After the dramatic new European bailout announcement, and despite few specifics, stock markets skyrocketed. But they are in for an ugly awakening. Europe will beg China for money, but their financial problems are so great, even China joining Germany can't solve them. Yet there is a far greater problem:
The economies of Portugal, Ireland, Italy, Greece and Spain are in a vicious tailspin and as they sink, their money needs soar. Yet to comply with the loan covenants, far more public sector people will be laid off, wages will be cut, retiree pensions will be slashed and taxes will rise. This will kill any potential economic recovery as it impacts the private sector as well. Already in Athens for example 40% of their youth are unemployed, one in four storefronts are vacant and over 100,000 people have repeatedly protested on the streets, while their strikes have shut down the country, including tourism, a vital part of the Greek economy. There are already calls to get rid of the Socialist government that just agreed to these bailout terms.
European unemployment rolls, home foreclosures and credit card defaults will soar and home values will fall. European governments are trying desperately to convince their citizens the severe economic problems are being solved as they Band-Aid them. Brace yourself for tough times, for their problems will have global impact, and please willingly help others as together we will eventually triumph over the world economic collapse.
Dick
For more information, please see "No Bounce for Greek Spirits," The Wall Street Journal http://online.wsj.com/article/SB10001424052970203554104577001773720092842.html
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