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Euro Zone Austerity Leads To Recession
As self-imposed Euro Zone austerity leads to recession the political face of Europe may be about to change. While authorities try to deal with the so called PIIGS debt crisis voters seem likely to express their dissatisfaction with things as they are. The Euro Zone debt crisis is three years old. The problems of the Euro Zone have affected economies across the globe. China, for example, is seeing a decrease in manufacturing as Euro Zone austerity leads to recession and fewer purchases of Chinese products. After the painfully slow Greek bailout, and European Central Bank cash infusion, things, briefly, looked hopeful. However, the Euro Zone bailout package consequences are coming home to roost as the Central Bank bailout money has been used and Euro Zone austerity leads to recession. Stock traders may well see a fair amount of volatility in Euro Zone stocks and stocks in markets throughout the world as political volatility drives market volatility in the Euro Zone.
The Recipe for European Debt
In the run up to European Central Bank loans to Greece this spring the various solvent members of the Euro Zone demanded that Greece cut back on government benefits, including pensions and health care. Although Greece eventually complied the prices were riots in the streets and an anemic economy that may spell disaster by the next time that Greek bonds come due. Along the way credit rating agencies downgraded debt in more than a dozen nations in Europe. The response was to institute austerity measures across the board. This is likely a good idea in the long run as it helps reduce the tendency of politicians to buy votes with programs paid for with someone else’s money. In the near term, however, this policy reduces money supply across the Euro Zone and thus this Euro Zone austerity leads to recession which is what is predicted for 2012.
Voter Discontent in the Euro Zone
The bigwigs in Paris, Brussels, Bonn, and Berlin have thrashed out a monetary solution to the current Euro Zone debt dilemma. The issue of who is paying for what has not been lost on voters across the more solvent members of the Euro Zone, especially Germany. Citizens of those nations with healthier economies are coming to resent the fact that they are backing the debt of the so called debtor nations of the EU, with their taxes. Leaders in Germany and France understand that the European Union is a Common Market as large as the USA. This market, or free trade zone, makes internal trade easier and more lucrative. Thus leaders have cautioned against letting debtor nations such as Greece, Portugal, Ireland, Spain, and, especially, Italy go their own way. The price of this decision may be that the European leaders who led the EU in its efforts may be out of a job courtesy of voters.
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3. As self-imposed Euro Zone austerity leads
to recession the political face of Europe
may be about to change.
www.ProfitableTradingTips.com
4. While authorities try to deal with the so
called PIIGS debt crisis voters seem likely
to express their dissatisfaction with things
as they are.
www.ProfitableTradingTips.com
5. The Euro Zone debt crisis is three years
old.
The problems of the Euro Zone have
affected economies across the globe.
www.ProfitableTradingTips.com
6. China, for example, is seeing a decrease in
manufacturing as Euro Zone austerity leads
to recession and fewer purchases of
Chinese products.
www.ProfitableTradingTips.com
7. After the painfully slow Greek bailout, and
European Central Bank cash infusion,
things, briefly, looked hopeful.
www.ProfitableTradingTips.com
8. However, the Euro Zone bailout package
consequences are coming home to roost as
the Central Bank bailout money has been
used up and Euro Zone austerity leads to
recession.
www.ProfitableTradingTips.com
9. Stock traders may well see a fair amount
of volatility in Euro Zone stocks and
stocks in markets throughout the world as
political volatility drives market volatility in
the Euro Zone.
www.ProfitableTradingTips.com
10. The Recipe for European Debt
www.ProfitableTradingTips.com
11. In the run up to European Central Bank
loans to Greece this spring the various
solvent members of the Euro Zone
demanded that Greece cut back on
government benefits, including pensions
and health care.
www.ProfitableTradingTips.com
12. Although Greece eventually complied the
prices were riots in the streets and an
anemic economy that may spell disaster by
the next time that Greek bonds come due.
www.ProfitableTradingTips.com
13. Along the way credit rating agencies
downgraded debt in more than a
dozen nations in Europe.
www.ProfitableTradingTips.com
14. The response was to institute austerity
measures across the board.
This is likely a good idea in the long run as
it helps reduce the tendency of politicians
to buy votes with programs paid for with
someone else’s money.
www.ProfitableTradingTips.com
15. In the near term, however, this policy reduces
money supply across the Euro Zone and thus
this Euro Zone austerity leads to recession
which is what is predicted for 2012.
www.ProfitableTradingTips.com
17. The bigwigs in Paris, Brussels, Bonn, and
Berlin have thrashed out a monetary
solution to the current Euro Zone debt
dilemma.
www.ProfitableTradingTips.com
18. The issue of who is paying for what has not
been lost on voters across the more solvent
members of the Euro Zone, especially
Germany.
www.ProfitableTradingTips.com
19. Citizens of those nations with healthier
economies are coming to resent the fact that
they are backing the debt of the so called
debtor nations of the EU, with their taxes.
www.ProfitableTradingTips.com
20. Leaders in Germany and France
understand that the European Union is a
Common Market as large as the USA.
www.ProfitableTradingTips.com
21. This market, or free trade zone, makes
internal trade easier and more lucrative.
Thus leaders have cautioned against letting
debtor nations such as Greece, Portugal,
Ireland, Spain, and, especially, Italy go their
own way.
www.ProfitableTradingTips.com
22. The price of this decision may be that the
European leaders who led the EU in its
efforts may be out of a job courtesy of
voters.
Traders should consider this in deciding
on trading US stocks versus Euro Zone
stocks.
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23. Trading Stocks as Euro Zone
Austerity Leads to Recession
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24. The fundamentals are that the Euro Zone
is heading into a recession due to strict
austerity measures and accumulated
debt.
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25. However, the situation may well be very
fluid in the coming year if major players in
negotiations are removed from the scene
via voter discontent.
www.ProfitableTradingTips.com
26. Technical analysis may be more important
than fundamentals in assessing market
sentiment and stock price direction in
Europe and elsewhere.
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27. And as Euro Zone austerity leads to
recession reduced manufacturing in
China may be compounded by a collapse
of the real estate market and the slow US
recovery may be imperiled by events
surrounding the fall electoral campaign.
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