thecomingdepressionblog.com | ECONOMY – Yes, it is officially time to start freaking out about the global economy. The European financial system is falling apart and it is going to go down hard. If Europe was going to be saved, it would have happened by now. The big money insiders have already pulled their funds from vulnerable positions and they are ready to ride the coming chaos out. Over the next few months, the slow motion train-wrecks currently unfolding in Europe will continue to play out and things will likely really start really heating up in the fall, once summer vacations are over.
Most Americans greatly underestimate how much Europe can affect the global economy. Europe actually has a larger population than the United States does. Europe also has a significantly larger economy and a much larger banking system. The world is more interconnected today than ever before, and a collapse of the financial system in Europe will cause a massive global recession. Once the global economy slides into another major recession, it is going to take years to recover. The pain is going to be immense. Yes, that is going to include the United States. Sadly, we never recovered from the last recession, and it is frightening to think about how much farther this next recession is going to knock us down.
The big problem is that there is simply way, way, way too much debt in the United States and Europe. It has been a lot of fun spending all of this borrowed money, but now we get to pay the price. Citigroup Chief Economist Willem Buiter says that both Italy and Spain are going to need major bailouts and despite the new Greek elections in favor of a continual bailout by Euro nations, Greece will have to bite the austerity bullet with no chance of the loan payments being restructured as many Greeks are hoping. German Chancellor Angela Merkel has declared that Germany will not budge at all on the terms of the Greek bailout.
If you are looking for some kind of a global financial miracle; you can stop watching. If European leaders had a master plan to save Europe, they would have shown it by now. The entire house of cards is starting to come down and things are going to get really messy. A lot of people both in the United States and in Europe are going to lose their jobs and their homes over the next few years. It is likely that the next recession will be even more painful than the last one was. –The Economic Collapse