From The Economist:

“THE fear that Greece’s sovereign-debt crisis might presage similar episodes elsewhere in the euro zone has been borne out. In November, Ireland joined Greece in intensive care, becoming the first euro-zone country to apply for funds from the rescue scheme agreed in May 2010 in concert with the IMF. Sovereign-bond spreads (the extra interest compared with bonds issued by Germany, the safest credit) have risen sharply in other euro-zone countries, notably Portugal, but also in Spain. “



Source:

(The Economist)

Category: Bailouts, Digital Media

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13 Responses to “Europe’s Spreading Infection”

  1. NoKidding says:

    I guess I live in a small corner of the blog-based financial news world. Is there a greater community out there that has not expected widespread European Sovereign debt defaults for at least two years now?

    Default is a done deal, right?

    Is there some scenario under which Greece and Ireland could actually pay back what is owed without massive currency devaluations?

    I am totally unable to comprehend any argument that starts with an assumption that default is not the baseline scenario.

  2. rktbrkr says:

    Whats with Norway, are they on a barter system?

    France has the highest prer capita GDP of all the major European countries although the little Eurozone countries are higher than the big counties

    You can’t impose austerity on the little PIIGS with 10-15-20%+ unemployment to keep the German, French and British bankers whole

  3. river says:

    I just have a superficial understanding of the history of the great depression, but I always wonder whether the final conclusion of this debt crisis in Europe could turn into an event like the Creditanstalt bank, which precipitated a chain reaction event in the global banking system. That time, the bank failed in the spring of 1931, which would have been a year and a half past the initial stock market crash of 1929. Greece first started rearing its ugly head 1-1/2 years after 2008, but this time they have been able to extend and pretend to draw it out three years after the crash and counting. But they still haven’t fixed the problem yet, so you still have the threat out there.

  4. JohnnyVee says:

    Default seems like a done deal. Once the first of the PIIGS default, they will all default. What condition will the financial institutions be in when this occurs? How will the Euro survive when the banks are taking heavy losses and 5 countries are in default? What’s the point of a Euro if Germany and France are the only members? The survival of the Euro does not seem plausible.

  5. mathman says:

    We have our own problems to deal with:

    http://www.financialarmageddon.com/2011/05/its-a-duck.html#comments

    the non-recovery is too big to ignore going forward.

  6. duaneteddy says:

    If you follow the details on this Euro mess, it looks like it is about to blow up. Greece isn’t going to make it and Ireland and Portugal are right behind it. Will Germany agree to support all of them?There are no reasonable choices here. It could get real messy and bring our market down with it.

  7. Maria says:

    @rktbrkr, LOL. Yes I believe Norway is using the barter system and that is why they’re doing extremely well in comparison :)

    /Maria

  8. Jeff L says:

    The map is incomplete. There are other currencies pegged to the Euro, including the Bosnian convertible mark, (BAM or KM) at 1 EUR = 1.95583 BAM

  9. johnhaskell says:

    @rktbrkr – good catch! Yes, Norway, Switzerland, Russia, 6 countries of ex-Yugoslavia and Turkey are all on the barter system. It was pretty clever how the Swiss set up their banking system with no currency. I live in Moscow and I just bought eggs and milk for breakfast by promising to help stock the shelves later this evening.

  10. adrian.prisnel says:

    not all EU countries are in Euro zone and not all European countries are in EU

  11. DeDude says:

    rktbrkr;

    “You can’t impose austerity on the little PIIGS with 10-15-20%+ unemployment to keep the German, French and British bankers whole”

    Yet that is exactly what they are doing. The reason they want to impose austerity on the little PIIGS is to buy enough time for all the European banksters to unload their loses onto the public before these loses have to be realized. The fact that they in the process may end up sinking a country or two, and cause huge unnecessary hardship is not of concern to them. The fact that society as a whole lose huge sums when austerity leave millions of people who want a job sitting and doing nothing instead, is none of their concern as long as the banksters get out of their own loses. The fact that the politicians are with the banksters, not the people, suggest that Europe have the same kind of problems with big money and power as we have here in the states. Interesting that only the “soc!alist” swedes and danes have forced their bank owners, loaners and large depositors to swallow the loses rather than passing them to the state – and look how their economies are doing.

  12. DeDude says:

    Every week European banksters see millions of expiring (nominal) Euro worth of little PIIGS bonds converted from bond paper to actual real money – and they say: “YES, lets keep it coming”. At the same time the informed part of the public see those same millions of Euro’s flowing from the public to the vaults of reckless banksters. European politicians allow this scam either because they have been bribed or because they have been intimidated with the scam of “if you don’t give us Euros the world shall come to an end”. The real solution always was to stop converting bonds to Euros and instead convert bonds to new bonds, when they expire. Then a much smaller investment of public funds could be used to finance the deficit spending that the little PIIGS need for years to come before they can turn their economies around. At some point in time enough of the European public will understand this grand theft scam and revolt against what their politicians are doing.