Best of the Week
Most Popular
1. 2019 From A Fourth Turning Perspective - James_Quinn
2.Beware the Young Stocks Bear Market! - Zeal_LLC
3.Safe Havens are Surging. What this Means for Stocks 2019 - Troy_Bombardia
4.Most Popular Financial Markets Analysis of 2018 - Trump and BrExit Chaos Dominate - Nadeem_Walayat
5.January 2019 Financial Markets Analysis and Forecasts - Nadeem_Walayat
6.Silver Price Trend Analysis 2019 - Nadeem_Walayat
7.Why 90% of Traders Lose - Nadeem_Walayat
8.What to do With Your Money in a Stocks Bear Market - Stephen_McBride
9.Stock Market What to Expect in the First 3~5 Months of 2019 - Chris_Vermeulen
10.China, Global Economy has Tipped over: The Surging Dollar and the Rallying Yen - FXCOT
Last 7 days
Sheffield "Mi Amigo" Memorial Fly Past , BBC Crew Setting Up Stage for Breakfast TV Endcliffe Park - 21st Feb 19
Stocks Closer to Medium-Term Resistance Level - 21st Feb 19
The Stock Market’s Momentum is Extremely Strong. What’s Next for Stocks - 21st Feb 19
QE Forever: The Fed's Dramatic About-face - 21st Feb 19
Gold Technical Perspective – Why So Bullish? - 21st Feb 19
Sheffield "Mi Amigo" Memorial Fly Past at 8.45am on 22nd Feb 2019 - 20th Feb 19
Here’s The Real Reason You Stress About Money - 20th Feb 19
Five Online Marketing Predictions that will Matter in 2019 - 20th Feb 19
Has Gold Price Reached Upside Resistance Near $1340-1360? - 20th Feb 19
So Many Things are Not Confirming Stock Market Rally - 20th Feb 19
Forex Trading Management: The Importance of Being Prepared - 19th Feb 19
Gold Stocks are Following This Historical Template - 19th Feb 19
Here’s Why The Left’s New Economic Policies Are Just Stupid - 19th Feb 19
Should We Declare Emergency for Gold? - 19th Feb 19
Why Stock Traders Must Stay Optimistically Cautious Going Forward - 19th Feb 19
The Corporate Debt Bubble Is Strikingly Similar to the Subprime Mortgage Bubble - 18th Feb 19
Stacking The Next QE On Top Of A $4 Trillion Fed Floor - 18th Feb 19
Get ready for the Stock Market Breakout Pattern Setup II - 18th Feb 19
It's Blue Skies For The Stock Market As Far As The Eye Can See - 18th Feb 19
Stock Market Correction is Due - 18th Feb 19
Iran's Death Spiral -- 40 Years And Counting - 17 Feb 19
Venezuela's Opposition Is Playing With Fire - 17 Feb 19
Fed Chairman Deceives; Precious Metals Mine Supply Threatened - 17 Feb 19
After 8 Terrific Weeks for Stocks, What’s Next? - 16th Feb 19
My Favorite Real Estate Strategies: Rent to Live, Buy to Rent - 16th Feb 19
Schumer & Sanders Want One Thing: Your Money - 16th Feb 19
What Could Happen When the Stock Markets Correct Next - 16th Feb 19
Bitcoin Your Best Opportunity Outside of Stocks - 16th Feb 19
Olympus TG-5 Tough Camera Under SEA Water Test - 16th Feb 19
"Mi Amigo" Sheffield Bomber Crash Memorial Site Fly-past on 22nd February 2019 VR360 - 16th Feb 19
Plunging Inventories have Zinc Bulls Ready to Run - 15th Feb 19
Gold Stocks Mega Mergers Are Bad for Shareholders - 15th Feb 19
Retail Sales Crash! It’s 2008 All Over Again for Stock Market and Economy! - 15th Feb 19
Is Gold Market 2019 Like 2016? - 15th Feb 19
Virgin Media's Increasingly Unreliable Broadband Service - 15th Feb 19
2019 Starting to Shine But is it a Long Con for Stock Investors? - 15th Feb 19
Gold is on the Verge of a Bull-run and Here's Why - 15th Feb 19

Market Oracle FREE Newsletter

The Real Secret for Successful Trading

Euro-zone Debt Crisis is Back

Interest-Rates / Eurozone Debt Crisis Apr 15, 2013 - 10:41 AM GMT

By: Money_Morning

Interest-Rates

David Zeiler writes: The Eurozone debt crisis that was supposed to have blown over long ago instead has become more like an endless game of Whac-a-Mole, with both new and old problems popping up faster than European leaders can bop them.

