Talin

Big Troubles for the Euro

One thing is theory about coordination, or lack of it... the other is practice about support. Until the end of this crisis, whenever it ends, the European governments are going to inject a staggering ammount of money to bail out the financial system flushed with the toxic waste of american foreign debt. At the rate they are going 1 triillon euros looks just the ammount. And, apparently, without recourse to the debtor.

In Europe they tax heavily and do not have the capitalistic mentality applied to their governments. To imagine Europeans calculating if in the end, after spending 700 billion of dollars, the government may end up making money, or investing in preferred shares in banks with warrants attached, so in case there is latter an uspwing in share values the "taxpayer" benefits, is unthinkable. That is why they will spend heavily and debtors will have a free ride.

As at now Governments in Belgium, Germany, France, UK, Iceland, Holland have already paid. This crisis is going to cost a lot of taxpayer money. If the US governement really spend real money salvaging the mortgage backed bonds, finishing this chicken game of who foots the bill, the crisis will end soon. The rest of the world are already paying more, and in the end, they know, they will have the largest loses. That is why the euro looks week.