Eurozone Crisis at Point of Maximum Danger, Great Depression II?

[Crewleader]

By: Mike_Whitney

Economics May 19th, 2010

Best Financial Markets Analysis ArticleDebt woes in Greece have sent bond yields soaring and increased the prospect of sovereign default. A restructuring of Greek debt will deal a blow to lenders in Germany and France that are insufficiently capitalized to manage the losses. Finance ministers, EU heads-of-state and the European Central Bank (ECB) have responded forcefully to try to avert another banking meltdown that could plunge the world back into recession.

They have created a nearly-$1 trillion European Stabilization Fund (ESF) to calm markets and ward-off speculators. But the contagion has already spread beyond Greece to Spain, Portugal and Italy where leaders have started to aggressively cut public spending and initiate austerity programs. Belt-tightening in the Eurozone will decrease aggregate demand and threaten the fragile recovery. We are at a critical inflection point.

From American Banker:

"Bank stocks plunged last week under the theory that banking companies will take large losses in Europe. The theory is correct. Banks will get hurt," Richard Bove of Rochdale Securities LLC wrote in a research note.
Bove wrote in a separate report last week that "big American banks have a bigger stake in this drama than thought." He estimates that JPMorgan Chase has $1.4 trillion of exposure across all of Europe alone, while Citigroup Inc. has $468.4 billion.

http://www.marketoracle.co.uk/Article19616.html

[madrchsod]

1. ya have to admire goldman sachs and the imf.....

they have perfected disaster capitalism.

[CHIMO]

2. Thanks For The Article

Digging into one of the references uncovered a very interesting piece. It was recorded more than a year ago.

Robert Brenner: A Marxist explanation for the current capitalist economic crisis
http://links.org.au/node/957

[Kringle]

3. the euro is doomed nt

[roamer65]

4. I expect weaker Eurozone members eventually will get kicked out of the Euro.

Portugal, Spain and Greece will be out. Ireland may stay if they stick to austerity measures.

The Euro will become a more northern European club, basically becoming a renamed Deutsche mark.

The Bundesbank will have it no other way.

The Brits have to be very happy the kept the pound at this point.