The Beginning of the End?
So first we had in 2007 the rumblings of a problem in the economy in the United States, with the subprime mortgage mess in the United States, because too much money had been given to people with bad credit ratings. As they say when the US sneezes the rest of the world catches a cold and promptly in 2008, the rest of the world had the flu, led by the collapse of Lehman Brothers which also led to the run on Northern Rock. This then led to problems with the insurers of the banks, and so AIG we in trouble and pretty quickly we were in a big old mess.
But hey presto, all of a sudden, out of thin air, more money was created and everyone was allowed to continue with the huge excesses which got us into this place in the first place (namely people living above their means). And so from March 2009 the stock markets around the world thought that all was rosey again, and started a climb which in the end gained around 50% from the lows seen in September 2008.
The gains continued, until the last few weeks, when with the threat of a hung parliament the market started to get jitters (congratulations to readers of the goodlife who correctly guess the conservatives would win) and then there was an oil slick which rubbed 6% off BPs share price, and then …… the
Greeks entered the scene
They decided that whilst in the euro, they dont want to work as long as other parts of Europe, and would like to retire at 55, and most would like to work for the government and not have any uncertainty by working for themselves. This means, that with such a benefits system, they are going (well gone) bankrupt, and now cant pay their debts, or bond repayments, which as you can imagine, has really annoyed the German Chancellor Angela Merkel and the rest of these guys
Now the germans, much like the British, work hard, save and where possible, live within our means. On the other hand, Greece is now in a problem, and they dont want to listen to anyone about how to handle the problem.
And as you know, even admitting you have a problem means that other countries have the jitters, and dont want to invest in your country, or even think you have the capability to repay you. So quickly your stock drops, and before you know it your rating is dropped to junk.
Now back in the day, before the euro this wasnt a problem. You would simply cause inflation, devalue a currency and once again hey presto, you can simply make your problems dissappear because your money becomes worthless. Also the problem is, that in mainland europe, if there isnt work in London, the bankers will move to Frankfurt, Paris or Zurich, but for Greece, well there isnt much chance of moving from Athens and so it really paints a difficult picture.
It does definitely beg the question, especially when you think that Spain and Portugal are getting sucked into this crisis with Italy being touted as the next lame duck, this could quickly spread like a virus across Europe.
So come on Greece pull your head out of the sand, and understand the problem and restructure the country. Many economists say, that in a rising tide everyones stock goes up, but when the tide goes out, you see who has been swimming naked, and quite obviously Greece have been swimming round naked quite happy for a few years with no one able to see their problems, but now, the tide has gone out on the islands, and guess what….
Could this currency… and their country
Be Bringing down this Currency? and Combined euroland???