{"id":382,"date":"2011-12-19T08:47:45","date_gmt":"2011-12-19T08:47:45","guid":{"rendered":"http:\/\/www.thebizsense.com\/views\/?p=382"},"modified":"2011-12-19T08:58:44","modified_gmt":"2011-12-19T08:58:44","slug":"europes-financial-crisis-and-you","status":"publish","type":"post","link":"https:\/\/www.thebizsense.com\/views\/featured\/europes-financial-crisis-and-you","title":{"rendered":"Europe Financial Crisis and You"},"content":{"rendered":"
\"Greece<\/a>

Greece tipping point<\/p><\/div>\n

Greece is a tiny economy, amounting to only 2\u00bd per cent of the 17-nation Eurozone, yet its difficulties have triggered a financial crisis that is sweeping across the Continent and threatens to engulf the global system.<\/p>\n

How is that possible?<\/strong><\/p>\n

Owners of mobile capital \u2013 banks, multinationals, wealthy individuals, are starting to shift their money, away from what they see as areas of risk into what they perceive to be the safe havens. Precious metals. The strongest banks. The most secure bonds.<\/p>\n

As this shift gathers momentum, it spreads the fear of loss in other assets and banks, ratcheting up the stresses\u2026 and the dangers.<\/p>\n

What threw petrol on a bonfire was the recent decision of Eurozone governments, in their rescue plan for Athen\u2019s finances, for the first time to impose a \u201chaircut\u201d (penalty) on private-sector holders of Greek government debt. They are to suffer capital loss on the bonds they hold, whose maturity values are to be halved.<\/p>\n

Even worse, Eurozone governments are using political blackmail to force their banks, who are the major private-sector holders of the bonds, to sign up to the deal so the haircut can be categorized as \u201cvoluntary.\u201d The intention is to deprive them of being able to claim compensation for their capital losses under Credit Default Swop contracts.<\/p>\n

These developments have caused an outbreak of panic among private-sector holders of the sovereign bonds of Eurozone countries, who fear they could be forced to accept haircuts in rescue plans, without being able to claim insurance against them. Yields on the ten-year bonds of Italy, for instance, soared to around 7 per cent.<\/p>\n

The crisis has now spread beyond the bond markets to the heart of the European financial system \u2013 private-sector banks. These are giant institutions \u2013 the five biggest in France, for example, have liabilities three times the size of the French economy\u2019s annual output.<\/p>\n

\u25ba They have huge holdings of Eurozone government bonds whose value is questionable, and other dodgy assets such as toxic debt arising out of the earlier crisis in the US.<\/p>\n

\u25ba They have made large loans to their own corporate and personal sectors whose default risk is rising as Europe moves into recession.<\/p>\n

\u25ba They are under pressure from regulators to boost significantly, and quickly, the capital reserves needed to shield them from bankruptcy.<\/p>\n

\u25ba Perhaps worst of all, as they cannot attract enough deposits from their customers, they have major dependence on money borrowed on the wholesale market from financial institutions that have cash surpluses. In recent weeks that market has largely shut down, as banks increasingly fear \u201ccounter-party risk\u201d \u2013 that if they lend to other banks, those could go bust.<\/p>\n

A European crisis is snowballing into a global crisis.<\/strong><\/p>\n

To ward off disaster and comply with regulators\u2019 demands, the banks are:<\/p>\n

\u25ba Selling assets, including riskier bonds and \u201cnon-core businesses\u201d such as those outside their home countries;<\/p>\n

\u25ba Cutting back on the credit they provide, which inevitably will drive Europe deeper into recession;<\/p>\n

\u25ba Borrowing huge amounts from the European Central Bank \u2013 totalling now more than half-a-trillion euros.<\/p>\n

How did we get into this mess?<\/p>\n

The fundamental cause is debt. Individual households, businesses and in particular governments have borrowed far too much. Now the bill is being presented for a half-century of profligacy.<\/p>\n

Total debt in the mature economies has grown to more than three times their annual output. It has doubled since 1980. This does NOT include future liabilities such as pensions that will have to be paid.<\/p>\n

Governments are largely to blame. Example: in the US corporate debt is equivalent to 75 per cent of one year\u2019s economic output, and consumer debt is 95 per cent — but government debt, including the cost of promises such as pensions to be paid in future, reached 541 per cent at the end of last year and is still climbing fast.<\/p>\n

CopyRight \u2013 OnTarget 2011 by Martin Spring<\/p>\n","protected":false},"excerpt":{"rendered":"

