Iv been reading about this on some of the financial sites and the future of both the USA and Europe is not looking good with countries not being able to pay back debts or on the brink of defaulting. I think we are heading for some real scary and rough times.
The Western World is careening towards a total financial collapse that is now appearing to be unavoidable.
Since our four part series on Understanding America?s Financial Crisis in early May, the unraveling of the global financial health of the world has accelerated to near free-fall conditions. If you are a neophyte to the financial crisis, read our four-part series first to get an overview of the rapidly escalating crisis.
Total unraveling of the global financial crisis was narrowly averted when the Greek parliament voted at the end of June to impose two major austerity bills. The legislation allows Greece to receive a $40.6 billion installment of a $159 billion package in financial aid from the EU (European Union) and IMF (International Monetary Fund). While averting a short-term disaster, the Financial Times reports economists are warning that the new measures ?may have simply delayed the inevitable.?
The problem of Greece?s enormous debt and its inability realistically to finance itself in future years remains as intractable as ever. Default is inevitable. Writing for the Financial Times, Chris Giles warns that even under the best of circumstances Greece is predicted to default by 2013 sending shockwaves through Europe that certainly will find their way to the U.S. Giles predicts that not only would Greece be kicked out of the EU, but Spain, Ireland, Italy and Portugal (the so-called PIIGS nations) also default and lose their membership in the EU. Hyperinflation will grip these defaulted nations as they lose the protection of the EU, cascading into a severe depression for the rest of Europe. It is also likely the Euro would either cease to exist or would no longer be a serious contender with the U.S. dollar.
That?s the good news. Greece is highly socialistic with most people depending on the government for their benefits, and indeed, their livelihoods. Outrageous benefits and corruption are the norm. Losing even some of those socialist benefits has already caused frequent riots. However, with the passage of the austerity laws in late June, Greek unions are rioting with increasing violence. Leaders are holding their collective breath. If the violence threatens the government, even with Marshal Law imposed, the newly passed austerity laws may go down in flames ? literally. The unions actually want the government to default on their debt and go back to the Greek drachma. They falsely believe it to be like bankruptcy that would free them from the backbreaking debt to continue life as usual.
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