"Failure to save East Europe will lead to worldwide meltdown"

[financeguy]

If mishandled by the world policy establishment, this debacle is big enough to shatter the fragile banking systems of Western Europe and set off round two of our financial Götterdämmerung.

Austria's finance minister Josef Pröll made frantic efforts last week to put together a €150bn rescue for the ex-Soviet bloc. Well he might. His banks have lent €230bn to the region, equal to 70pc of Austria's GDP.

"A failure rate of 10pc would lead to the collapse of the Austrian financial sector," reported Der Standard in Vienna. Unfortunately, that is about to happen.

"There are accidents waiting to happen across the region, but the EU institutions don't have any framework for dealing with this. The day they decide not to save one of these one countries will be the trigger for a massive crisis with contagion spreading into the EU."

Europe is already in deeper trouble than the ECB or EU leaders ever expected. Germany contracted at an annual rate of 8.4pc in the fourth quarter.

If Deutsche Bank is correct, the economy will have shrunk by nearly 9pc before the end of this year. This is the sort of level that stokes popular revolt.

The implications are obvious. Berlin is not going to rescue Ireland, Spain, Greece and Portugal as the collapse of their credit bubbles leads to rising defaults, or rescue Italy by accepting plans for EU "union bonds" should the debt markets take fright at the rocketing trajectory of Italy's public debt (hitting 112pc of GDP next year, just revised up from 101pc – big change), or rescue Austria from its Habsburg adventurism.

So we watch and wait as the lethal brush fires move closer.

If one spark jumps across the eurozone line, we will have global systemic crisis within days. Are the firemen ready?

Failure to save East Europe will lead to worldwide meltdown - Telegraph

 

[AliEnvy]

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[financeguy]

YouTube - Blindness New Trailer *Exclusive!*

I recall that in the 70's there were a lot of movies of a similar sort.

 

[AliEnvy]

I recall that in the 70's there were a lot of movies of a similar sort.

Everything is pretty much recycled these days.

 

[deep]

Everything is pretty much recycled these days.

a lot of stuff is just copies of things from the past.

(nobody has an original thought)

 

[AliEnvy]

(nobody has an original thought)

Why do you think that is?

 

[deep]

I have been searching on the internet to find an answer to that question,
I have not found it yet.

 

[Zoomerang96]

that's a bit interesting... i got an email from my uncle asking me for my thoughts on this very same article.
i haven't yet replied. i don't know what to think. just read in the times this morning that the uk's recession is even deeper than the B o E said last week...

ah yes, the glories of deflation.

i don't know how i'm going to find a job in june/july. wish me luck.

 

[A stor]

that's a bit interesting... i got an email from my uncle asking me for my thoughts on this very same article.
i haven't yet replied. i don't know what to think. just read in the times this morning that the uk's recession is even deeper than the B o E said last week...

ah yes, the glories of deflation.

i don't know how i'm going to find a job in june/july. wish me luck.

I wish you the best of luck, in finding a job. Things are just as bad here, in the United States. Though, President Obama is doing his best to jump start our economy and to develop new jobs. We, in America are frightened. Credit for small businesses is difficult to secure. And what ever little money we have. We are saving, incase we loose our jobs.

 

[hiphop]

Austria's finance minister Josef Pröll made frantic efforts last week to put together a €150bn rescue for the ex-Soviet bloc. Well he might. His banks have lent €230bn to the region, equal to 70pc of Austria's GDP.

...or rescue Austria from its Habsburg adventurism.

Absolutely right.. thx for the kind words.

I telephoned the finance ministerium last fall (when economy tanked) asking what the hell they intend to tell 1 million Austrians (about 15% of the population) who lose all the interests they have been saving for in the private pension funds. They could have reacted i.e. by allowing those funds to be more flexible in investment - they are bound to the ATX (Trade Index) by law. The ATX is made up of large Austrian companies. The money that people like you and me save for retirement was invested in the companies that comprise this index.

Apparently the finance minister wanted to continue to support big Austrian banks (who invested in Eastern Europe massively) and companies like Immofinanz (practically bankrupt now) and therefore refused to allow more flexible investement strategies - the funds managers could have still been pulled out of the miserable state they are in. But noooo, we can´t endanger the small super rich class of Austria. Nice one, isn´t it?

The same minister Pröll just announced "extremely restrictive saving policies". We, the people, pay the bill at the end of the day.

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[AliEnvy]

I have been searching on the internet to find an answer to that question,
I have not found it yet.

lol

Ok, without google I'll toss out the idea that innovation and creativity take an investment of time, money and risk all of which have been fairly scarce for years.

Adapting old ideas is faster, cheaper and previously proven to be a sure thing in fairly predictable markets.

All creative modeling of potential solutions to the problems of the global economy position winners and losers and predictable consequences.

The problem isn't that there aren't any solutions, it's that there is no time to develop any political will among the countries who have to make the biggest compromises and take the biggest risks - the ones with the most political power in the current establishment.