As Europe's finance ministers gathered in Dublin today (Friday), they faced at least half a dozen major issues threatening the fiscal health of the Eurozone.


Although Europe's leaders, in concert with the International Monetary Fund (IMF), have succeeded in keeping a lid on each successive crisis over the past three years, that streak can't survive in the face of the new and old fiscal woes that have been peppering the Eurozone.

U.S. investors can't let those past successes deceive them into thinking the Eurozone is no longer a worry.

When the Eurozone debt crisis finally implodes - and sooner or later, it has to - it will hammer stock markets around the globe.

The Latest Eurozone Debt Crisis Whac-a-Moles
At the top of the list of problems facing the Eurozone is Cyprus. That one's far from over.

On Thursday, the Cypriot government confirmed that the cost of its bailout had risen from about $23 billion to $30 billion, and that it might have to sell most of its gold reserves to pay for its portion of the bailout.

And it will most assuredly get worse. The decimation of the Cypriot financial industry in the wake of its debt crisis will shave 12.5% to 15% from the tiny nation's economy over the next couple of years.

You can bet an impoverished Cyprus will need to beg the EU and IMF for table scraps often in the years ahead.

A court in Portugal, one of the original debt-plagued PIIGS (Portugal, Ireland, Italy, Greece and Spain), tossed out austerity measures that had been a required part of that country's $101 billion bailout in 2011.

Ironically, the EU finance ministers agreed in principle on Friday to give both Portugal and Ireland more time to pay back their bailout loans.

And earlier in the week, a report by the bailout coordinating troika (the European Commission, the IMF and the European Central Bank) said Portugal's lingering fiscal struggles eventually could force it to seek a second bailout.

A report released Tuesday by the Organization for Economic Co-operation and Development (OECD) said that Slovenia is facing a "severe banking crisis."

Another report by the European Commission said both Slovenia and Spain had "excessive" budget imbalances that could force them to pay fines of 0.1% of their economic output, in accordance with tough new EU budget surveillance rules.

Italy's political crisis remains unresolved as well, which will further delay needed labor market reforms. Meanwhile, Italy's debt-to-GDP ratio is expected to rise past last year's all-time high of 127% to 130.4% this year.

Finally, the EC report called out France - Europe's second-largest economy - saying that the economic reforms enacted so far would "not be sufficient to solve competitiveness issues."

The report added: "France's public-sector indebtedness represents a vulnerability, not only for the country itself, but also for the euro area as a whole."

Lack of Growth Guarantees Eurozone Debt Crisis Meltdown
The only thing that could prevent the Eurozone debt crisis from at some point imploding is economic growth, and that's not happening.

According to Eurostat, the GDP for the 17-nation Eurozone plunged 0.6% in the final quarter of 2012, a steeper drop than the 0.4% economists had expected and the worst decline since 2009, and the third consecutive decline.

The average unemployment rate across the Eurozone is at a staggering 12%, the highest since the creation of the economic bloc in 1995. The problem is far more acute in some countries; Spain, for instance, has an unemployment rate of 26.3%, and in Greece it's 26.4%.

And recent economic data indicates things are getting worse. Industrial production in Spain plunged 8.5% in February from a year earlier; in Italy it was down 3.8%.

While a healthy EU could prop up one or two struggling members, instead a handful of healthy countries are trying to prop up many struggling neighbors.

There's almost no chance the European debt crisis will be resolved without a major meltdown - it's just a question of when.

Money Morning Global Investing Strategist Martin Hutchinson said he expects the Eurozone economy to "stagnate," and suggested investors keep a watchful eye on it.

"For us as investors, the whole region is best avoided," Hutchinson said.

Source :http://moneymorning.com/2013/04/12/eurozone-debt-crisis-now-its-a-hopeless-game-of-whac-a-mole/

Money Morning/The Money Map Report

©2013 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules