Can someone explain, in layman terms, what is going on in the financial world? If there are so many countries in debt, who do they owe? Some countries must have some money. Or is it that the countries with money have lent it to countries that no longer have any money and can’t pay it back? Is there a winner somewhere? Is there a league table of which countries have the most credit/debit?
The financial situation is way too complicated for the public to understand and it would take a 4 year degree course to understand it fully.
Greece, Portugal, Italy and Ireland had ****e economies and were charged the earth to borrow by their neighbours, but dragged their arses into the Euro with some clever planning and a certain amount of paper over the cracks. Greeks hate paying tax, and the country is in the ****e, but it is Italy that is the real concern as all of Europe has money tied up in it and if it goes down we are all in the mire good and proper. The Uk is knackered becuase of A: the Sub-Prime market in America and B: Because every **** has borrowed like **** and saved **** all. The yanks are goosed. the Emerging markets, ie China and India etc are all strong players in global terms of turnover but are subject to the usual rules...if China invests x Billion and the recipient that was invested in goes bandy that impacts on them etc etc In short...We are all ****ed. Brazil and Turkey are the really strong players at the moment but their scale is miniscule in global terms.
I give you four beans and expect eight in return You use these beans to grow more beans You grow 2 beans Where are my beans mother ****er?
This is why Britain should stay well away from the Euro.. I never really understood why countries keep bailing out Greece, when even Greece accept they wont be able to pay it back unless a miracle happens!
It looks like if Greece, Portugal, Italy and Ireland default on the debts they owe, the euro is going to be pretty much worthless, the idea from the EU money chiefs was to try and get the emerging counties ( China and India) to try and buy into the debts at the last round of G8 talks, but that didnt work so now basically its all ****ed.
I know it gets said a lot but the problem with the Euro really isn't an economic one but a political one. It is basically a currency with out a country and was never going to last and we are seeing that now. We need to get back to the original intent of the EU and forget the desire to create a European superstate.
In about 2000 BC, the ruler of one of the Greek City states - don't remember his name, but he was known as "the legislator" because of his legal wisdom - declared all debts void. Since every single citizen was both owed and owing, everybody benefited, and was free to make a fresh start and get on with their lives. Perhaps one of the world's current leaders might want to bring this up at the G20 conference. But perhaps not.
The problem is is is just numbers on a screen ... The actual "money" doesn't exist, it's just a set of figures transferring from one PC to another! That why they spunk it all away - it doesn't seem real!
The big push for everyone to join the Euro was meant to ease trade between countries and save money on currency exchange. We had Black Wednesday where interest rates soared up to the 15% mark and our currency value was slashed, as a result we were hoofed out of the monetary exchange rate mechanism. Hedge fund managers made £billions out of betting against sterling in the process. Previously poor countries with low value currencies such as Greece, Portugal & Spain, all joined up and the cost of goods and services was increased to the same levels as Germany and France. Everything got more expensive as a result. With the increased wealth these countries spent shed loads of cash on inrastructure such as roads, public services and the like. Banks were confident that buying Government bonds was a good idea but after the global banking crisis the poo hit the fan in the States and the domino effect came our way too. The banks were skint and wanted the money borrowed given back. Skint old Greece haven't got the same sort of financial base (industry, exports etc) as Germany and France and their loans weren't worth the paper they were printed on. Once we had been dropped from the monetary exchange mechanism it gave the UK free reign to opt out of other things Europe wanted us to do, John Major vetoed the Maastricht treaty hoping to keep hold of our sovereignty and maintain financial independence amongst other things (like not wanting to take on better working conditions and a lot of other social improvements). The benefit is that we weren't bound to the same rules and could control our own inflation measures. It is part of the reason why the UK isn't taking such a beating from the banks. Nigel Lawson was on the radio yesterday bragging that he'd been responsible for the UK opting out of the single currency and had predicted this would all happen. Well he would, wouldn't he. It is now up to Germany & France to decide if they can support countries that are bleeding cash. If not there is a good chance that Greece will either opt out or be kicked out of the Euro. Other countries with poor credit ratings may have to take a long hard look and do the same. I hope you all kept hold of your drachmas, lira and punts because some of these countries may go back to their own currencies.
