Economics
The euro crisis
Staring into the abyss
Nov 14th 2011, 18:34 by R.A. | WASHINGTON
WHILE we're on the subject of just what it means to be European, let me direct your attention to this week's print edition, which contains a Special report on the euro crisis by The Economist's foreign editor, Ed Carr:
[T]he crisis that has engulfed the European Union (EU) is about much more than the euro. As government bonds, share prices and banks swoon and global recession knocks on the door, the first fear is of financial and economic collapse. But to understand what is happening to the currency you also need to look at what is happening to Europe.
The euro will not be safe until Europe answers some fundamental questions that it has run away from for many years. At their root is how its nations should respond to a world that is rapidly changing around them. What will it do as globalisation strips the West of the monopoly over the technologies that have made it rich, and an ageing Europe starts to look increasingly like the western peninsula of a resurgent Asia?
Some Europeans would like to put up carefully designed fences around the EU’s still vast and wealthy market. Others, including a growing number of populist politicians, want to turn their nations inward and shut out not just the world but also the elites’ project of European integration. And a few—from among those same elites, mostly—argue that the only means of paying for Europe’s distinctive way of life is not to evade globalisation but to embrace it wholeheartedly.
This is not some abstract philosophical choice. It is a fierce struggle for Europe’s future, being waged in Athens as George Papandreou loses power to a temporary government of national unity, in derelict factories in France and Belgium and in the wasted lives of millions of unemployed young Spaniards.
It's an excellent primer on the crisis, its roots, and its broader meaning, and I encourage you to have a look.
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The shrinking population will be a virtue if the dying of the bubble generations can be managed cost-effectively and without compromising the education of the next, smaller generations.
Alas what's going to have to go is Europe's suicidal obsession with so-called human rights, at least as regards asylum seekers and imported cultural interests. The rise of the West did not coincide with deference toward others who possessed what the West wanted.
From A very short history of the crisis
As Keynes argued after the Depression, someone, somewhere must be consuming.
Well, in the states it seems the people with lower credit scores might be the ones to borrow and consume again. (Don't worry about the pesky little fact of whether it that debt will be paid off.)
Looks like things haven't changed and the banks haven't learned much from their previous mistakes. Perhaps another virtuous-to- vicious circle?
As they say on the beer commercial,
"Here we GO!"
Lower score borrowers get bigger slice of credit
NEW YORK (AP) -- Fierce competition for top-tier credit card customers appears to be leading some banks to look in elsewhere for new business: borrowers with spotty credit histories.
Data shows that more new cards went to consumers with less-than-stellar credit scores in the third quarter, while fewer new cards went to those with the best scores.
In the three months ended Sept. 30, credit reporting agency TransUnion found that 25.2 percent of the new card accounts went to consumers with a score below 700.
That was up from 23 percent of cards going to riskier borrowers in the same quarter of 2010.
In fact, the number of new card accounts opened by borrowers with scores of 800 or better slipped to 45.9 percent, from 49.7 percent a year ago.
Data from credit card companies also shows that while the most affluent consumers are using their cards more, they're also paying off their balances in full each month.
That means that to increase profits in their card businesses, banks need to find new borrowers who will pay higher interest rates and are more likely to carry balances each month.
"If financial institutions are going to grow, eventually they're going to have to dip their toes into the water of riskier borrowers," said Greg McBride, senior financial analyst for Bankrate.com, which tracks credit offers.
Regards
"What will it do as globalisation strips the West of the monopoly over the technologies that have made it rich, and an ageing Europe starts to look increasingly like the western peninsula of a resurgent Asia?"
That's a bit too dramatic lol. If the West was willing to accept Asian realities (wages, standards of living, environment), West would be resurgent now, and Asia would be unemployed. Per capita output still heavily favors the West, and will continue to do so for the foreseeable future.
Meanwhile, 300 million smart Chinese who got wealthier by taking Western jobs will realize that the next billion of Chinese is not quite as smart and competitive, and yet still will have to be cared for, or face revolts. All of a sudden, domestic development will take priority over high flying international competition. In the West, size of the old population will be a drag. In the East, size, period, will be a drag. As technology gets more globalized, East or West will matter little anymore.
Ratings: The concluding section is nuanced, quite interesting, more like the vibrant and intelligent Economist of good ol’ days. The middle is filler. The first two sections are thumbs down, wrong or weak.
I agree that it was an excellent special report. Maybe a little speculative.
I don't think so. The crisis is due to internal stresses, not external ones. The globalisation that needs to be addressed is within Europe.
That's not to say that European countries should reject the outside world, but that issue remains whether or not the European project gets sorted out and certainly won't be helped by a fracturing within Europe. And in any case it's hard to think of a country more globally minded than Germany. Not China, not the US.
"What will it do as...an aging Europe starts to look increasingly like the western peninsula of a resurgent Asia?"
Whoa.
Paradigm shift!!