Debt turmoil, contagion fears sweep Europe


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Dublin still negotiated the final details of an 85 billion euro ($113 billion) EU-IMF rescue package

Read somewhere that if this "rescue package" that is being forced on Ireland was being done in the US it would work out to about $9 trillion, when you compare the size of the two countries. Some rescue.

And let's stop pretending this stuff is about rescuing countries, and out of control government spending. Ireland and Spain were two of the thriftiest governments in Europe until everything hit the fan. It is a banking bailout, nothing more.

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Irresponsible people in charge doing irresponsible things, these people need to be charged with some serious crimes as what they have done is wrong.

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Europe failed her supervision of the banking system. Europe failed her supervision of her members. Countries like Greece lied about about her financial status. Is the currency the problem? No. All this mess is the government responsabilities. Nobody wanted any supervision and low regulations.

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Nobody wanted any supervision and low regulations. -> Nobody wanted any supervision and regulations.

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The answer and cause to the global debt problem can be found by watching 'the secret of oz'. Search for it on Youtube. It reveals the shocking truth and corruption behind every nations nationals debt. BTW it is a multi-award winning documentary too.

We have all been living in a Matrix like dreamworld. Am I nuts! Watch the documentary and you'll know the answer.

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The answer is sell europe to the chinese. Europeans have proven themselves to be useless at money matters, except germany.

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It makes no sense bailing out corrupt banks or the financial terrorists. =Let these entities fail and allow the public to buy their assets in bankruptcy.

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Ireland wallowed in political turmoil Friday, frightening investors with the prospect of a power vacuum even as it must pass its bailout and austerity plan.

With an EU-IMF bailout, there's your power vacuum! The smartest of Ireland already emigrated elsewhere...

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Construction and housing sectors' the best sectors at times and the worst at times.

The Spanish housing bubble (2007) burst ahead of the so-called GFC; with the collapse of share prices in construction, housing companies Fadesa, Astroc and Cleop.

The following year (2008) the world saw European provinces of Spain and the UK, and other regions of Europe too deep into a financial crisis.

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The Euro scheme comes crashing down. Yes, the banks are guilty of giving all these loans and should be allowed to go bankrupt, but they simply responded to the distortions that the policians created with the Euro system. With national currencies, it would have never happened.

The European elites now are determined to cling to their Euro project until all countriess suffer economic collapse. Criminals!

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Maybe the Europeans should hire some Japanese to manage their system.

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" The Spanish housing bubble (2007 "

The Spanish housing bubble was caused by the Euro. Suddenly, a strong currency and cheap credit (adapted to German standards) was available to Spain. What did Spain do? Restructure its economy to make it converge with German competitiveness (as the Euro proponents naively expected)? Of course not! People, companies, and the government took cheap credits and blew them on consumption, speculation, and pork respectively. Like they would have done with a lottery win in Pesetas. But the natural safety valve of the Pesata (devaluation) is not there in the Euro system, which leaves only 2 options: a) National bankrupcty, and b) transfer payments from Germany.

a) is politically unacceptable, and b) is explicitly prohibited in the Maastricht treaty.

a) is politically unacceptable for the European elite, so they forced through b) in Ireland and Greece, mislabelling it as a "temporary fund". Of course, there is nothing temporary about this transfer union.

But while they still could paper over this with Greece and Ireland, there is no way to do it with Spain, unless they bankrupt Germany too. The numbers are simply too big.

This disaster is the logical result of the Euro system, and EXACTLY what Euro critics like Milton Friedman, Walter Hankel, Nouel Roubini, or Max Otte have long predicted.

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WillyB: the problem is not the Euro but dumb governments and bank managers. The party is over and now their economies have a serious hangover. The problem lies in the fraction reserve system and the absence of regulations. This crisis proved we cannot let the economy unwatched and unregulated.

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" the problem is not the Euro but dumb governments and bank managers. The party is over and now their economies have a serious hangover. The problem lies in the fraction reserve system and the absence of regulations. This crisis proved we cannot let the economy unwatched and unregulated. "

Did you pay any attention? The problem is precisely the Euro. It would be a problem even if governments and bank managers were the smartest people on earth. In the event, the bank managers having proved outstandingly smart, by exploiting a system that asked to be exploited. And no, the inherrent contradictions in the Euro can not be "regulated" away; if they could, Brussels would have done that long ago.

