The financial crisis in Europe: who is to blame and what to do
Who is guilty?
We can note the connection between the collapse of the American stock market and the crisis in Europe. Under the blow were Greece, Cyprus, Spain and Iceland. These countries have brought national debt to the annual GDP (gross domestic product; all goods and services produced in the country in monetary terms). The countries of the European Union have almost caught up with the United States in terms of government debt to their creditors. Objectively, the leading economy at the moment is China, which is the lender of the largest countries in the world.
What to do?
According to the theory of the Soviet scientist Nikolai Kondratiev, crises contribute to the cyclical development of the economy. The “Kondratieff cycle” has a duration of 45-60 years, including the growth and downturns of the market.
Despite the danger of a European crisis for the world economy, there are people who earn large sums of money from serious fluctuations in rates and general chaos.The model of behavior on the stock market should be the opposite of the nervous “crowd movement”. One of the most famous investors in the world, Warren Buffett, earned the largest amounts at a time when stocks of famous enterprises on the stock exchange fell to record lows.
Real estate in Spain and Greece has fallen dramatically in price. In this regard, the governments of these European countries have simplified the procedure for the privatization of apartments, houses and land. Sale of property can ease the situation of governments and become a good investment for foreign investors.
The Greek economy has a budget deficit of 150% of GDP. The national debt of France, Germany and the UK exceeds 100% of GDP.
American economist Nicholas Taleb in his book "The Black Swan" accused prominent world politicians and financiers of blatant carelessness. Trusting complex formulas and mathematical models, they no longer feel the reality, Taleb writes. "Black Swan" - a serious event, the prototype of which had never happened before. The thought: “If you have not seen black swans, this does not mean that they are not at all” runs through the work of a recognized financier and thinker.
The economy of Europe is quite fragile.The foreign exchange reserves of many of the largest economies (Germany, Great Britain, France) are not based on gold, but on US Treasury bonds. America's public debt is growing, and Barack Obama has not yet found a "antidote" for the US economic stagnation.
The economy of European countries can come out of the collapse, reducing costs and increasing funding for enterprises of the real sector. "Bubbles", accumulated in the field of finance, IT and consulting, sooner or later burst. European governments should reduce the size of the essence of debt benefits and investments in collapsing banks and monopoly structures.
If Europe does not respond to the signals given by the crisis and continues to increase its debt to strong states, this could lead to another “Black Swan” of unprecedented scale. Millions of people can be left without pensions and salaries. The economy of Europe is under threat, and only a reasonable policy can improve the situation, while not resorting to populism.
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