2008 US Financial Crisis VS 2012 European sovereign-debt crisis

[BeDisciplined]

Germany election in 2013. Would Germans want to work harder and save harder so that they can continue to finance the living standards of poorer peripheral neighbours? If you were German, what would you do? EU countries are all required to contribute to the stabilization fund with Germany being the major one. If there is no actual structural reform in those peripheral countries, once ECB starts printing money, there will be no end to it. No doubt a weaker Euro would help exports but it would also mean those holding onto to Euro (eg deposits) would suffer with shrinking purchasing power. And all these sacrifices in the name of saving EU and other countries.

Central Bank is the lender of last resort and unlike previous bubbles, the current problem resides squarely on the last bastion....never before ...no percedence...how to solve.......

[freedom]

I don't think it is unprecedented.

It happened in 1997 in South East Asia.

It happened in 1999 in Argentina.

[BeDisciplined]

In both cases, each country has absolute control over its currency and could devalue to get out of the mass but the EU problem is it is a monetary union but not a fiscal and political union. Fed = US = US dollars...whatever debt they run up is still one country debt. How to get one country (Germany) to shoulder other EU countries debts?

1997 was also different. If i have remembered correctly, back then private sectors and governments borrowed heavily to support rapid economic growth and ended up over geared and when creditors cut their 'supply' lines, currency crash and economy spiralled downwards. It was growing economies which were over geared and not government ballooned deficits sponsoring a lifestyles that the people cannot afford.

Anyway, no economic crisis is exactly the same but this time, the ultimate institution that is counted on bailing out the economy is itself mired deeply in debts

[sportsinvestment]

Both of those situations are (were) worrisome, and the uncertainty is weighing down indicies and equities around the world. Equities markets were so inflated 2007 that a decent period is going to be required to pass for the "hangover" to subside.

Euro debt is real, but is also the convenient reason to keep it sold down. When markets need to be sold down, any excuse will do.

[shanrui_91]

Germany election in 2013. Would Germans want to work harder and save harder so that they can continue to finance the living standards of poorer peripheral neighbours? If you were German, what would you do? EU countries are all required to contribute to the stabilization fund with Germany being the major one. If there is no actual structural reform in those peripheral countries, once ECB starts printing money, there will be no end to it. No doubt a weaker Euro would help exports but it would also mean those holding onto to Euro (eg deposits) would suffer with shrinking purchasing power. And all these sacrifices in the name of saving EU and other countries.

Central Bank is the lender of last resort and unlike previous bubbles, the current problem resides squarely on the last bastion....never before ...no percedence...how to solve.......

I am in support of Merkel not just because she can provide an opportunity for stock market to go down, but that the euro zone problem is essentially a structural problem that has to be solved. If ECB guarantees all the bond yield to perhaps max of 5% yield and provides a banking license to ESM, will there still be any incentive for Italy and Spain to solve their problem?

I am pretty worried about inflation in the future with interest rate at such low level and the whole world seemed to think that money printing is going to solve all the economic and financial problems. Money has to be parked somewhere afterall, be it in commodities, equities or properties.

IMO, the easiest way out of the crisis is really for Greece to exit the euro zone. Allowing those that deserves to "die" to survive will result in what we see as the lost decades for Japan with their zombie banks and corporation.

[yeokiwi]

I am pretty worried about inflation in the future with interest rate at such low level and the whole world seemed to think that money printing is going to solve all the economic and financial problems. Money has to be parked somewhere afterall, be it in commodities, equities or properties.

IMO, the easiest way out of the crisis is really for Greece to exit the euro zone. Allowing those that deserves to "die" to survive will result in what we see as the lost decades for Japan with their zombie banks and corporation.

Inflation will set in if there is a general shortage of commodities.
At least for the next few years, we probably will not feel the problem yet.

Oil price is maintaining or reducing due to diversification in energy sources like oil shale, natural gas etc. Suddenly it seems that every tom, dick and harry countries have natural gas somewhere below their land and sea and in large quantity.

Food production will be dependent on technological improvement on the crops or rather genetically modified crops.