2012 – 2013: The years that will seal our lives. Forever
(The first article of this year on my blog was scheduled to be about Romania. But I will wait a bit, in order not to enter in the political discussions of this period).
2012 has started and after the celebrations of the first days, everyone realized that it will be a really difficult year. People continue making the mistake of considering that it is the “Greek problem” that needs to be solved. But the truth is far more complicated…
Most of European countries are in trouble
· The German economy is reported to be “losing steam”.
· One of the top German banks is reported to be in “very big financial trouble” and that “it will be saved by the government”.
· Many more German local banks are in trouble.
· France lost its AAA rating on Friday, after “having flirted” with this incident for several weeks.
· French banks are reported to have some… 350 billion Euro exposure in Italian, Portuguese, Irish, Greek and Spanish bonds.
· The French economy “needs more reforms, now”, as if the problems just started. Reforms while, at the same time, there will be presidential elections there in 4 months. Not easy…
· Italy is reported to be in need of some… 309 billion Euro this year!
· Italian banks have major problems as well. Since January 2nd, their capitalization has fallen by 25 – 50% (depends on the bank) and their announcements are more or less the same ones that Greek banks have made 2 years ago. (Coincidence)
· Even so, The Italian Prime Minister is the only European leader who speaks about growth, not just austerity measures.
· The new Spanish Prime Minister announced a very painful package of measures, more or less the same package that Greece announced 2 years ago. (At that time, “Spain was protected” as we were informed).
· Spanish banks are reported to have in their portfolio some… 1,1 million unsold (new) apartments. There are studies that speak of another 1,3 million unsold new apartments.
· Spain has to borrow some hundreds of billion Euro as well this year, while its unemployment rate is around 23 – 24%.
· Austria lost its AAA rating on Friday and we all remember the Governor of the National Austrian Bank speaking about the need for Austrian banks to redraw some capital from Eastern Europe.
· Many more European countries are in trouble, including ones that no one would expect.
· The American economy is far from being described as healthy. (The only difference to us is that they are printing money 24/7)
· Plus they will have elections this year and the economy will be the top priority for voters.
· The Chinese economy is not what it used to be and many fear that it will slow down this year.
Always 3 months behind the actual problem
So far, European leaders have not been able to synchronize themselves with the actual problems. In October they decided upon the solution that should have been decided back in July. In July they did the same, using the April’s solution and in April they were happy to announce the solution that should have been applied as early as January.
Being always 3 months behind the actual problem, they have not succeeded in controling the situation and the solution cannot be further postponed.
Greece is not the problem
Now everyone is talking about the Greek “PSI program” which will allow the country to off-load “50% of its debt” (which is 20%, as I analyzed to you here.)
But even if everything turns out to be perfect in regards to Greece, the big problem still remains unsolved: Europe and the world have major challenges to resolve.
(In Greece the problem was always the public sector, but so far the majority of measures targeted the private one. And between you and me, by constantly giving the wrong medicine to Greece, the country will not be able to recover soon. 70, 100, even 150 billion Euro will not be enough, as long as the cause of the problem remains).
There is no easy way out
The problems cannot wait anymore. We need solutions and we need them now. But there is no easy solution. Also, this solution cannot be just “new austerity measures”. We need growth as well, with less bureaucracy and more flexibility.
Are the leaders going to realize this and provide to the world feasible solutions?
2012 and 2013 are the years that will seal our lives forever
Nouriel Roubini predicts an “economic Armageddon” in 2013. Others expect gold to reach 2.500 – 3.000 dollars per ounce (which can happen only if the world economy collapses).
France has elections this year, USA as well. Germany will have them next year.
The positive thinkers expect a new round of growth to start in the beginning of autumn. They expect the stock markets to sell off until then, but “somewhere in the middle of September a new round of growth will start, similar to the one of 2009”.
(you can check the diagram here. I found it on a Greek site but the figures are clear).
I’m not 100% sure of what will happen in our lives over the following 24 months. But I am certain that we will live historical moments and we will see everything changing a lot, influencing our lives forever.
What is your opinion?