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When you get into too much debt, eventually really bad things start to happen. This
is a very painful lesson that southern Europe is learning right now, and it is a lesson that the United States will soon learn as well.
So writes Michael (www.theeconomiccollapseblog.com) in edited excerpts from his original article* entitled 17 Signs That A Full-Blown Economic Depression Is Raging In Southern Europe – Is The U.S. Next?.
This article is presented compliments of www.FinancialArticleSummariesToday.com (A site for sore eyes and inquisitive minds) and www.munKNEE.com (Your Key to Making Money!) and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.
Michael goes on to say in further edited excerpts:
It simply is not possible to live way beyond your means forever. You can do it for a while though, and politicians in the U.S. and in Europe keep trying to kick the can down the road and extend the party, but the truth is that debt is a very cruel master and at some point it inevitably catches up with you and…the results can be absolutely devastating.
Greece, Italy, Spain and Portugal all tried to just slow down the rate at which their government debts were increasing, and look at what happened to their economies. In each case, GDP is shrinking, unemployment is skyrocketing, credit is freezing up and manufacturing is declining. And you know what? None of those countries has even gotten close to a balanced budget yet. They are all still going into even more debt. Just imagine what would happen if they actually tried to only spend the money that they brought in?
I have always said that the next wave of the economic collapse would start in Europe and that is exactly what is happening so keep watching Europe. What is happening to them will eventually happen to us.
Below are some signs that a full-blown economic depression is raging in southern Europe…
- The unemployment rate:
- in Greece is 26.4% (and youth unemployment is 57.8%),
- in Spain is 26%,
- in Italy is 11.7%….(with youth unemployment at 38.7% and
- in the eurozone as a whole has reached a new all-time high of 11.9%.
- The economy (GDP) of:
- Italy shrank by 28% year-on-year and was down 0.9% in the fourth quarter of last year;
- Greece…contracted by 5.7% year-on-year and, overall, has contracted by more than 20% since 2008. [In fact,] things have gotten so bad…the Greek government plans to sell off 28 state-owned buildings – including the main police headquarters in Athens.
- The manufacturing activity – where 50 is the cut-off between growth and decline – is declining just about everywhere in Europe with the following February readings:
- U.K. at 47.9 (down from 50.5)
- Spain at 46.8
- Italy at 45.8
- France at 43.9
- Eurozone as a whole at 47.9
- while Germany was marginally in growth territory at 50.3
- The Italian economy is in the midst of a horrifying “credit crunch” that is causing thousands of companies to go bankrupt…
- Italian now have 12.2% in bad loans compared to just 4.5% back in 2007.
- [Indeed] as Lars Feld, a key economic adviser to German Chancellor Angela Merkel, said [recently], “The sustainability of Italian public finances is in jeopardy. The euro crisis will therefore return shortly with a vengeance.”
- Bank deposits experienced significant declines all over Europe during the month of January.
- Private bond default rates are soaring all over southern Europe:
- Italy has a 9.5% default rate (up from 5.7%) as local banks shut off funding.
- Spain is at 14.3% which has doubled over the past yearin Spain.
- France’s default rate rocketed from 0.8% to 8.7%…as the delayed effects of tax rises, fiscal tightening, and the strong euro do their worst.
One of the few politicians in Europe that actually understands what is happening in Europe is Nigel Farage as this video of one of his recent rants conveys. Farage believes that “the Eurozone has been a complete economic disaster” and that the worst is yet to come.
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Most people believe that the eurozone has been “saved”, but that is not even close to the truth. In fact, it becomes more likely that we will see the eurozone break up with each passing day….A Reuters article says that there have been rumblings among some German politicians that Greece should be the first to leave…but there is also a chance that Germany could eventually be the first nation…[to go]. In fact, a new political party is forming in Germany that is committed to getting Germany out of the eurozone. A recent article by Ambrose Evans-Pritchard…states that they propose German withdrawl from EMU and return to the D-Mark, or a breakaway currency with the Dutch, Austrians, Finns, and like-minded nations. The French are not among them. The borders run along the ancient line of cleavage dividing Latins from Germanic tribes. However this all plays out, the reality is that things are about to get much more interesting in Europe.
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Conclusion
No debt bubble lasts forever. The Europeans are finding that out right now. The U.S. won’t be too far behind but for the moment most Americans assume that everything is going to be okay because the Dow keeps setting new all-time record highs.
Well, enjoy this little bubble of debt-fueled false prosperity while you can, because it won’t last for long. A massive wake up call is coming, and it will be exceedingly painful for those that are not ready for it.
Editor’s Note: The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.
*http://theeconomiccollapseblog.com/archives/17-signs-that-a-full-blown-economic-depression-is-raging-in-southern-europe-is-the-u-s-next
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