European debt crisis explained

[randomrogue]

http://www.youtube.com/watch?v=tXT5Yxo1KSA

It's a funny video but pretty much lays it out. I just got back from Europe and it's not looking so good. Zero percent gdp growth, massive debt, the EU bank is dumping money into the system but running out, bond prices are rising, Germany is not going to bail out Greece, Italy, Spain and Portugal and unemployment is rampant. We complain about our 10% unemployment in the USA but you haven't seen anything until your entire country has about the same unemployment as Detroit.

It's going to hit the fan in less than 90 days. At that point I don't know what to expect. My friends are talking like it's the end of days. When you go to a city and half the buildings are empty, construction isn't finished, there's 40% unemployment, etc it's disturbing. They think their money will all disappear with the euro.

I don't know how this will effect the US but it will. I'm concerned. A double dip recesion is pretty much guaranteed in my eyes. People will panic. They already are.

 

[Moonbeam]

Life is always less attractive when you've wet your pants.

 

[Broheim]

let's just get the terminology straight here, by european do you mean Europe as a continent, the EU, the Eurozone or something entirely different.

also, I call bullshit on 40% unemployment rate....

 

[randomrogue]

let's just get the terminology straight here, by european do you mean Europe as a continent, the EU, the Eurozone or something entirely different.

also, I call bullshit on 40% unemployment rate....

You have two things going on. Currency worries and the EU. Not Europe as a continent. Many countries in Europe are just fine.

Actually I think Detroit is at 50% now so it's probably not a good example. However it's like 25% in major cities right now (Barcelona as an example) in southern Europe where the problems are becoming unsolvable. I would expect Italy, Spain, and Greece to default in 90 days or less.

 

[Atreus21]

Life is always less attractive when you've wet your pants.

...

Life is like a box of chocolates. Full of chocolate.

 

[woolfe9999]

You have two things going on. Currency worries and the EU. Not Europe as a continent. Many countries in Europe are just fine.

Actually I think Detroit is at 50% now so it's probably not a good example. However it's like 25% in major cities right now (Barcelona as an example) in southern Europe where the problems are becoming unsolvable. I would expect Italy, Spain, and Greece to default in 90 days or less.

Now for the actual facts:

Overall unemployment rate in the EU is 9.5% (as of Q2 2011). EU measures unemployment not identically but very similar to the US BLS. Accordingly, EU unemployment is only slightly higher than the U.S. at the moment:

http://en.wikipedia.org/wiki/Economy_of_the_European_Union

Actual unemployment rates of individual member states range from 3.7% (Austria) to 21.2% (Spain).

The situation in Europe sucks right now, but you're cherry picking numbers and places in order to be as alarmist as possible.

For shits and giggles, I googled Detroit's unemployment rate. It was 20% as of May, 2011.

http://en.wikipedia.org/wiki/Detroit

- wolf

 

[sunzt]

Actually I think Detroit is at 50% now ....

....

 

[randomrogue]

Wish I would never have mentioned Detroit. I just used it as an example since it blows there. I could have sworn it was 50% at some point but who cares, not relevant anymore. Apparently they're recovering quite well to be down to 20%. :| I live in a city with 2.90% unemployment.

I'm not cherry picking. The countries on the brink are the ones with high unemployment and it will get worse. As bond prices rise their ability to pay for debt becomes impossible.

 

[Lithium381]

SPEND MORE!!!!!!!!!!!!!! that's the only way to fix the problem

 

[werepossum]

Wish I would never have mentioned Detroit. I just used it as an example since it blows there. I could have sworn it was 50% at some point but who cares, not relevant anymore. Apparently they're recovering quite well to be down to 20%. :| I live in a city with 2.90% unemployment.

I'm not cherry picking. The countries on the brink are the ones with high unemployment and it will get worse. As bond prices rise their ability to pay for debt becomes impossible.

Those 40% & 50% numbers are cherry picked by those* who quote them, in the specific hope that the rest of us will remember them. They apply to specialized groups like black teenagers, or people 55-65 without a four-year degree, or perhaps deaf-mute chinchilla breeding lepers, and are just as often quoted as a measure of how bad things are in general as they are quoted in support of that particular group. Of course, 20% is quite bad enough.

