The Euro Zone is desperate to avoid massive debt write offs that could endanger national banks and other major financial institutions and Portugal, Ireland, Italy, Greece and Spain are taking drastic cost cutting and tax hiking actions to accommodate them. The problem is those actions if implemented are so severe, their people will never allow it. Yet if they did allow it, their economies would face a Depression, something which is likely to happen anyway.
While in the U.S., with the exception of producing weapons of mass destruction, fighter jets, drones, ships, tanks, etc. there no longer is the greatest manufacturing powerhouse the world had ever seen. Much of it has been shipped to China. The government's strategy to revive the economy is for consumers to spend vast sums of money they don't have on foreign made goods they can't afford. That strategy is not viable, so along with its overwhelming military industrial complex expenditures at taxpayer expense, the economy is troubled and it will get worse. The only thing preventing a collapse is the rush of cheap panicked money not going into Europe.
While export driven nations such as China, Germany, Japan, South Korea and Brazil face huge exposure with their European and American customers in deep trouble. Protect yourself from the deteriorating situation if you haven't yet done so by paying down your credit cards and selling off overhead you may no longer need such as an extra car, motorcycle or boat. Cross train at work to protect your job, offer your employer ideas to generate revenue or cut costs and help others to do their jobs better, for these things will make you more valuable to your employer. And don't give-up hope. Together we will eventually get through this mess.
Dick
To learn more, please see "Austerity Reigns Over Euro Zone as Crisis Deepens," New York Times (1/2/12) http://www.nytimes.com/2012/01/02/business/global/in-euro-zone-austerity-seems-to-hit-its-limits.html?_r=1&nl=todaysheadlines&emc=tha2
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