Europe's train wreck in slow motion

[oxcoug]

this piece from Ferguson is one of the best breakdowns for American readers that I've seen on the crisis.

http://www.thedailybeast.com/newswee...-election.html

I don't know how things play out in the next year - but I don't think any of the scenarios are good.

[Uncle Ted]

Imagine that the United States had never ratified the Constitution and was still working with the 1781 Articles of Confederation. Imagine a tiny federal government with almost no revenue. Only the states get to tax and borrow. Now imagine that Nevada has a debt in excess of 150 percent of the state’s gross domestic product. Imagine, too, the beginning of a massive bank run in California. And imagine that unemployment in these states is above 20 percent, with youth unemployment twice as high. Picture riots in Las Vegas and a general strike in Los Angeles.

Now imagine that the only way to deal with these problems is for Nevada and California to go cap in hand to Virginia or Texas—where unemployment today really is half what it is in Nevada. Imagine negotiations between the governors of all 50 states about the terms and conditions of the bailout. Imagine the International Monetary Fund arriving in Sacramento to negotiate an austerity program.

This is pretty much where Europe finds itself today. Whereas the United States, with its federal system, has—almost without discussion—shared the burden of the financial crisis between the states of the Union, Europe has almost none of the institutions that would make that possible.

Hmm... I can imagine California being the Greece and Texas being the Germany of the United States. Heck, we are even getting ready to bump up the speed limits on some of our autobahns.

As for the political consequences of a U.S. slowdown, it doesn’t take a Ph.D. in political science to see why the White House is worried. Even when people were still talking about recovery, President Obama was neck and neck with Mitt Romney on his handling of the economy, the No. 1 issue in voters’ minds. Back in 1980 Ronald Reagan asked Americans the question that ensured Jimmy Carter was a one-term president: “Are you better off than you were four years ago?” Asked the same question in last month’s Washington Post–ABC News poll, just 16 percent of Americans said they are.

Wow, just 16%. Obama could be toast if Romney takes this page out of Reagan's playbook.

[The_Douger]

Obama's going to get slaughtered.

[myboynoah]

Wow, just 16%. Obama could be toast if Romney takes this page out of Reagan's playbook.

Americans saw wealth plummet 40 percent from 2007 to 2010, Federal Reserve says

[Jeff Lebowski]

Fascinating. And scary.

[edward777]

Obama's going to get slaughtered.

Are you a racist?

[Clark Addison]

Let me first say that I am far from an expert in Eauropean economics. This article adresses something that I have never understood anout the Euro. I have not argument with the Euro in theory, but it is very strange in its implementation. Why would countries submit to tie their monetary policy to the extent they have to other countries, while at the same time having minimal control over those countries fiscal policies? It just seems a receipe for disaster. I know there were standards that all EU countries were supposed to meet, but Greece et. al. got around those in various ways without much trouble. Was it just blind optimism that made them do this?

It will be interesting if this all results in a much more Federal Europe. I hadn't really heard much of that before.

[Color Me Badd Fan]

Let me first say that I am far from an expert in Eauropean economics. This article adresses something that I have never understood anout the Euro. I have not argument with the Euro in theory, but it is very strange in its implementation. Why would countries submit to tie their monetary policy to the extent they have to other countries, while at the same time having minimal control over those countries fiscal policies? It just seems a receipe for disaster. I know there were standards that all EU countries were supposed to meet, but Greece et. al. got around those in various ways without much trouble. Was it just blind optimism that made them do this?

It will be interesting if this all results in a much more Federal Europe. I hadn't really heard much of that before.

As to this point, I can promise you that the Germans, who retire at 67, are not thrilled with the French, who just voted down the retirement age to 60. And the French aren't going to back down on this point. Making things federal means that these kinds of things would have to align and that won't happen unless these countries give up a lot of their own authority.

So trying to strengthen the central government and making Europe more Federal is a no go. I can see Germany linking up with countries like the Netherlands, but they're not going to put up with the lazy French, Spanish, Italians and Greeks.

[byu71]

Americans saw wealth plummet 40 percent from 2007 to 2010, Federal Reserve says

It doesn't change the fact, but isn't that because most american families have their wealth basically in Real Estate, their home.

[myboynoah]

It doesn't change the fact, but isn't that because most american families have their wealth basically in Real Estate, their home.

Yes, that's what the article said, and they're not likely to get it back any time soon, giving context to the Washington Post poll.

[Moliere]

It doesn't change the fact, but isn't that because most american families have their wealth basically in Real Estate, their home.

Sad but true...

I had a fun conversation on Friday with a Frenchy. Let's just say that based on my sample size of 1, France is in trouble with Hollande at the helm. He talked about how Sarkozy spent the better part of his time trying to roll back the unsustainable policies of Mitterand (a socialist) and Hollande comes in and in one week basically eliminates the work Sarkozy had done on finances.

While I won't say the French are lazy, there seems to be a seething hatred for the aristocracy and the hatred stems back centuries. It's almost like the people are either trying to allow themselves some of the aristocratic luxuries or they are just trying to stick it to the wealthy. The ironic part is that there are relatively few "wealthy" french citizens due to the overbearing tax/socialistic policies.

[Paperback Writer]

It doesn't change the fact, but isn't that because most american families have their wealth basically in Real Estate, their home.

Real Estate and 401K plans. Both took a big hit. I think that's what is also hurting unemployment rates. People cannot afford to retire and are staying in the work force longer than planned leaving fewer openings for new college graduates and laid off workers.

My retirement is still a ways off but I thought I knew when I could retire based on historic stock market returns. Now, I just don't know.

[oxcoug]

The ironic part is that there are relatively few "wealthy" french citizens due to the overbearing tax/socialistic policies.

And an increasing number of the few are now relocating to London.

Hollande is a huge problem.

[Pelado]

And an increasing number of the few are now relocating to London.

Hollande is a huge problem.

It's at least in part because of the lax soft drink laws in London...

[YOUTUBE]UlFTyJpBaWo[/YOUTUBE]

[SeattleUte]

Here's our chance. Let's trade Louisiana, Mississippi, West Virginia and Nevada for Greece, Italy, Spain and Portugal. I wonder how this would affect BCS realignment.