Your points are valid, but collapse is not in my opinion inevitable. Even though we're bombarded with stories about how consumer confidence is the lowest since Carter, in my personal observations people seem to be out spending money. Certainly they are out running around (and therefore in my damned way.) Architects are getting more work than over the last couple years, which directly affects me but also bodes well for construction and for the economy as a whole.

I think perhaps we're seeing what Republicans have complained about in past years; people get bombarded with so many negative stories that even those who are doing just fine think everyone else's life is in the crapper. A return to recession is certainly possible and perhaps even likely, but personally I'm a tiny bit more optimistic than this time last year.

* Not accusing you, just the talking heads on television. That's the news business: If it bleeds, it leads, if it thinks, it stinks.

 

[Moonbeam]

European unemployment numbers could all be brought down by going into the wet pants laundry business or selling end of the world signs.

 

[woolfe9999]

Those 40% & 50% numbers are cherry picked by those* who quote them, in the specific hope that the rest of us will remember them. They apply to specialized groups like black teenagers, or people 55-65 without a four-year degree, or perhaps deaf-mute chinchilla breeding lepers, and are just as often quoted as a measure of how bad things are in general as they are quoted in support of that particular group. Of course, 20% is quite bad enough.

Your points are valid, but collapse is not in my opinion inevitable. Even though we're bombarded with stories about how consumer confidence is the lowest since Carter, in my personal observations people seem to be out spending money. Certainly they are out running around (and therefore in my damned way.) Architects are getting more work than over the last couple years, which directly affects me but also bodes well for construction and for the economy as a whole.

I think perhaps we're seeing what Republicans have complained about in past years; people get bombarded with so many negative stories that even those who are doing just fine think everyone else's life is in the crapper. A return to recession is certainly possible and perhaps even likely, but personally I'm a tiny bit more optimistic than this time last year.

* Not accusing you, just the talking heads on television. That's the news business: If it bleeds, it leads, if it thinks, it stinks.

Pretty much this. Too much economic alarmism can be harmful in and of itself.

Oh, except I disagree about the deaf-mute chinchilla breeding lepers. I can assure you that their unemployment rate is no higher than 17%.

 

[Howard]

...

Life is like a box of chocolates. Full of chocolate.

Wrong. What if you have an half-full box? Or a box with only two?

 

[werepossum]

Pretty much this. Too much economic alarmism can be harmful in and of itself.

Oh, except I disagree about the deaf-mute chinchilla breeding lepers. I can assure you that their unemployment rate is no higher than 17%.

 

[bfdd]

unemployment numbers are always bullshit. everyone is bullshitting them. some to make it seem worse, some to make it seem better. although i did hear from a coworker who got back from Spain recently said that it seemed only 1 in 10 Spaniards they talked to in Barcelona were employed. Probably a slight over exaggeration on their part, but it is pretty bad in Spain right now.

 

[werepossum]

Regarding the financial market (hey, that's part of the economy, unless you judge by my 401K), my uncle just sent me a picture of Mila Kunis (I think) in a strapless dress. Below it reads:
"The financial market is currently like a strapless bra.

Half the people are wondering what's holding it up.

The other half are hoping it will drop so they can grab the opportunity with both hands."

Nice.

 

[randomrogue]

I wish I knew more about the exact numbers cause if I'm off we'll just derail this thread but in a nutshell the EU bank is funneling something like 20B Euro a week into the banking system. In roughly 90 days they will run out of money. At that point, since they are not buying up bonds, their prices will become more expensive and countries like Italy and Spain will default on their obligations. They have tried to explain to their people that they need to reduce spending and raise taxes but they won't except it and they have strikes.

There is nothing alarmist about this. It's just reality at this point. You then have to ask yourself whether you think Germany will dump over a trillion Euro into these countries. I think not.

 

[randomrogue]

unemployment numbers are always bullshit. everyone is bullshitting them. some to make it seem worse, some to make it seem better. although i did hear from a coworker who got back from Spain recently said that it seemed only 1 in 10 Spaniards they talked to in Barcelona were employed. Probably a slight over exaggeration on their part, but it is pretty bad in Spain right now.

Officially I think it's at 25%. Unofficially my friends there say 50%. They all have PHDs though and are in that crowd. Yours say 90%. Either way it's bad. I noticed the same thing. Everyone goes to Barcelona though so it's going to be worse there than other cities.