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Europe, Spain Temporarily Out of Crisis, But Is Bailout the Right Way Out?

Europe, Spain Temporarily Out of Crisis, But Is Bailout the Right Way Out?
"""Performances, and not failings, are rewarded. However, nations have sought bailouts as if they were rewards for their grievous mistakes. Bailout (from the Tax-Payers money) has been the most preferred support system or a reward for their misdeeds since 2008, when major US & other Banks & Lenders across the Globe were on the verge of a major catastrophe due to the Sub-Prime real estate lending, born out of greed. Are they morally deserving of the same? Why have these lending institutions failed in the first place? OR must they confront the mess they created and be punished? Can Tax Payer funds be so readily squandered?

The most ironic aspect is that """"Only the banks are bailed out with Taxpayer money, not the unemployed (likely former Taxpayers) or the destitute."" The unemployment rate in the United States and the Eurozone has skyrocketed. Governments always appear ready to defend the banks, but are unwilling to acknowledge that their policies are failing the people they were elected to serve and the economy as a whole.

With an agreement to rescue Spain's struggling banks, Europe avoided financial turmoil in the midst of its third year of debt crisis. But Europe still confronts much greater threats to the continent and, by extension, the global economy. Moreover, the Spanish bailout will do little to address the dependence of European banks on borrowed funds for their daily financing requirements. Far more difficult to estimate are the costs if, after the Greek elections, the new government reneges on the bailout it negotiated with its European creditors. This could result in a withdrawal from the euro zone, thereby endangering the currency union, which has primarily benefited prosperous members such as Germany. Unpredictable high costs and dangers would accompany the dissolution of the currency union. The greatest concern for Europe is contagion, a financial panic that could extend far beyond Greece. Italy continues to struggle with economic stagnation and rising interest rates.

Bailouts, despite the fact that they will be vehemently denied by many, are the most effective means of increasing Debt, as opposed to being the support for development and increases, as is commonly believed. The only benefit provided by the Bailout is immediate, albeit temporary, pain alleviation from the seemingly unavoidable depths of a faltering economy, which was precipitated by hasty, often greed-driven decisions. Repeated large bailouts will only result in enormous debt write-downs, the collapse of the financial system, and a global depression. The bailout providers will be in for a greater and irreversible blow - a major reason why banks avoid extending credit to individuals in dire financial straits.

The only way out of a problem caused by a large BAILOUT is through an endless series of additional BAILOUTs.

Similar to: There will always be a severe hangover after a binge drinking session, so the best method to avoid one is to KEEP ON DRINK...
This is indisputable evidenced by the fact that nations that have received substantial Fund support have returned for more aid.

Only when proactive minds realize that """"If a problem appears to have no solution, it may not be a problem, to be overcome, but a FACT - not to be solved, but to be dealt with over time"""" will this issue be resolved.

U.S. QE3 is undoubtedly a certainty. The crucial issue is whether the launch would occur before or after the election. It will be given a new name, a new acronym, and remarketed as something different and superior to the previous version, something akin to a new software version with no significant new features. The People's Bank of China reduced its interest rate in response to fears of a property market collapse and a slowing economy. Since Western economies have harmed Chinese export markets, the supply-and-demand balance may deteriorate. Consequently, commodity prices may continue to decline even as interest rates decline. In actuality, this has been the case throughout history. The European debt crisis is generating economic contagion that may spread to the already fragile economies of China and the United States. Instigated by current economic, political, and financial problems, a deeper financial system collapse is likely to persist and worsen for years. See my article 2012 Economic Forecast: 2013 is the year when the suffering intensifies... Something horrifying, enormous in magnitude and size may be required to jolt these policymakers from their daydreams of a brighter and stronger future based on these bailouts. The same could be just around the corner, poised to wreak havoc with large tsunami waves...""

" - https://www.affordablecebu.com/
 

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"Europe, Spain Temporarily Out of Crisis, But Is Bailout the Right Way Out?" was written by Mary under the Finance / Wealth category. It has been read 162 times and generated 0 comments. The article was created on and updated on 01 June 2023.
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