of money they have been borrowing.

Without the wealth creation the establishment are putting their own heads in a noose, and I really do not think they are that silly.

So what is the plan since the wealth creation isn't in place?

Is there some kind of new tech in the offing? what other revenue streams can they tap?

If coporations and banks are behind this, what is in it for them once they have bled everyone dry, what then? their printed money/bonds are worthless.

The only conclusion I can come to is that some kind of new tech is about to be unveiled or prior to any next crash some kind of conflict...

On that score a certain patten seems to be emerging... reminicent of the political/militaristic landscape of the pre-WW2 years..

Tho in all honesty I hope I am wrong.. and need my tin foil hat adjusting.