A Greek crisis is coming to America

A Greek crisis is coming to America

www.ft.com

It began in Athens. It is spreading to Lisbon and Madrid. But it would be a grave mistake to assume that the sovereign debt crisis that is unfolding will remain confined to the weaker eurozone economies. For this is more than just a Mediterranean problem with a farmyard acronym. It is a fiscal crisis of the western world. Its ramifications are far more profound than most investors currently appreciate.

(visit the link for the full news article)

For the world’s biggest economy, the US, the day of reckoning still seems reassuringly remote.

The International Monetary Fund recently published estimates of the fiscal adjustments developed economies would need to make to restore fiscal stability over the decade ahead. Worst were Japan and the UK (a fiscal tightening of 13 per cent of GDP). Then came Ireland, Spain and Greece (9 per cent). And in sixth place? Step forward America, which would need to tighten fiscal policy by 8.8 per cent of GDP to satisfy the IMF.

Moreover, the article states that Morgan Stanley expects yields on treasury securities to rise from 3.5% to 5,5% this year, which equals $300 billion of extra interest payments, while China has effectively stopped buying US securities (debts). Moody has warned that the triple A credit rating should not be taken for granted, indicating that the risk of buying US treasuries could become more risky if things continue to develop in the same way and hence, require a higher yield for making investors willing to take that higher risk.

All of our countries have increased deficits as a result of this crisis (which I think banks should be held accountable and forced to pay to bear the burden), so we are all in the same boat. Greece is in a pretty bad situation, but so are the countries mentioned in the article.

We all know what happens to machines (be it families, organizations or countries) when they cannot pay their interest anymore: exactly, bankruptcy.


www.ft.com
(visit the link for the full news article)

[edit on 12-2-2010 by Mdv2]

I think the article could have been directed at almost any nation right now, not just the US.. No one can sit by and feel this won't happen to them, not in the US, not in China.. the knock on effects are there for all to see when this contagion spread throughout the world last time..

If you want to liken it to something, this would be the real pandemic we are all facing..

The issue is a contagion within a global system causes global issues, and the risks of this causing a domino effect is there.. whatever route this contagion takes it will spread throughout the system unless it is halted.

The knock on effects of civil unrest exist through out the world just beneath the surface.. I certainly feel this is a troubling time for us all..

The time to pay the piper is drawing near. We will have a price to pay it just is a matter of when? How long can our printing presses stem the tide? What happens when this falls apart? Has this be planned for a long time?

We need answers and only politicians that feel we need answers to these questions should get elected. Who feel asleep at the wheel and how did it get this bad? Is the stock market a lie and who is running it? Where did all this money go?

reply to post by thoughtsfull


That's true, but some countries are in more severe situations than others. The author is merely indicating that the US deficit is not at a significantly better state than Greece's, with the crucial problem that those (hostile) countries capable of bearing the financial burden of America have stopped to catching up with the US deficit which itself continues to increase.

When I raised this issue here on ATS in 2006, one person told me ''when America sneezes, the world catches a cold, which very much applies to this situation. If the US economy comes to collapse, we can be sure that it will have a domino effect on particularly other Western countries. The possibility that such an event would trigger an economic collapse is greater in the American situation than in the relatively unimportant Greek situation.

reply to post by Mdv2


That was the point, we are so hinged on each other, that it doesn't matter which route this takes, or even where it starts we are all in the same boat, no matter how strong we think certain nations are, this is not a storm to be weathered but more a disease to be eradicated.

And since no one nation has taken any protectionist measures we are all open to a second wave of this contagion.. (not that I approve of any protectionist measures) But also no one has put anything in place to deal with a second wave.

Perhaps they will learn this time, if this spreads, and fix the problems.

I have been hearing about this all week, I find it very interesting!.... even ole Glenn Beck has said a lot of very interesting things about this problem in greece... i found this article very interesting... dunno if it is true but it is noteworthy. "...The financial minister of Greece announced yesterday that from 1/1/2011 all financial transactions of sums above 1500 euros in cash, will be banned. For any transaction above 1500 euros, only credit cards and checks will be legal."

Greece is in trouble www.henrymakow.com...

S&F

Seems to me that Western nations are about to be squeezed by the IMF and World Bank in the same way developing nations always have been.

Democracy will suffer - big time.

And the Corporate World Government already created legally under International Trade Law thereby will be firmly established and entrenched.

- sofi

reply to post by soficrow


The IMF attempted to spread their tentacles around Greece, but that was prevented by the EU. They effectively told IMF to get lost. The IMF is very good at keeping at preserving countries in a terminal state of economic weakness.