EUROPE SLIDES INTO RECESSION
This is the situation that the political and financial leaders of Europe feared the most: an economic recession of Europe, where the taxes from businesses and workers would fall and be unable to support the superstructure that keeps them alive.
On November 22nd., 2011, Germans could not sell their tranche of ten year bonds. Belgians could not sell their bonds, either. There were not enough buyers. World investors had turned their back on Europe.
They saw the convoluted make-shift arrangement of props that supported the weak countries and they saw the incredible overhang of bonds held by the European banking system which soon would be worthless.
Investors did the numbers. In order to save Europe from its own internecine wall papering of fake bonds would cost at least Eight Trillion Euros!
That money was no where available. Holders of any Euro bonds would see their investment vanish. So, international investors pulled their money out and placed it into cash. Many sold Euros and the Euro dropped.
THE ENTIRE WORLD IS SLOWING
Unfortunately for Europe, the world economy, including that of Asia, is slowing. This means that European exports will decrease and the strong exporting countries of the north will have less income.
The U.S., another exporting market for Europe, is also in recession and cannot buy more goods from Europe.
The combined effect of a world slow down and a financial oversupply of debt paper has brought Europe to its knees.
STOCK MARKETS
The European stock markets and the American stock are both falling.
It is well known that the entire Western financial system is interrelated. Most large American banks have European bonds on their balance sheets.
As European banks fall so must their American cousins.
COMMODITY PRICES
Since the major Western economies are weakening commodity prices are weakening as well.
There will be smaller markets for food and for construction and manufacturing for the next several years. Commodity prices are reflecting this decrease in need.
GOLD DROPS
Since the same commodity traders that trade other metals also trade gold, gold also dropped. However, the specialists in this metal predicted that gold would hit over $1800 in 2012.
CONCLUSION
As Europe feels the brunt of the recession in the form of unemployment and reduced consumption, the people of Europe will have to re-think their political future.
The people of Europe like a country without borders and they like a single currency. But, nothing is free. Are they willing to support millions of people who want to live a life of self indulgence and only a few hours of work per day and few days per month?
Are they willing to support millions of political parasites who tell them what to eat, how to work and who change the methods of doing business which were established centuries ago?
This recession is a good thing. Like most periods of hardship, people learn what is truly valuable and what is fundamentally harmful.
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