The Sick Man Of Europe

By Author: PAOLO BRERA
Total Articles: 62
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Apart from Greece and Spain, what is today the real "sick man of Europe? The answer begins to be whispered in various circles. The world commentators indeed suffer from an incredible inertia: if for years, no, for decades, speaks of a certain country in a certain way, it is very difficult to change their way of speaking. Species then if the change is co-so radical. It goes from a Britain seen as a model for his little red tape, the efficiency of the financial sector, its free, to a Britain covered in debt, the balance in external accounts is monstrously in red for decades , whose sterling lost ground against major world currencies. The contrast is not po-grains to be more marked.
Already, the contrast could not be more marked, yet the situation that is emerging is simply the flip side, green bile, the pink pig is described in the previous years. Indeed, if one jumps from the twentieth floor, until he meets the pavement of the road can rightly enjoy the cool breeze that feels in the face, as long she can not think of what will inevitably happen just when the breeze (and thus the speed ) will arrive at its maximum. In real ...
... life, to numb the down-shift borlante have thought the media, above all financial interests.
What were in fact the ingredients of the celebrated British model? As in all English-speaking world, the main ingredient was the debt. Not only were distributed income (from capital and labor) in excess of the production, but most importantly there were ample opportunities to borrow to buy a home and to consume at relatively low rates. This has become a habit for consumers, indeed, an addiction. In 2008, when the subprime crisis exploded and the engine started to pack them in proportion to their income British families had the highest debt of the G-7 and the negative balance of credit cards highest in Europe. This last point is particularly significant, although generally ignored by the media, because it is a component of debt granted to usurious interest (also 20 per cent). No wonder that banks are forced to take increasingly large numbers of loss in relation to credit cards: in the third quarter of 2009, according to data from the Bank of England, 1.6 billion pounds, against 800 million in each of the two previous quarters and a total of 3.2 in 2008. In the same year mortgage loans in default have only reached a total of 408 million, and the first nine months of 2009 around 780.
Experts point out that this huge debt that will not interfere with Great Britain in his recovery. Although in recent weeks has left many details that seem to speak of a recovery, better read these figures no longer seem so positive. Enrollment in the unemployment has declined, but employment is falling in all sectors except in the government's support, which are booming. Consumption has been increasing, but the center of economic forecasts from Ernst & Young Item Group, in the person of its chief economic adviser Peter Spencer said that this has happened through a series of transient conditions: the cycle of stocks of companies, the premium scrapping and cutting VAT, which expired in January. "Once it runs out the effects of these stimuli temporary, it is difficult to see where the growth will come out in the short term," says the Item Group. "Before us there is a long, long period of rehabilitation," he told the BBC Graham Turner, of GfC Economics. The UK economy will have to seek customers outside their national borders, but the production base is compromised by decades of domination of the finance and competitiveness, including the new level of sterling, is doubtful. Twenty years and more the balance of payments of the country is in deep red.
In essence, what the government and the central bank have done is to save the banks and stimulate consumption by injections of fresh money. The price was to transfer part of the state and private debt load the public sector of a lot 'of junk bonds, namely those lame by the subprime crisis, the actual value of which will be known, if any, only when come to maturity. Doing so, however, has weakened the credit of His Majesty, who is not above suspicion, so much so that Fitch and Standard & Poor's have made their good warnings. If the famous song said that "The Britons will never be slaves", the updated version is now feared that might be "The Britons will never be solvent."
The recent rise in inflation (2.9% per year is the last figure, far above expectations) could force the central bank to raise rates. If this has strengthened the pound immediately, within one year, the rates might strike at the heart the public budget. The only way out would be a boost Gande industry, but industry Great Britain has not dying out.
Paolo Brera