http://www.stltoday.com/news/national/u-s-companies-feel-impact-of-european-debt-crisis/article_9a2fe073-bab6-5a9d-ab3a-84105533f0bf.html
So as wonderful as the US economy is... the crisis in Europe is having a great impact on our companies and banks in a negative way. Just what we needed, right?
The European Union is the United States' number one trading partner, "Nearly $475 billion in goods crossed between the regions in the first nine months of 2011. About 14 percent of revenue for the 500 biggest U.S. companies — roughly $1.3 trillion — comes from Europe." So their spiraling downfall is obviously going to affect the companies and people living here in the US. Companies are losing a lot of profits, hesitant to hire, and people are not willing to spend during these hard times, forcing the prices to drop and hurt the companies even more. Companies such as: Whirlpool, General Motors, Nike Inc, Abercrombie & Fitch (although I wouldn't mind their prices dropping) are some examples of places losing lots of money due to the European debt. Even small businesses are getting hit by this. Some of the US corporations actually not hurting are Sara Lee, Kraft, and McDonalds.
The banks are also being greatly impacted as you could probably assume. They're cutting lending and holding onto all their cash so in case this crisis doesn't end soon, we're not hit AS much. If the crisis worsens, the debt we hold of European governments could lose value which would definitely be bad for our economy. The fear is that the US and European governments may be worried each other can't cover losses that the lending would stop completely. That would impact the whole global economy.
What should people in the US do to prepare for the Europeans potential downfall? How should companies try to increase profits while this whole crisis is undergoing? How may their crisis affect people our age in America?
Friday, November 18, 2011
Thursday, October 27, 2011
Europe's New Debt Crisis
As you all already know, Europe is in a lot of trouble and going nowhere fast. I found this article: http://curiouscapitalist.blogs.time.com/2011/10/27/europe%e2%80%99s-new-debt-crisis-agreement-the-good-the-bad-the-ugly/#ixzz1bz684XXk that talks about the "good, bad, and ugly" aspects of the debt crisis agreement.
The European Union has seemed to have been putting off dealing with this problem for awhile. Members are getting nothing done by simply arguing and coming to no agreements each and every day. Major changes need to take place, but someone is going to have to be the bigger person and let there be progress. The good points from the negotiation this morning were that members are finally having a reality check and trying to make something happen. Steps being taken are increasing the fund's (ESFS) "capabilities by using it to guarantee private bondholders against losses on sovereign debt purchases".
The bad and ugly parts definitely outweigh the positive possibilities. Nothing is fully determined and nothing is very clear. The EU isn't sure that every member will actually help provide, which will only cause more problems. The bank recapitalization plan calls for banks to raise 106 billion euros in fresh capital, but that's not even half of what's needed.. so a temporary solution or stall. Also, after the bailout in Greece, there's no certainty of how much money will be left. As well as they will have major debt to pay off still.
The deal also includes trying to get money from China, which is completely desperate and pathetic. Just because they're doing well economically doesn't mean Europe can go begging for cash. Even if they did help it still would only be a tiny portion of the amount they need.
Obviously nobody knows all of the answers to solve such a crisis, even the top political members are still mind-boggled.
What do you think the missing pieces of the deal should include? Should China throw them some spare change to get them off their backs or leave them out cold?
The European Union has seemed to have been putting off dealing with this problem for awhile. Members are getting nothing done by simply arguing and coming to no agreements each and every day. Major changes need to take place, but someone is going to have to be the bigger person and let there be progress. The good points from the negotiation this morning were that members are finally having a reality check and trying to make something happen. Steps being taken are increasing the fund's (ESFS) "capabilities by using it to guarantee private bondholders against losses on sovereign debt purchases".
The bad and ugly parts definitely outweigh the positive possibilities. Nothing is fully determined and nothing is very clear. The EU isn't sure that every member will actually help provide, which will only cause more problems. The bank recapitalization plan calls for banks to raise 106 billion euros in fresh capital, but that's not even half of what's needed.. so a temporary solution or stall. Also, after the bailout in Greece, there's no certainty of how much money will be left. As well as they will have major debt to pay off still.
