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What Happens To A Financial System When Its Two Biggest Pillars Collapse?
TMO ^ | 2-16-2013 | Graham Summers

Posted on 02/16/2013 7:58:43 PM PST by blam

What Happens To A Financial System When Its Two Biggest Pillars Collapse?

Stock-Markets / Eurozone Debt Crisis
February 16, 2013 - 10:32 PM GMT
By: Graham Summers

Those EU leaders who have yet to be implicated in scandals are not faring much better than their more corrupt counterparts. In France, socialist Prime Minister Francois Hollande, has proven yet again that socialism doesn’t work by chasing after the wealthy and trying to grow France’s public sector… when the public sector already accounts for 56% of French employment.

France was already suffering from a lack of competitiveness. Now that wealthy businesspeople are fleeing the country (meaning investment will dry up), the economy has begun to positively implode.

The first sign of this actually came from Germany. As we noted a few months ago, Germany had prepared a working group to examine the impact of an economic collapse in France.

German Finance Minister Wolfgang Schaeuble has asked a panel of advisers to look into reform proposals for France, concerned that weakness in the euro zone’s second largest economy could come back to haunt Germany and the broader currency bloc.

Two officials, speaking on condition of anonymity, told Reuters this week that Schaeuble asked the council of economic advisers to the German government, known as the “wise men”, to consider drafting a report on what France should do…

“The biggest problem at the moment in the euro zone is no longer Greece, Spain or Italy, instead it is France, because it has not undertaken anything in order to truly re-establish its competitiveness, and is even heading in the opposite direction,” Feld said on Wednesday.

“France needs labour market reforms, it is the country among euro zone countries that works the least each year, so how do you expect any results from that? Things won’t work unless more efforts are made.”

This German concern has proven to be well founded, as the recent spate of French economic data has been truly horrific.

Auto sales for 2012 fell 13% from those of 2011. Sales of existing homes outside of Paris fell 20% year over year for the third quarter of 2012. New home sales fell 25%. Even the high-end real estate markets are collapsing with sales for apartments in Paris that cost over €2 million collapsing an incredible 42% in 2012.

Since the EU Crisis began in 2008, France and Germany have been the two key countries backstopping the implosion. The fact that France is now facing an economic implosion does not bode well for the future of the Euro or the EU.

The other sovereign backdrop for the EU, Germany, is also experiencing an economic slowdown.

The German economy was hit hard by the euro zone crisis in the final quarter of last year, shrinking more than at any point in nearly three years as traditionally strong exports and investment slowed, the Statistics Office said on Tuesday…

Gross domestic product shrank by 0.5 percent in the final three months of 2012, the worst quarterly performance since Germany fell into a recession during the global financial crisis in 2008/2009 and only the second contraction since it ended.

The parlous fourth quarter pushed overall growth for the year down to 0.7 percent, a sharp slowdown from the 3.0 percent registered in 2011 and a post-reunification record of 4.2 percent in 2010. The 2012 figure was a tad below a Reuters consensus forecast for growth of 0.8 percent.

Thus, we find that Europe’s primary political market props (EU leaders including ECB head Mario Draghi) are coming unraveled at the precise time that EU banks are showing warning signs and the most important EU economies are heading sharply south.

2013 is going to be a very interesting year for Europe.

So if you have not already taken steps to prepare for systemic failure, you NEED to do so NOW. We’re literally at most a few months, and very likely just a few weeks from Europe’s banks imploding, potentially taking down the financial system with them. Think I’m joking? The Fed is pumping hundreds of BILLIONS of dollars into EU banks right now trying to stop this from happening.

TOPICS: News/Current Events
KEYWORDS: collapse; economy; europe; francegermany

1 posted on 02/16/2013 7:58:52 PM PST by blam
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To: blam

Everyone knows the global financial situation is going south bigtime. The only real question is that when it fully bottoms out, whatever that really means, who will be holding the proverbial bag?

2 posted on 02/16/2013 8:04:24 PM PST by SpaceBar
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To: SpaceBar

The question is how fast will it fall? Straight down or at what angle?

How exactly will governments try to slow it down (and probably make it worse)

3 posted on 02/16/2013 8:06:14 PM PST by GeronL (
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To: blam

All intentional, by the bitter Kenyan marxo muslim in the White House. Attack the hub of man and the rest of western man tumbles/

Stimulate the US and the rest of the world glows.

He is doing his best to bring America to a grinding stop. Now that is leadership! Doing your best under adverse conditions.

4 posted on 02/16/2013 8:17:38 PM PST by himno hero (hadnuff)
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To: GeronL

Feng Shui Masters of Hong Kong say that the year of the Snake (2013 by the western reckoning and 4711 by Chinese)will be a time of great upheaval. In June/July the stock market will crash. In and around May 9th the EU will fall into two groups, with states leaving and forming another league. There will be war between China and Japan—a naval war, and there will be natural disasters—from earthquakes to floods and tidal waves. In USA there will be riots and unrest in the last half of the year. This is according to Chinese astrology. I sure hope its wrong.

5 posted on 02/16/2013 8:18:18 PM PST by Forward the Light Brigade (Into the Jaws of H*ll)
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To: blam

No worry’s.
Obama is going to save them with a new trade agreement.

6 posted on 02/16/2013 8:20:49 PM PST by mylife (The Roar Of The Masses Could Be Farts)
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To: Forward the Light Brigade

All of those things do sound likely, don’t they?

7 posted on 02/16/2013 8:26:14 PM PST by GeronL (
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To: himno hero

Odungo has accellerated it with his fascist (yes the texbook def of fascism) policies, but it has been a long time in the works, and his majesty was sent to push our uncooperative nation over the edge.

8 posted on 02/16/2013 8:35:32 PM PST by SpaceBar
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To: Forward the Light Brigade

Sounds to me that the stars only factor into the prediction insofar as things are headed south and then use your imagination. The rest reads like guess work based on a reading of current events. “Around May 9,” which may be broadly interpreted, is the only specific thing. That a war between China and Japan involve a significant naval component is a no-brainer, unless the Chinese have learned to talk on water.

9 posted on 02/16/2013 11:12:29 PM PST by Hieronymus ( (It is terrible to contemplate how few politicians are hanged. --G.K. Chesterton))
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To: blam
when the public sector already accounts for 56% of French employment.

That is a massive number.

In the US, there are approximately 2.2 million Federal workers, not all of those being full time. Some are term or temporary employees. The Pentagon just let 43,000 of them go because of Sequestration.

Our of a population of approximately 318 million, that is about a 0.67% of the population, far fewer than France's 56%.

However, if you factor in the workers for state, local, and municipal employees, the number will skyrocket by another 20,000,000.

10 posted on 02/17/2013 3:31:13 AM PST by SkyPilot
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