60 Minutes Piece on EU Debt Crisis

inlet13

Worth watching...

http://www.ftense.com/2012/04/60-minutes-imperfect-union-europes-debt.html

...and I will add - I agree with the woman at the end.

brianlux

A good follow up to your last posted video on economics, inlet. This seems to tie in quite well with it.

How do you see it all shaking out, both in the short term (say, the next year or so) and the longer (say, the next decade)?

inlet13

brianlux wrote:

A good follow up to your last posted video on economics, inlet. This seems to tie in quite well with it.

How do you see it all shaking out, both in the short term (say, the next year or so) and the longer (say, the next decade)?

Honestly, it's a great question and I'll be quick to admit I don't know the timing. So, short term my frank answer is I haven't a clue. If I had to guess, I'd say things will get worse in EU this summer. Clearly, Greece is a country to watch, but I'd keep my eye on Spain as well. The US will probably run into some issues over the summer as well, both debt and economic-related. The irony is, even if things improve economically here, we will see energy prices rise right away in response, so that alone will set us right back. I'd bet stocks trend lower this summer, and generally trends in the stock market predict where the economy is going 6 or so month later.

Longer term, however, I'm really certain this will be a huge disaster... much, much worse than the 08' financial crisis. The problem is simply that as governments deleverage (or try to pay down debt), the world economy will be contrained. It's a no win situation. Pay down debt, your economy shrinks. Don't pay down debt, you will only experience moderate growth at best and you eventually default on your debt. So, take a punch in the mouth now (pay down the debt) or take a jab to the kidney every day for the next 10 years (don't pay down the debt). The main issue is that global economic growth isn't robust and won't be. That would be the only savior for the world (and local economy), but once again, the irony would be we'd have bouts with inflation if things went really well, which would then slow the world economy and bring us back to where we are. I don't see a uplifting scenario, unfortunately. Some would say: The best we can hope for is moderate inflation and a lost decade for the global economy. They may be right. But, I say: the best we can hope for is defaults across the EU to force a disbanding of the EU, this may cause a global recession and we straighten out our domestic gov't and personal finances in response. Basically, I look at it like a drug addict who thinks popping an additional pill is "saving them". It may make them more comfortable for a day, but in the end it's worsening the problem. This deleveraging problem is not going away... it will be the major blip on the radar for the next decade or two or three, unless we really do something. I say tackle it now. And I'm not someone who's saying that won't hurt. It will hurt f'ing bad, we'll have a bad recession, but we'll be better off tomorrow. Our kids will have a future.

peacefrompaul

inlet13 wrote:

brianlux wrote:

A good follow up to your last posted video on economics, inlet. This seems to tie in quite well with it.

How do you see it all shaking out, both in the short term (say, the next year or so) and the longer (say, the next decade)?

Honestly, it's a great question and I'll be quick to admit I don't know the timing. So, short term my frank answer is I haven't a clue. If I had to guess, I'd say things will get worse in EU this summer. Clearly, Greece is a country to watch, but I'd keep my eye on Spain as well. The US will probably run into some issues over the summer as well, both debt and economic-related. The irony is, even if things improve economically here, we will see energy prices rise right away in response, so that alone will set us right back. I'd bet stocks trend lower this summer, and generally trends in the stock market predict where the economy is going 6 or so month later.

Longer term, however, I'm really certain this will be a huge disaster... much, much worse than the 08' financial crisis. The problem is simply that as governments deleverage (or try to pay down debt), the world economy will be contrained. It's a no win situation. Pay down debt, your economy shrinks. Don't pay down debt, you will only experience moderate growth at best and you eventually default on your debt. So, take a punch in the mouth now (pay down the debt) or take a jab to the kidney every day for the next 10 years (don't pay down the debt). The main issue is that global economic growth isn't robust and won't be. That would be the only savior for the world (and local economy), but once again, the irony would be we'd have bouts with inflation if things went really well, which would then slow the world economy and bring us back to where we are. I don't see a uplifting scenario, unfortunately. Some would say: The best we can hope for is moderate inflation and a lost decade for the global economy. They may be right. But, I say: the best we can hope for is defaults across the EU to force a disbanding of the EU, this may cause a global recession and we straighten out our domestic gov't and personal finances in response. Basically, I look at it like a drug addict who thinks popping an additional pill is "saving them". It may make them more comfortable for a day, but in the end it's worsening the problem. This deleveraging problem is not going away... it will be the major blip on the radar for the next decade or two or three, unless we really do something. I say tackle it now. And I'm not someone who's saying that won't hurt. It will hurt f'ing bad, we'll have a bad recession, but we'll be better off tomorrow. Our kids will have a future.

Well done to add Spain into the mix... Things are starting to head south there too. Great analysis!