Wednesday, December 8, 2010

Iceland, Greece, Ireland, Spain, Portugal........... many more cockroaches in the Euro cupboard watch out!

After the collapse of the American Banks through toxic debts, the contagion spread to Europe. Just like the proverbial cockroach, there is never really just one is proving itself in the Euro zone. Anyone (including European Banks) who bought the toxic debts that the American Banks issued are now facing a crisis and have leaned on the EU (ECB) to save them. Iceland was the first, Greece the second in line, with Ireland now, and with rumblings in Spain and Portugal as well as Italy, France, Germany and Belgium (HQ of the EU) being a possibility.

This unfolding Euro crisis will result in instability and volatility in currencies for a long time to come. The US Dollar will not regain its shine for at least a decade (and only after it sees some production moving on-shore into the country) as value addition becomes more and more scarce. The Euro will see a decline for the foreseeable future at least and will in all likelihood see a precipitous drop over the next few years. Recovery from all these will take at least 15 years (to attain the same levels of growth seen before the crisis).

So hold on to your seats folks - we are all in for the ride!


At July 06, 2011 , Blogger Vikram R Chari said...

The Economist -

The saga continues.... see the Greek Bond trends for an indication.


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