The Economic And Financial Problems In Europe Are Only Just Beginning…
By: Michael Snyder
Right now, the financial world is focused on the breathtaking stock market crash in China, but don’t forget to keep an eye on what is happening in Europe. Collectively, the European Union has a larger population than the United States, a larger economy than either the U.S. or China, and the banking system in Europe is the biggest on the planet by far. So what happens in Europe really matters, and at this point the European economy is absolutely primed for a meltdown. European debt levels have never been higher, European banks are absolutely loaded with non-performing loans and high-risk derivatives, and the unemployment rate in the eurozone is currently more than double the unemployment rate in the United States. In all the euphoria surrounding the “deal” that temporarily kept Greece in the eurozone, I think that people have forgotten that the economic and financial fundamentals in Europe have continued to deteriorate. Whether Greece ultimately leaves the eurozone or not, a great financial crisis is inevitably coming to Europe. It is just a matter of time.
In many ways, the economy of Europe is in significantly worse shape than the U.S. economy. Just recently, the IMF issued a report which warned that the eurozone is “susceptible to negative shocks” and could be facing very tough economic times in the near future. The following comes from the Guardian…
The International Monetary Fund has warned the eurozone faces a gloomy economic outlook thanks to lingering worries over Greece, high unemployment and a banking sector still battling to shake off the financial crisis.But even if there are no “shocks” to the European economy in the months ahead, the truth is that it is already in terrible shape and much of the continent is already mired in an ongoing economic depression.
The IMF’s latest healthcheck on the eurozone found it was “susceptible to negative shocks” as growth continues to falter and monetary policymakers run out of ways to help. It called for an urgent “collective push” from the currency union to speed up reforms or else risk years of lost growth.
“A moderate shock to confidence – whether from lower expected future growth or heightened geopolitical tensions – could tip the bloc into prolonged stagnation,” said Mahmood Pradhan, the IMF’s mission chief for the eurozone.
Today, the official unemployment rate in the United States is just 5.3 percent, but the unemployment rate for the eurozone as a whole is sitting at 11.1 percent. That is an absolutely terrible number, but most Europeans have come to accept it as “the new normal”. The following are some of the prominent nations in Europe that currently have an unemployment rate of above 10 percent…
France: 10.3 percent
Italy: 12.4 percent
Portugal: 13.7 percent
Spain: 22.37 percent
Greece: 25.6 percent
And remember, these unemployment numbers often greatly understate the true scope of the problem.
For instance, in Italy the number of people “willing to work but not actively searching” is much higher than the number of Italians that are officially unemployed…
For every 100 working Italians, there are 15 people seeking a job and another 20 willing to work but not actively searching, the highest level among the 28 EU countries, according to statistics agency Eurostat.So would the true rate of unemployment in Italy be greater than 30 percent if honest numbers were being used?
That is something to think about.
Meanwhile, debt levels in virtually all European nations have shot up substantially since the last financial crisis. Just consider the staggering debt to GDP ratios in the following nations…
France: 95.0 percent
Spain: 97.7 percent
Belgium: 106.5 percent
Ireland: 109.7 percent
Portugal: 130.2 percent
Italy: 132.1 percent
Greece: 177.1 percent
Greece is not the only debt crisis that Europe is facing by a long shot. All of the other nations on that list are going down the exact same path that Greece has gone down.
So whether or not a “permanent solution” can be found for Greece, the reality of the matter is that Europe’s debt problems are only just beginning.
Meanwhile, the economic crisis in Greece continues to become even more dire. At this point, nearly half of all loans in the country are non-performing, authorities are warning that bank account holders may be forced to take 30 percent haircuts when the banks are finally “bailed in”, and it is being reported that Greek banks may keep current restrictions on cash “in place for months”…
Greek banks are set to keep broad cash controls in place for months, until fresh money arrives from Europe and with it a sweeping restructuring, officials believe.Nothing has been “solved” in Greece. The only thing that has been accomplished so far is that Greece has been kept in the euro (at least for the moment). But for the average person on the street things continue to go from bad to worse.
Rehabilitating the country’s banks poses a difficult question. Should the eurozone take a stake in the lenders, first requiring bondholders and even big depositors to shoulder a loss, or should the bill for fixing the banks instead be added to Greece’s debt mountain?
Answering this could hold up agreement on a third bailout deal for Greece that negotiators want to conclude within weeks.
The longer it takes, the more critical the banks’ condition becomes as a 420 euro ($460) weekly limit on cash withdrawals chokes the economy and borrowers’ ability to repay loans.
How soon will it be until we see similar scenarios play out in Italy, Spain, Portugal and France?
As things in the eurozone continue to deteriorate, nations that were planning to join the euro are suddenly not so eager to do so…
Poland will not join the euro while the bloc remains in danger of “burning”, its central bank governor said. Marek Belka, who has also served as the country’s prime minister, said the turmoil in Greece had weakened confidence in the single currency. “You shouldn’t rush when there is still smoke coming from a house that was burning. It is simply not safe to do so. As long as the eurozone has problems with some of its own members, don’t expect us to be enthusiastic about joining,” he said.Yes, definitely keep an eye on what is happening in China. Without a doubt, it is very big news.