The deal also includes trying to get money from China, which is completely desperate and pathetic. Just because they're doing well economically doesn't mean Europe can go begging for cash. Even if they did help it still would only be a tiny portion of the amount they need.
Obviously nobody knows all of the answers to solve such a crisis, even the top political members are still mind-boggled.
What do you think the missing pieces of the deal should include? Should China throw them some spare change to get them off their backs or leave them out cold?
Wednesday, October 5, 2011
Greek Riots
http://www.time.com/time/world/article/0,8599,2096177,00.html
At a rate over 16% unemployment, crime, suicides, bankruptcies and homelessness are all on the rise in Greece. The country has been in a recession due to austerity measures that foreign lenders are demanding in return for bailout loans. The Greek citizens have lost almost all faith in their politicians and there's no clear sign of that changing. "it's understood that the government committed the equivalent of political suicide a long time ago with the austerity drive," said political science professor Takis Pappas.
This past Wednesday, a protest broke out in Athens as a reaction to this ongoing crisis in the country. Even high school students gathered, angry about their parent's lost jobs and lack of books and teachers. Greek officers dispersed the crowds using tear gas (which is a reason not as many people showed up to the protest). This is an example of an anomic group because it wasn't organized or necessarily people of the same interest, these people all just protested because they wanted to show their anger towards the changes.
ADEDY and GSEE are the country's two main labor unions, representing 2.5 million workers. They went on strike, and stopped most international flights, trains, closed tax offices and state schools. Greece does not have a good end in sight with the actions everybody is taking. It seems nearly impossible for the government to win support of their citizens in order to turn this deficit around, because according to nearly all Greeks, the measures taken haven't done anything to get their country out of debt.
http://www.cnn.com/2010/BUSINESS/02/10/greek.debt.qanda/index.html
This better explains exactly what happened, where they stand, and what exactly the measures are that they're taking, etc.
In my opinion, the country is in so much financial trouble that the citizens should expect nothing less than major changes to take place. The only way the Greeks can hope to meet their deficit is to back the new measures, at least long enough for some progress to be made. Although people in the middle class are struggling, nothing is going to improve the way things are staying, and going on strike is ultimately hurting the economy even more. I don't know the solution to this kind of crisis, but I do know that things have to get worse before they can get better, so the people of Greece need to just come together with their government to figure out some sort of plan.
At a rate over 16% unemployment, crime, suicides, bankruptcies and homelessness are all on the rise in Greece. The country has been in a recession due to austerity measures that foreign lenders are demanding in return for bailout loans. The Greek citizens have lost almost all faith in their politicians and there's no clear sign of that changing. "it's understood that the government committed the equivalent of political suicide a long time ago with the austerity drive," said political science professor Takis Pappas.
This past Wednesday, a protest broke out in Athens as a reaction to this ongoing crisis in the country. Even high school students gathered, angry about their parent's lost jobs and lack of books and teachers. Greek officers dispersed the crowds using tear gas (which is a reason not as many people showed up to the protest). This is an example of an anomic group because it wasn't organized or necessarily people of the same interest, these people all just protested because they wanted to show their anger towards the changes.
ADEDY and GSEE are the country's two main labor unions, representing 2.5 million workers. They went on strike, and stopped most international flights, trains, closed tax offices and state schools. Greece does not have a good end in sight with the actions everybody is taking. It seems nearly impossible for the government to win support of their citizens in order to turn this deficit around, because according to nearly all Greeks, the measures taken haven't done anything to get their country out of debt.
http://www.cnn.com/2010/BUSINESS/02/10/greek.debt.qanda/index.html
This better explains exactly what happened, where they stand, and what exactly the measures are that they're taking, etc.
In my opinion, the country is in so much financial trouble that the citizens should expect nothing less than major changes to take place. The only way the Greeks can hope to meet their deficit is to back the new measures, at least long enough for some progress to be made. Although people in the middle class are struggling, nothing is going to improve the way things are staying, and going on strike is ultimately hurting the economy even more. I don't know the solution to this kind of crisis, but I do know that things have to get worse before they can get better, so the people of Greece need to just come together with their government to figure out some sort of plan.
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