Posts Tagged ‘Uk banks insolvent’

Welcome To The Global Economic Crisis, Europe

January 20th, 2009 Comments off

When the European Commission released its forecast for 2009 and 2010 on economic “growth” in the eurozone, the dismal projections were no surprise. According to the Commission, eurozone economies collectively will contract by 1.9 % in 2009 and grow by an anemic 0.4 % in 2010. Even these seemingly pathetic figures are almost certainly highly optimistic. A senior economist at Bank of America, Gilles Moec, for example, projects that the 16 nations that use the euro currency will see their economies shrink by 2.6 %. during 2009. As for 2010, I think the European Commission was inhaling some potent weed to see any growth potential for 2010.

The negative growth in the eurozone affirms that that this pivotal region in the global economy is deep in recession, with already high rates of unemployment about to surge to a level that will threaten the social and political cohesion of western and central Europe. Quite clearly, the eurozone, along with the rest of the planet, will not be immune from the man-made catastrophe that is the Global Economic Crisis.

What about the rest of Europe? Here the news is at least as bad, and in many instances worse than the eurozone. The economy of the UK is imploding, its banks technically insolvent, according to a recent and authoritative report. Russia is being shattered economically by the collapse in commodity prices, especially petroleum, its primary generator of hard currency. The Ukraine and Baltic nations are possibly in even deeper trouble, while even little Iceland has not been spared, as it risks being the first victim of the Global Economic Crisis to fall into national bankruptcy.

The global economic disaster ripping apart the world began in the United States, where it continues to accelerate in its destructive impact. However, now that Europe is being ripped apart by the global financial and economic tsunami, we are now entering what economists refer to as a negative feedback loop. As the U.S. and Europe feed upon each other’s economic decline, the tentacles of this destructive recessionary octopus will increasingly strangle the other major economic engines on the planet, namely China, Japan and Southeast Asia. The sobering conclusion is that the worst is yet to come, but almost certainly will.