But I believe that what is going on in Europe will ultimately prove to be an even bigger story.
The greatest financial crisis that Europe has ever seen is coming, and it is going to shake up the entire planet.
12 Ways The Economy Is In Worse Shape Now Than During The Depths Of The Last Recession
Did you know that the percentage of children in the United States that are living in poverty is actually significantly higher than it was back in 2008? When I write about an “economic collapse”, most people think of a collapse of the financial markets. And without a doubt, one is coming very shortly, but let us not neglect the long-term economic collapse that is already happening all around us. In this article, I am going to share with you a bunch of charts and statistics that show that economic conditions are already substantially worse than they were during the last financial crisis in a whole bunch of different ways. Unfortunately, in our 48 hour news cycle world, a slow and steady decline does not produce many “sexy headlines”. Those of us that are news junkies (myself included) are always looking for things that will shock us. But if you stand back and take a broader view of things, what has been happening to the U.S. economy truly is quite shocking. The following are 12 ways that the U.S. economy is already in worse shape than it was during the depths of the last recession…#1 Back in 2008, 18 percent of all Americans kids were living in poverty. This week, we learned that number has now risen to 22 percent…
There are nearly three million more children living in poverty today than during the recession, shocking new figures have revealed.For the whole article:
Nearly a quarter of youngsters in the US (22 percent) or around 16.1 million individuals, were classed as living below the poverty line in 2013.
This has soared from just 18 percent in 2008 – during the height of the economic crisis, the Casey Foundation’s 2015 Kids Count Data Book reported.
http://www.zerohedge.com/news/2015-07-22/12-ways-economy-worse-shape-now-during-depths-last-recession
Venezuelan farmers ordered to hand over produce to state
As Venezuela's food shortages worsen, the president of the country's Food Industry Chamber has said that authorities ordered producers of milk, pasta, oil, rice, sugar and flour to supply their products to the state stores.
Venezuela's embattled government has taken the drastic step of forcing food producers to sell their produce to the state, in a bid to counter the ever-worsening shortages.
Farmers
and manufacturers who produce milk, pasta, oil, rice, sugar and flour
have been told to supply between 30 per cent and 100 per cent of their
products to the state stores. Shortages, rationing and queues outside supermarkets have
become a way of life for Venezuelans, as their isolated country battles
against rigid currency controls and a shortage of US dollars – making
it difficult for Venezuelans to find imported goods.
Pablo Baraybar, president of the Venezuelan Food Industry Chamber, said
that the order was illogical, and damaging to Venezuelan consumers.
"Taking products from the supermarkets and shops to hand them over to
the state network doesn't help in any way," he said. "And problems like
speculating will only get worse, because the foods will be concentrated
precisely in the areas where the resellers go.
He pointed to statistics showing that two thirds of hoarders – or
"bachaqueros", giant ants, as they are nicknamed in Venezuela – buy
their goods from the three state-owned chains, to resell at a profit.
"Consumers will be forced to spend more time in queues, given that the goods will be available in fewer stores."
The state owns 7,245 stores, compared to more than 113,000 in private hands. Mr Baraybar said that many of the private shops were in densely-populated areas, meaning that people will now be forced to make longer journeys to the state stores.
Seven charts showing why Venezuela's economy is a basket case
The Chamber has asked the government for a meeting to discuss the plan, which they say they were not informed of.
"This does absolutely nothing to help with the shortages," he said, adding that the solution was for the government to increase national production.
In March, Venezuelans were so worried about food shortages and dimininshing stocks of basic goods, fingerprint scanners were installed in supermarkets in an attempt to crack down on hoarding.
Venezuela’s official rate of inflation hit 64 per cent last year – the highest in the world. The government hides the scale of shortages, but angry consumers regularly post photos of empty shelves on social media.
Coming to America and the world!
http://tradcatknight.blogspot.com/2015/06/is-it-too-late-to-start-preparing-for.html
The state owns 7,245 stores, compared to more than 113,000 in private hands. Mr Baraybar said that many of the private shops were in densely-populated areas, meaning that people will now be forced to make longer journeys to the state stores.
Seven charts showing why Venezuela's economy is a basket case
The Chamber has asked the government for a meeting to discuss the plan, which they say they were not informed of.
"This does absolutely nothing to help with the shortages," he said, adding that the solution was for the government to increase national production.
In March, Venezuelans were so worried about food shortages and dimininshing stocks of basic goods, fingerprint scanners were installed in supermarkets in an attempt to crack down on hoarding.
Venezuela’s official rate of inflation hit 64 per cent last year – the highest in the world. The government hides the scale of shortages, but angry consumers regularly post photos of empty shelves on social media.
Coming to America and the world!
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