{"id":4749,"date":"2011-09-30T03:42:47","date_gmt":"2011-09-30T09:42:47","guid":{"rendered":"http:\/\/www.jasonapollovoss.local\/?p=4749"},"modified":"2018-09-21T02:04:41","modified_gmt":"2018-09-21T06:04:41","slug":"is-the-european-sovereign-debt-crisis-behind-us","status":"publish","type":"post","link":"https:\/\/jasonapollovoss.com\/web\/2011\/09\/30\/is-the-european-sovereign-debt-crisis-behind-us\/","title":{"rendered":"Is the European Sovereign Debt Crisis Behind Us?"},"content":{"rendered":"<p>&nbsp;<\/p>\n<p><span style=\"font-size: 16px;\">The multi-trillion dollar question of the moment: is the European sovereign debt crisis behind us?\u00a0 My answer is, unfortunately, no.<\/span><\/p>\n<p><span style=\"font-size: 16px;\">What I feel positive about:<\/span><\/p>\n<ul>\n<li><span style=\"font-size: 16px;\">The crisis finally has the attention of much of the financial world and many of the First World&#8217;s governments.\u00a0 This is distinctly different than the situation that has come before now.\u00a0 Before now the Europeans tried to sweep this problem under the rug by issuing hollow affirmations similar in potency to those issued by serial-dieters.\u00a0 Additionally, many investors the world around were either lazy or sloppy in exploring the crannies of the European debt attic.\u00a0 But, just like heart disease brought on by obesity, bloated debt and budgetary problems don&#8217;t just go away.<\/span><\/li>\n<li><span style=\"font-size: 16px;\">As I blogged about recently, <a href=\"https:\/\/jasonapollovoss.com\/web2011\/09\/26\/what-my-intuition-tells-me-now-amount-of-european-bailout-fund-about-right-finally\/\" target=\"_blank\" rel=\"noopener\">the Europeans are finally talking about the right amount of cash necessary to end this crisis: $2 trillion<\/a>.<\/span><\/li>\n<li><span style=\"font-size: 16px;\">Various European parliaments have approved the continued existence and expansion of the EFSF &#8211; the bailout slush fund.<\/span><\/li>\n<li><span style=\"font-size: 16px;\">Meaningful dialogue is taking place about whether or not to kick Greece out of the EU.\u00a0 This is important because Greece has admitted to lying its way into the European Union.\u00a0 It&#8217;s hard to keep the peace when other members of the EU have met stringent entrance requirements and one of them has not.\u00a0 And not only has Greece not met the entrance requirements and then lied about it, they also are the most indebted nation asking every other member, the European banking community, and the rest of the world to bail them out.<\/span><\/li>\n<li><span style=\"font-size: 16px;\">The Europeans are finally crossing their t&#8217;s and dotting their i&#8217;s.\u00a0 That is, they are finally dealing with many of the retarded omissions in the treaty that created the European Union.\u00a0 An example of an omission is how do you kick a member out that lied its way in?\u00a0 Another: without the ability to kick out a member, how do you enforce the ongoing annual stringent economic requirements that must be met to remain a member of the EU?<\/span><\/li>\n<\/ul>\n<p><span style=\"font-size: 16px;\">What I don&#8217;t feel positive about:<\/span><\/p>\n<ul>\n<li><span style=\"font-size: 16px;\">It&#8217;s $2 trillion!\u00a0 That&#8217;s double that of the U.S. mortgage crisis of 2008-2009!<\/span><\/li>\n<li><span style=\"font-size: 16px;\">Europe&#8217;s banks are all invested in Europe&#8217;s nations&#8217; sovereign debts.\u00a0 If one nation declares bankruptcy it could set off a chain reaction of bank failures and then sovereign debt failures.<\/span><\/li>\n<li><span style=\"font-size: 16px;\">From where is all of the money coming?\u00a0 In my opinion the cascading financial crises around the world all have the same source: too much debt.\u00a0 How was it possible to issue so much debt in the first place?\u00a0 Again, in my opinion, it&#8217;s from monetary policy the world around that was way too loose.\u00a0 That is, interest rates, starting in the mid-1990s were kept much too low.\u00a0 When the price of money, interest rates, is too low people like to borrow.\u00a0 But unfortunately, the solutions that are being proposed all involve some form of issuing more debt or in keeping interest rates low.<\/span><\/li>\n<li><span style=\"font-size: 16px;\">There still is not walk to the European talk.\u00a0 As I said in the linked post above, the Europeans are finally talking about the right amounts of money, $2 trillion.\u00a0 But the EFSF is going to be funded at about $600 billion, that&#8217;s 1,400 billion dollars short.\u00a0 To my mind this is a massive, massive issue.\u00a0 Where does one just suddenly discover $1.4 trillion?<\/span><\/li>\n<li><span style=\"font-size: 16px;\">How do you convince nations that are a part of an economic club to bail one another out to the tune of $1.4 trillion?\u00a0 At a certain level the nations of Europe are still competitors at the economic level.\u00a0 How can citizens of Germany be asked to bail out the citizens of Portugal?\u00a0 Even as generous as I consider myself to be, I would have a hard time having my taxes raised to pay for a bailout in Mexico (remember we are tied to them through NAFTA).<\/span><\/li>\n<li><span style=\"font-size: 16px;\">Issues about the EU and its continued existence still have not been resolved.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-size: 16px;\">All of the negatives listed above create tremendous uncertainty.\u00a0 That leads to volatility.\u00a0 And those negatives lead me to conclude that, despite the uplift in share prices recently based on the right kind of Euro-talk, the European debt crisis is going to continue.\u00a0 Not only will it continue, it will likely get more complex.\u00a0 That complexity will be of a kind to create more uncertainty and likely more volatility.\u00a0 So I don&#8217;t think that the European sovereign debt crisis is behind us, not even close.<\/span><\/p>\n<p><span style=\"font-size: 16px;\">Jason<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&nbsp; The multi-trillion dollar question of the moment: is the European sovereign debt crisis behind us?\u00a0 My answer is, unfortunately, no. What I feel positive about: The crisis finally has the attention of much of the financial world and many of the First World&#8217;s governments.\u00a0 This is distinctly different than the situation that has come [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-4749","post","type-post","status-publish","format-standard","hentry","category-the-blog"],"_links":{"self":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/4749","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/comments?post=4749"}],"version-history":[{"count":0,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/4749\/revisions"}],"wp:attachment":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/media?parent=4749"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/categories?post=4749"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/tags?post=4749"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}