Friday, May 21, 2010

Part 2: European Dominos: Global Cascade?

Thursday's market crash even has Larry Kudlow (champion of any green shoot - however limp) unnerved.  He's "hoping the world financial system survives the next sixty days" it will take to implement circuit breakers into the U.S. index computers.  So what exactly is wrong with Europe, according to Leo Isaak at ?  (I recommend you read the original article in its entirety.)  "Massive amounts of sovereign and corporate debt....Where is the economic growth (to pay it back) going to come from?...Tax hikes will only serve to slow recovery even more....Rampant Unemployment....Spain (has) 20+% unemployment and near 45% unemployment for those under 25....Greece is no better and the backroom dealings and corruption add a seedy and impossible layer to the whole system....No commonalities in tax system, retirement, social ideology, etc....Greece has no effective tax collection system making it impossible to properly fund the government, France works 35 hours a week (punishing those who are more industrious), and Germany is continually forced to play big brother to all of them.  Without commonality in retirement age, work hours, how taxes are both assessed and collected, and more - the EMU will fall.  The differences are just too great."  Not to mention deadly riots over austerity measures!