Just a couple of days ago I wrote about how gloomy and depressive the prospects for Europe were and how markets seemed to just be going downwards. Today there have been some huge developments in that the US Federal reserve, has allowed the European central bank and bank of England ‘cheaper access to the dollar’. Reading between the lines, the US have basically said that they are guaranteeing the money of Europe to an extent….
So happy days are back, or are they? Why on earth is the US stepping in to help Europe when they cannot even help themselves? I mean half their country is basically broke and almost living in poverty and yet they feel they can save the world. To me this feels like the second world was when the US ‘heroically’ stepped in to prevent Germany taking over Europe and in that instance everything worked out pretty well. However this time, I cant see the rosy future.
Surely Germany has missed a trick in all this. Germany could have stepped in and been the saviour of Europe by acting as the European central bank and accepting to guarantee any debt but no they have chickened out of this task. To me its strange that Germany did not accept the responsibility as if they did it would almost be like winning world war three as all the other countries have failed bar themselves.
This news comes on the back of the spending results of black Friday. For those of you who are aware of what this means, as it is American, I will explain it for you. Black Friday is the day that follows Thanks Giving in the US and it marks the start of the holiday spending for the run up to Christmas. Shops tend to open extremely early, at around 4am and have special offers to entice spending. Now this year the results were that more money than ever had been spent and the markets reacted to this in an extremely positive fashion. Most shares shot up around 4%-5% as they felt this consumption was a great thing. Now surely the mess the economic climate is in right now is due to the worlds over consumption and spending of money that they don’t have. Despite this people still think its amazing, which granted for the retailers it is, and the market sentiments reflect this with stock soaring. The people and the world have clearly not learnt their lessons from the past and by this logic I am sure that we will be heading towards a bigger and more catastrophic recession in 10 years time, that is of course if we ever exit this one!
Germany could have done more to save the Eurozone? Chickened out? OH NO. Germany's tax payers already bailed out Portugal and now Greece, which is a heavy burden for Germany's economy. A money Germany will probably never see again.
ReplyDeleteAnyway, would they have enough to save everyone?Now France is not doing too well either... Where do we draw the line between helping the rest of european countries and taking care of your own economy?
Perhaps, default sometimes helps to force countrys' economies to apply long overdue changes.
The Financial Fool
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