Tag Archives: debt crisis

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The True Scale of American Debt: $220,000 for Every Man, Woman, and Child

The 22 trillion dollar debt of the federal government receives a lot of  media attention. But this is only part of the picture. The true figure is an additional 50 trillion dollars.

When discussing America’s debt problem we have to also consider: corporate debt, which has doubled since the last financial crisis; consumer debt, accounting for $13 trillion; and state and local government debt, growing at an alarming rate.

So that is $72,000,000,000,000 and works out at $220,000 for every man, woman and child in the US.

Read More: Zero hedge

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ITALIAN ELECTIONS COULD RE-IGNITE EUROZONE DEBT CRISIS

The Italian elections have left Italy with a result which may render the country ungovernable, and could reignite the eurozone debt crisis. The lower house was won by Pier Luigi Bersani’s centre-left bloc; but the upper house, the Senate, was taken by the centre-right, conservative block, led by Silvio Berlusconi. Protest party, Five Star, led by a popular Italian comedian, Beppe Grillo, came third.

Mr Bersani’s centre-left bloc had won 29.57% of the vote for the lower house (Chamber of Deputies) to 29.15% for Mr Berlusconi’s bloc.

Mr Grillo’s Five Star Movement had 25.54% and the centre left led by Mario Monti 10.57%.

Control of both upper and lower houses is required to govern.

Grillio campaigned to return to the Lira and Berlusconi campaigned against EU imposed austerity, calling for tax cuts to stimulate Italy’s ailing economy.

Bersani has pledged to stay the course of the EU crisis, wanting to work with Europe. However, he will find it hard to form a workable coalition.

As the results came in bond markets across Europe began to fall. Italy is the third biggest economy in the eurozone and has the power to bring the euro down.

Even if Bersani can form a government he cannot ignore the anti-austerity, anti-eurozone message from the election. Even within his own party there are deep divisions over Europe, and his party will want

Read More BBC
The Telegraph

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FRANCE HAS BEEN STRIPPED OF “AAA” CREDIT RATING BY MOODY’S

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The rating’s agency Moody’s has stripped France of it’s AAA credit rating. The agency cited France’s continued exposure to the eurozone debt crisis, but also said the inflexible labour market and low levels of innovation were seriously hindering France’s growth prospects.

In a statement Moody’s said: “Further shocks to sovereign and bank credit markets would further undermine financial and economic stability in France as well as in other euro area countries.

“The impact of such shocks would be expected to be felt disproportionately by more highly indebted governments such as France.”

The move is a serious blow to the socialist governments economic policies. Francois Hollande’s government is trying to push through labour reforms, though some believe they do not go far enough.

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George Soros: Germany should back growth or leave euro – Telegraph

George Soros: Germany should back growth or leave euro – Telegraph.

As the debt crisis continues in Europe, many of the same arguments are being made within the eurozone countries as to the best way forward. Italy and Spain are both edging closer to needing a bailout; and it will not be long before Greece will be requiring another bailout package.

However, the arguments between growth and austerity continue. Germany are reluctant to continue to pay the bills, without the proper checks in place. But will Spain and Italy be prepared to sign away political autonomy?

Now George Soros has said “Germany must back growth or leave the euro”.  To back growth means Germany continues to bailout and lend more money – increasing indebtedness. Germany has made it clear it desires growth, but not by creating more debt.

However, if Germany were to leave the euro it would enable the Euro to devalue and ease the economic pain in the struggling nations.

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Spain and Italy to be Bailed Out

At the G20 summit in Mexico European leaders have agreed on a deal which will see Spain and Italy being bailed out using a €750 billion bail out fund. In the deal European governments will buy up Italian and Spanish debt, in effect transferring the debt to other countries within the eurozone; instead of bailing out the individual governments.

This is a step towards the issuing of eurobonds, which would in effect be under written by Germany

For further information: The Telegraph

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Could France Need a Bail-Out?

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The former UK Prime Minister Gordon Brown has spoken ahead of next week’s G20 summit in Mexico, about the prospect of a required bailout for Italy and France. Gordon Brown has called for the G20 to begin to draw up a “concerted global action plan” to deal with the crisis.

This comes after German Chancellor Angela Merkel, attacked the French President Francois Hollande for allowing the French economy to stall. She also echoed Mr Brown’s comments, warning that Hollande’s socialist policies could lead to France being enveloped by the debt crisis.

Last year, when officials began to speak of the contagion spreading to Italy and Spain, no solid measures were put in place, and now we are on the brink of Spain requiring a full bail-out (the bailout currently under consideration is only to bailout their struggling banking system). Spain and Italy were both labelled at the time as “too big to fail”.  At that time the thought of a French bailout was unthinkable.

