Tag Archives: economy

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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Turmoil in the Global Stock Markets

The close of trading this week has seen the Dow Jones down for the fourth consecutive week. The last few weeks have seen global markets fluctuate wildly. On many days the spread of the gains and losses have been so extreme, one would expect to see such changes over the course of a year, not a day’s trading.

The erratic behavior of the markets has fueled fears of a double-dip recession in the US and Euro-zone nations, as already slow growth reduces even further.

Economic analysts are seeing markets behave in ways never before seen in the history of stock market trading- this is unknown territory.  Some believe we may be heading for a global depression, or Japanese style stagnation.

The fear within the markets is primarily being fed by the continued uncertainty in the Euro-zone nations. Italy and Spain are looking increasingly unstable, and either one of their economies would be too big to bail out, in the manner of Greece. Even the second Greek bail-out package is looking uncertain, as the other Euro-zone nations loose confidence in Greece’s ability to pay back their debts.

Economists have not given up all hope of finding a way through this present crisis, although the margin for error is very slim. Many believe the only way out is for a break up of the single European Currency. If the economic heavy weights of the Euro- Germany in particular- were to leave it would allow the Euro to devalue, bringing relief for the PIGS nations. Despite the economic virtue of such a plan it is currently politically unthinkable in Germany, as such a move would plunge Germany into a harsh recession.

 

Credit Rating Agencies to Review US AAA Rating

President Obama and leading cross-party congressmen are continuing to try and break the deadlock of the deficit reducing measures required, before Congress will allow the increase in government debt, before the August 2nd deadline.

Talks continue to end in stalemate, and yesterday saw President Obama, famous for keeping his cool, loosing it and storming out of talks. With elections next year no party wants to concede ground, or appear to cause an American debt default, which could happen if the ceiling is not lifted before August 2nd.

Today the pressure to reach a deal intensified with news that the Moody rating agency is “reviewing” the American AAA rating, with a view to downgrade the rating over fears America may default on her debts. Moody’s have previously said they are looking for a speedy resolution to the credit limit issue. Furthermore the rating agency S&P have also come out to say they too are looking at the US credit rating, and have gone as far to say there is a one in two chance of a downgrade; fearing the political entrenchment is worsening.

A default on debt would carry catastrophic consequences to the global economy, plunging the West back into recession, domestically social security payments would not be made, and government employees would not be paid.

This is a key time for the financial stability of the US and the world, Christians need to pray for her leaders to forge a wise road ahead. Support Prophet TV as the Washing DC mission continues, and we seek to block the demonic trying to access Washington via the Kalachakra rituals.