Greece is a tiny economy, amounting to only 2\u00bd per cent of the 17-nation Eurozone, yet its difficulties have triggered a financial crisis that is sweeping across the Continent and threatens to engulf the global system.<\/p>\n","protected":false},"author":1,"featured_media":383,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"amazonpipp_noncename":"","amazon-product-isactive":"","amazon-product-single-asin":"","amazon-product-content-location":"","amazon-product-content-hook-override":"2","amazon-product-excerpt-hook-override":"3","amazon-product-singular-only":"","amazon-product-amazon-desc":"","amazon-product-show-gallery":"","amazon-product-show-features":"","amazon-product-newwindow":"2","amazon-product-show-list-price":"","amazon-product-show-used-price":"","amazon-product-show-saved-amt":"","amazon-product-timestamp":"","amazon-product-new-title":"","amazon-product-use-cartURL":"","amazon_featured_post_meta_key":"","_amazon_featured_alt":"","amazon-product-template":"","footnotes":""},"categories":[8,9],"tags":[109,42,108,110],"class_list":["post-382","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-news","tag-debt","tag-eurozone","tag-financial-crisis","tag-greece","has_thumb"],"yoast_head":"Europe Financial Crisis and You - TheBizSense Views<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.thebizsense.com\/views\/featured\/europes-financial-crisis-and-you\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Europe Financial Crisis and You - TheBizSense Views\" \/>\n<meta property=\"og:description\" content=\"Greece is a tiny economy, amounting to only 2\u00bd per cent of the 17-nation Eurozone, yet its difficulties have triggered a financial crisis that is sweeping across the Continent and threatens to engulf the global system.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.thebizsense.com\/views\/featured\/europes-financial-crisis-and-you\" \/>\n<meta property=\"og:site_name\" content=\"TheBizSense Views\" \/>\n<meta property=\"article:publisher\" content=\"http:\/\/www.facebook.com\/TheBizSense\" \/>\n<meta property=\"article:published_time\" content=\"2011-12-19T08:47:45+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2011-12-19T08:58:44+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.thebizsense.com\/views\/files\/2011\/12\/debt-crisis.448.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"448\" \/>\n\t<meta property=\"og:image:height\" content=\"200\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"bizadmin\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"bizadmin\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/featured\\\/europes-financial-crisis-and-you#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/featured\\\/europes-financial-crisis-and-you\"},\"author\":{\"name\":\"bizadmin\",\"@id\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/#\\\/schema\\\/person\\\/0e38449a7d67f896737e4431da086713\"},\"headline\":\"Europe Financial Crisis and You\",\"datePublished\":\"2011-12-19T08:47:45+00:00\",\"dateModified\":\"2011-12-19T08:58:44+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/featured\\\/europes-financial-crisis-and-you\"},\"wordCount\":652,\"commentCount\":2,\"image\":{\"@id\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/featured\\\/europes-financial-crisis-and-you#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/files\\\/2011\\\/12\\\/debt-crisis.448.jpg\",\"keywords\":[\"Debt\",\"Eurozone\",\"Financial Crisis\",\"Greece\"],\"articleSection\":[\"Featured\",\"News\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/featured\\\/europes-financial-crisis-and-you#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/featured\\\/europes-financial-crisis-and-you\",\"url\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/featured\\\/europes-financial-crisis-and-you\",\"name\":\"Europe Financial Crisis and You - TheBizSense Views\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/featured\\\/europes-financial-crisis-and-you#primaryimage\"},\"image\":{\"@id\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/featured\\\/europes-financial-crisis-and-you#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/files\\\/2011\\\/12\\\/debt-crisis.448.jpg\",\"datePublished\":\"2011-12-19T08:47:45+00:00\",\"dateModified\":\"2011-12-19T08:58:44+00:00\",\"author\":{\"@id\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/#\\\/schema\\\/person\\\/0e38449a7d67f896737e4431da086713\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/featured\\\/europes-financial-crisis-and-you\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/featured\\\/europes-financial-crisis-and-you#primaryimage\",\"url\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/files\\\/2011\\\/12\\\/debt-crisis.448.jpg\",\"contentUrl\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/files\\\/2011\\\/12\\\/debt-crisis.448.jpg\",\"width\":\"448\",\"height\":\"200\",\"caption\":\"Greece tipping point\"},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/#website\",\"url\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/\",\"name\":\"TheBizSense Views\",\"description\":\"Business Viewpoints and