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WilliB: they exploited the system and lost. The ECB was too busy with the inflation to check what was really happening. The currency isn't the problem. See the subprime crisis? Is the USD responsible? No. Let the market regulate itself as Greenspan professed? No. The banks lend money to everyone and their dogs. Nobody really cared. I didn't see anything coming myself...

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I expected to see lots of comments here about the lazy Irish and the lazy Mediterranians being to blame, and instead I see an argument about whether the Euro or the banking system is to blame. A pleasant surprise. Both might be right of course, and a doomed currency was introduced into a doomed banking system.

Anyways, there are big protests planned for Sunday in Ireland, hopefully everybody stays safe. Certain groups have a vested interest in things appearing to be violent, as was seen this week in the UK. And those groups are not the protesting groups.

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What did Spain do?

@ WilliB. Personally, I think, the Spanish accelerated the crisis (unintentionally) when they hiked i. rates aggressively ahead of the ECB.

(You do have to remember that by 2005 the whole of Europe already suspected that there was an impending crisis. Hence its robust 'containment' measures)

But alas! By hiking i. rates the Spanish central bank was probably more concerned with the capacity of banks to lend readily (rather than a general concern for the fiscal health of Spanish banks)... but the consequence of these vigorous hikes were that they made the banking sector lend willy-nilly and finance the real estate/ construction boom till about 2007 when the cracks became quite obvious.

The Spanish obviously thought that by raising i. rates more aggressively than the ECB the housing boom would cool itself.... that of course wasn't the case.

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The problem is precisely the Euro.

When it comes to Spain (read above), blaming the Euro is obviously lacking.

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“This confusing ‘pea-soup’ of indecision, vacillation and disunity by the EU is beginning to create unnecessarily seismic waves of fear in international bond and money markets,” said David Buik, markets analyst at BGC Partners.

Oh I suspect the usual people will make a killing.

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Oh I suspect the usual people will make a killing.

In that case, these people you're referring to should lose their shirts!

(And perhaps pants as well)

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. I wonder how many countries are now regretting joining the Euro.

Republic of Ireland had to have two referendums to get it passed to join.

Other countries only had one and the governments of the NO vote respected the result.

If R.o.I had kept to the decision of the first vote (NO), would they be in as much trouble as they are now ?

If the Euro was not introduced, would there be as much trouble between the european countries over finances ?

If the euro collapses and countries go back to their own currencies, would that be a good or bad thing ?

If, if, if............

What has been done, can not be undone and saying "what if" will solve nothing.

I am glad that the United Kingdom is not part of the Euro, or who knows how much worse would be the mess left when the Labour government was kicked out.

Sadly we are effected by what happens to the euro and europe, but not as much as the ones using the euro.

We are with Germany and France are going to bail out R.o.I. so who will we be bailing out next ?

And how much more dept will be put onto the next generation to pay. It is already massive due to the over spending of the Labour government.


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" See the subprime crisis? "

You are still not paying attention. Not everywhere is comparable to the US. The Euro crisis as it is unfolding now is caused by the Euro and not by an artificial housing bubble (although of course, there have been plenty of those in Europe too), and it was predicted exactly as it is unfolding now.

If you want to add a European-style meltdown on top of the economic crisis that US is in already, imagine a currency union between the US and Mexico. Call it the Americano. And wait how well that works, when Mexico is free to create gigantig dollar debts. Clearer?

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The 2 referndums in ireland were about the Lisbon Treaty ,...not the joining of ther Euro.

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Nigel Farage nails it in the EU parliament:

youtube . com / watch ?v=Fyq7WRr_GPg

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WillyB: I understand what you mean about merging Mexico and the USA. Nobody would believe it would work. Naive, you would say but I believe it could work. To play this game, you need rules. The rules should not kill the game and in the same time, you need serious people to survey what is happening. You cannot trust everyone to respect the rules if they are not surveyed. In the same time I don't want any 'super'-government to slow down my business activities and better, I don't want the whole game to be threatened because my government, I chose or not, failed to watch the game you and I are playing.

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" To play this game, you need rules. "

The EU has rules. They have rules about debt levels, they have rules about transfer payments. They all signed them in Maastricht and Lissabon with great fanfare. Unsurprisingly, the PIIG countries violated the rules left, right and center, and now the Eurocrats are doing the same. Rules, my behind.

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WillyB: so, is it the currency or the rules and the players?

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