However, it is expected that the summit in Los Cabos, Mexico, will see world leaders continuing to pressure Chancellor Angela Merkel to agree to Eurobonds. Mrs Merkel has left Germany for the summit, remaining steadfast in her tough austerity stance – in the face of French opposition from Francois Hollande, and with President Obama also backing the new French President.

 

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IT’S MAKE UP OR BREAK UP FOR THE EUROZONE

IT’S MAKE UP OR BREAK UP FOR THE EUROZONE

The biggest threat to growth in America is the economic situation in Europe.

World leaders are growing frustrated at the Eurozone’s failure to find a workable solution.

The United Kingdom is highly exposed to the trouble in Europe.

With the UK back into recession and figures showing that government spending is propping up the UK economy it is essential the economic storm does not cross the Channel to Britain. As David Cameron the British Prime Minister has said it is time “[the eurozone] make up or break up”.

However as Prophet TV has been reporting for years the financial markets are faith based systems.

Even now if confidence can be restored and correct decisions taken disaster could still be averted.

 

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Iran Threatens to Halt EU Oil Supply

Iran Threatens to Halt EU Oil Supply

After the EU and America decided on an oil embargo against Iran, over it’s nuclear program, the war of words intensifying. The EU decided on an embargo starting in July. However, Tehran are looking at stopping oil exports of EU companies immediately. Many of these companies are already in a perilous financial situation due to the Debt Crisis in Europe. The oil in question is part of a buyback scheme which the Iranian Oil Industry favors, and is oil which is owed to these companies. If Iran went ahead, China would buy the oil they refused to send to Europe.

Iran is also threatening to close the Straits of Hormuz, where about 20% of the world oil is transported, making it the most important oil transportation sea route.

Without a satisfactory conclusion of this matter there could be serious financial implications for the global economy.

News

Eurozone Debt Deal…


At the much anticipated meeting of European Union heads of state in Brussels a deal was reached to hopefully solve the continuing debt crisis threatening the world economy.

Leaders agreed that the European Financial Stability Facility (EFSF), used to bailout nations like Greece when they are in trouble, has been increased to €1 trillion. Leaders also managed to reach a deal which will see a Greek debt haircut of 50%, and a plan was also reached to recapitalize the European banks. The problems in Italy were also discussed, with Italian Prime Minister Silvio Berlusconi giving assurances to the EU meeting, that his government will continue with it’s austerity drive and will seek to have a balanced budget by 2013.

When the deal was announced global stock markets rose at the signs that action had finally been taken. However, it very quickly became apparent Europe was by no means out of the woods. The deal is very short of detail. Nothing was said about how the EU will find the €1 trillion required for the EFSF and since then EU officials have been in talks with China to raise the loan. It was agreed that the fine detail of how to raise the money would be discussed at the next EU summit of leaders in December.

Furthermore, despite stock markets rising on the news, the global bond markets did not follow. The bond markets treated the deal with a great deal of caution. Since it is the global bond markets that lend to governments this is not a good sign. Put simply, investors are not investing in Europe, it is too high risk. If bond markets stop lending to large western economies, it means public sector wages go unpaid, schools close, and hospitals run out of cash. This would result in  serious civil unrest.

As for the recapitalization of the banks. When the details were looked at it was found the amount agreed upon is woefully inadequate. Analysts at Credit Suisse, after looking at the figures, concluded that this is not really a bank recapitalization at all. The recapitalization was so important because the banking sector in Europe makes up a significant proportion of GDP. If the banks fail, and require sovereign nations to bail them out it will be very difficult, and would likely have a snow ball effect on that nations credit rating. This is a particular problem for France, whose banks have a high exposure to the Greek debt.

The haircut for Greece also comes with undesirable consequences for Greece. They are to have EU officials installed in Athens, who will not oversee the running of their economy, in effect Greece has lost her economic sovereignty. This is the fate of any nation now, that requires a bailout.

With the recent attention being given to Greece and Italy, we cannot forget Portugal. Portugal is beginning to show the same signs that Greece had before it went into financial meltdown.

Behind all the deals and negotiations are the citizens of Europe, who are becoming increasingly angry at the whole affair. Solvent nations are seeing their citizens angry that they are having to bailout out the wrongs of others, and those nations in financial difficulty are seeing increased civil unrest due to the crippling austerity packages put in place. Across Europe nationalism is growing.

The deal may succeed, but there are a lot of factors at work which could cause it to unravel very quickly. This is not a time for us to be putting our faith in the politicians to find a solution; It is the time to support the work of Prophet TV, to enable the missions in Europe to continue. Economic meltdown need not happen, but we must protect Europe to ensure that it doesn’t.

 

 

 

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