Financial Times (February 23, 2012)Financial Times (February 23, 2012)
“Japan has somehow managed to creep by with its problems untouched.” Will Japan’s “happy depression” end as the Greek crisis settles down? Jim O’Neil of Goldman Sachs believes there’s reason to worry. “Japan’s outstanding debt to gross domestic product stands at a whopping 230 per cent and makes Greece’s latest 120 per cent by 2020 target seem like a picnic by comparison.”“Japan has somehow managed to creep by with its problems untouched.” Will Japan’s “happy depression” end as the Greek crisis settles down? Jim O’Neil of Goldman Sachs believes there’s reason to worry. “Japan’s outstanding debt to gross domestic product stands at a whopping 230 per cent and makes Greece’s latest 120 per cent by 2020 target seem like a picnic by comparison.”
Wall Street Journal (February 14, 2012)
“Athens has agreed to carve €3.3 billion out of this year’s budget (including €300 million out of pensions), slash the minimum wage by 22%, and eliminate 150,000 government jobs by 2015.” This will not put out the fires and rioting. The Greek crisis will continue. “The larger question is whether the rest of Europe and America will learn from Greece’s chaos before they experience the same fate.”
Washington Post (January 31, 2012)
The Post urges Congress to deal with the mounting long-term debt problem without jeopardizing the economy. “The smart path would deal with the debt in a way that is gradual, balanced between spending cuts and revenue increases and intelligently targeted rather than the current law’s bludgeon.” Trying to reduce the debt too quickly would be “dumb” and cause the economy to crash. Simply ignoring the debt problem, however, would be “dangerous.”
Wall Street Journal (November 30)
Germany is unfairly getting blamed for the Eurozone crisis. “The reality is that the Germans—along with the Dutch and the Finns—are the rare Europeans who understand that saving the euro requires more than a blank check. It requires a new political commitment to better economic policy…. Money alone won’t solve Europe’s more fundamental debt and growth problem.”
Germany is unfairly getting blamed for the Eurozone crisis. “The reality is that the Germans—along with the Dutch and the Finns—are the rare Europeans who understand that saving the euro requires more than a blank check. It requires a new political commitment to better economic policy…. Money alone won’t solve Europe’s more fundamental debt and growth problem.”
Investment Week (November 10)
Famed investor Jim Rogers predicts the next crisis will be worse than that of 2008. “In 2002 it was bad, in 2008 it was worse and 2012 or 2013 is going to be worse still—be careful.” He points his finger at non-sustainable debt levels which have left countries with few options for increasing economic stimulus. “The world has been spending staggering amounts of money it does not have for a few decades now, and it is all coming home to roost.”
The Telegraph (October 31)
“Veteran investor George Soros has attacked the lack of leadership at the top of the eurozone and said that the new Brussels ‘deal’ to solve the debt crisis will only last between ‘one day and three months.’” Soros points out faults. The 50% Greek debt cut will actually only amount to 20%. Banks may not agree to the terms, hoping to collect on their credit default swaps. And clueless European leaders have again responded with “too little too late.”
The Economist (October 8)
The solution to Europe’s crisis is fairly obvious, but there is one problem. The solution “depends on the Europeans to carry it out. The debt crisis has been running for 18 months now, and the only way that euro-zone leaders have dazzled is through sheer incompetence.”
Tags: Crisis, Debt, Europe, Incompetence, Leadership
Bloomberg (September 14)
“European banks are losing deposits as savers and money funds spooked by the region’s debt crisis search for havens, a trend that could worsen economic and financial conditions.” Deposits dropped 40% at Irish banks during the past 18 months, but the trend is affecting Greek, German, French, UK and Spanish banks as well. In turn, banks are showing a clear preference for the perceived safety of the Federal Reserve over the European Central Bank. “The cash that foreign banks keep at the U.S. Federal Reserve has more than doubled to $979 billion at the end of August from $443 billion at the end of February.”
“European banks are losing deposits as savers and money funds spooked by the region’s debt crisis search for havens, a trend that could worsen economic and financial conditions.” Deposits dropped 40% at Irish banks during the past 18 months, but the trend is affecting Greek, German, French, UK and Spanish banks as well. In turn, banks are showing a clear preference for the perceived safety of the Federal Reserve over the European Central Bank. “The cash that foreign banks keep at the U.S. Federal Reserve has more than doubled to $979 billion at the end of August from $443 billion at the end of February.”
The Economist (August 20)
Europe’s leaders and, in particular, Angela Merkel correctly sense the lack of domestic support needed to fix the euro zone crisis. What they overlook is the need to cultivate this support. Half-measures will not work and a euro zone collapse would be damaging. “The current rescue plan for the euro is just not working. The markets continue to price in default…. A year ago it was said that the euro zone could take care of two or three small countries but that Spain was too big to fail. Today, with Italy and even France looming into the picture, the very survival of the euro is coming into question.”
Fortune (August 19)
As for the European debt crisis, you can “expect more trouble.” Leaders have failed to provide “action that’s a step ahead of the markets…. Time has been wasted defending the indefensible before giving in to the inevitable…. Solutions that might have worked a few months earlier become insufficient as the contagion hits more countries.” All of this means the problems keep growing and “a wider, more expensive response is required.”