Forecasting\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Person\",\"@id\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/#\\\/schema\\\/person\\\/0e38449a7d67f896737e4431da086713\",\"name\":\"bizadmin\",\"url\":\"https:\\\/\\\/www.thebizsense.com\\\/views\\\/author\\\/bizadmin\"}]}<\/script>","yoast_head_json":{"title":"Europe Financial Crisis and You - TheBizSense Views","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.thebizsense.com\/views\/featured\/europes-financial-crisis-and-you","og_locale":"en_US","og_type":"article","og_title":"Europe Financial Crisis and You - TheBizSense Views","og_description":"Greece is a tiny economy, amounting to only 2\u00bd per cent of the 17-nation Eurozone, yet its difficulties have triggered a financial crisis that is sweeping across the Continent and threatens to engulf the global system.","og_url":"https:\/\/www.thebizsense.com\/views\/featured\/europes-financial-crisis-and-you","og_site_name":"TheBizSense Views","article_publisher":"http:\/\/www.facebook.com\/TheBizSense","article_published_time":"2011-12-19T08:47:45+00:00","article_modified_time":"2011-12-19T08:58:44+00:00","og_image":[{"width":448,"height":200,"url":"https:\/\/www.thebizsense.com\/views\/files\/2011\/12\/debt-crisis.448.jpg","type":"image\/jpeg"}],"author":"bizadmin","twitter_misc":{"Written by":"bizadmin","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.thebizsense.com\/views\/featured\/europes-financial-crisis-and-you#article","isPartOf":{"@id":"https:\/\/www.thebizsense.com\/views\/featured\/europes-financial-crisis-and-you"},"author":{"name":"bizadmin","@id":"https:\/\/www.thebizsense.com\/views\/#\/schema\/person\/0e38449a7d67f896737e4431da086713"},"headline":"Europe Financial Crisis and You","datePublished":"2011-12-19T08:47:45+00:00","dateModified":"2011-12-19T08:58:44+00:00","mainEntityOfPage":{"@id":"https:\/\/www.thebizsense.com\/views\/featured\/europes-financial-crisis-and-you"},"wordCount":652,"commentCount":2,"image":{"@id":"https:\/\/www.thebizsense.com\/views\/featured\/europes-financial-crisis-and-you#primaryimage"},"thumbnailUrl":"https:\/\/www.thebizsense.com\/views\/files\/2011\/12\/debt-crisis.448.jpg","keywords":["Debt","Eurozone","Financial Crisis","Greece"],"articleSection":["Featured","News"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/www.thebizsense.com\/views\/featured\/europes-financial-crisis-and-you#respond"]}]},{"@type":"WebPage","@id":"https:\/\/www.thebizsense.com\/views\/featured\/europes-financial-crisis-and-you","url":"https:\/\/www.thebizsense.com\/views\/featured\/europes-financial-crisis-and-you","name":"Europe Financial Crisis and You - TheBizSense Views","isPartOf":{"@id":"https:\/\/www.thebizsense.com\/views\/#website"},"primaryImageOfPage":{"@id":"https:\/\/www.thebizsense.com\/views\/featured\/europes-financial-crisis-and-you#primaryimage"},"image":{"@id":"https:\/\/www.thebizsense.com\/views\/featured\/europes-financial-crisis-and-you#primaryimage"},"thumbnailUrl":"https:\/\/www.thebizsense.com\/views\/files\/2011\/12\/debt-crisis.448.jpg","datePublished":"2011-12-19T08:47:45+00:00","dateModified":"2011-12-19T08:58:44+00:00","author":{"@id":"https:\/\/www.thebizsense.com\/views\/#\/schema\/person\/0e38449a7d67f896737e4431da086713"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.thebizsense.com\/views\/featured\/europes-financial-crisis-and-you"]}]},{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.thebizsense.com\/views\/featured\/europes-financial-crisis-and-you#primaryimage","url":"https:\/\/www.thebizsense.com\/views\/files\/2011\/12\/debt-crisis.448.jpg","contentUrl":"https:\/\/www.thebizsense.com\/views\/files\/2011\/12\/debt-crisis.448.jpg","width":"448","height":"200","caption":"Greece tipping point"},{"@type":"WebSite","@id":"https:\/\/www.thebizsense.com\/views\/#website","url":"https:\/\/www.thebizsense.com\/views\/","name":"TheBizSense Views","description":"Business Viewpoints and Forecasting","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.thebizsense.com\/views\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.thebizsense.com\/views\/#\/schema\/person\/0e38449a7d67f896737e4431da086713","name":"bizadmin","url":"https:\/\/www.thebizsense.com\/views\/author\/bizadmin"}]}},"_links":{"self":[{"href":"https:\/\/www.thebizsense.com\/views\/wp-json\/wp\/v2\/posts\/382","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.thebizsense.com\/views\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.thebizsense.com\/views\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.thebizsense.com\/views\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.thebizsense.com\/views\/wp-json\/wp\/v2\/comments?post=382"}],"version-history":[{"count":7,"href":"https:\/\/www.thebizsense.com\/views\/wp-json\/wp\/v2\/posts\/382\/revisions"}],"predecessor-version":[{"id":391,"href":"https:\/\/www.thebizsense.com\/views\/wp-json\/wp\/v2\/posts\/382\/revisions\/391"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.thebizsense.com\/views\/wp-json\/wp\/v2\/media\/383"}],"wp:attachment":[{"href":"https:\/\/www.thebizsense.com\/views\/wp-json\/wp\/v2\/media?parent=382"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.thebizsense.com\/views\/wp-json\/wp\/v2\/categories?post=382"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.thebizsense.com\/views\/wp-json\/wp\/v2\/tags?post=382"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}