The so called five "PIIGS," Portugal, Ireland, Italy, Greece and Spain have run up enormous deficits they can't afford and are in serious financial trouble. But why should you care if you're not a citizen of one of those nations?
Because your economy depends on it. U.S. businesses for example, are counting on selling sizable amounts of products and services in Europe and the U.S. government is desperate for European cash to help fund its out of control deficits.
The Euro Zone must confront this crisis quickly before it gets worse. The most likely approach will be for the stronger countries to offer a bailout by channeling resources to the International Monetary Fund (IMF). But every European nation has problems and they may not commit those resources to bailout others.
But assuming there are enough resources for a bailout, to get the IMF money, these troubled nations will have to get their finances in order by dramatically slashing their spending and aggressively raising taxes. This could trigger widespread protests from their citizens and potentially even riots.
Elsewhere in Europe the situation is growing worse. Austria just nationalized one of their troubled banks and may have to nationalize another. The Baltic states, and Ukraine and Hungary also face financial peril.
And as America tries to spend its way out of a deepening Recession by using money it doesn't have, its deficits are also soaring. What we're confronted with is a domino effect in which one after the next could topple.
As a result, please be very conservative in how you spend your money. And if you can afford it, buy a few small gold coins, which are highly likely to hold value in the event your paper money loses much of its worth.
It turns out, it is a small world after all and what happens to your brethren overseas affects to you.
Dick
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