@RichK: absolutely yes, definitely; we don't forget WWW was born @ CERN, grids archicteture for current smart networks/cities/homes were born @ CERN, I am confident similar events will happen again, they could boost also current crisis on jobs.
@Wale: "i want to challenge this - natural resources?"
I still don't think Europe's natural resources are depleted. Look, we wound up finding huge oil and gas reserves almost everywhere in the US via fracking. There are still many untapped resources in Europe. There are still forests, buried minerals, farms, and people, if you want to see them as natural resources, too.
@mfbertozzi: " I agree, I am convinced it will happen."
I sarcastically joke about a "Golden Age of Prosperity" when people try to whitewash the severity of the current crisis, but in the case of a breakthrough in physics, we may actually have a real economic breakthrough.
Europes old glory - the main attraction for the tourists is being given tough competion by the countries in Asia - Singapore, Thialand, Malaisia with the new modern style tourist attractions.
If Europe could revive its toursim industry!
Country like Singapore is making its daily bread partly on tourim
@All-On the other hand in China's case its a question of handing more control over to the People-something which is anathema to the way the Communist party is run today.So their transistion will have to be more violent and painful.
@Prabhakar, Europe's strengths include the following: A large population, educated and highly motivated workforce, strong residual household wealth, developed infrastructure that continues to entice companies, transparent and reasonably good law system, stable political system, democractic governments, innovative systems and the ability to absorb investments.
Jacob - i think it will take a while before see recover. I think conversations need to move more towards growth. If some of the EU central banking things can be better addressed and bank can start making loans to small businesses and approving corporate innovation, I think we could see some ripples of positive growth next year this time. But, honetsly I don't know. Everyone is being swallowed into this austerity pit (at least here in Spain)
Jenn: agreed. Finger-pointing is a waste of time, yet the politicians have to look "tough" to their constituents. The last time the global economies pulled together in the interest of survival was WW2, adn even then it was an "us" vs. "them." There is always a devastating loser. And it doesn't seems like we have evolved much--now, the weapon of choice is currency and exports.
@Everyone, Over the next few weeks as high-tech companies announce results starting next week EBN bloggers and contributors will be examining the results to sift out the impact of Europe on the sector. We will also review forecasts to determine expectations. See: earnings calendar.
@Wale/@Bolaji/all: we could also outline just a few days ago Italian scientist @CERN has explained boson Higgs discover and the physical scientist Mr Federico Faggin (which has invented which has invented the microprocessor) is candidate to the Nobel.
@tech: "The Mother of all Economic Crashes is coming-From China!!!"
You know, we have "circuit breakers" in place in trading floors and on power grids, maybe we need trade circuit breakers, too, to insulate economies from black holes forming in China.
The interesting thing about all this is that everyone is wanting to blame someone for the crisis and want one big country to the world, whether it's the US, China or Germany. Folks, we're in a global economy... tech industry especially wanted a global market, so now it's funny to me to think that only one or two or three economies willl bouy the rest.
@Flyingscot, UK will not join the euro-currency. Period. It will jeopardize their economy and threaten London's status as the world's financial capital. You'll be amazed how much a country like the U.K. benefits from having trillions of dollars in investment flow through London daily.
@Wale: (innovation) it is a good point, we don't forget Northen Region is on the top for broadband and mobile and recently in the Central Europe has been launched "post-digital future" that is exactly the way for combining electronics and phisical objects working together.
@Wale: Well, same as everywhere. Internet of things will help keep better track of inventories and sales and so reduce overheads, so it is a way to increase efficiency. But it won't pull the whole load when it comes to getting Europe back on track.
@Barbara, China knows we all swim or sink together but that's not an open policy of the government. They'll push the rest of the world to the edge and be there with a helping hand to ensure we don't drag them down. Selfless actions won't determine winners and this is about winning even if it isn't a zero-sum game.
@Jennifer the European model of the long lunch was based on the tradition of the midday meal constituting dinner and the fact that people used to live close enough to where they worked to be able to go home then. In warm countries, it was also a time to break from the peak heat of the day to return later when it was cooler. However, as many people commute further today, it's not practical for many. In Israel some businesses used to close in the middle of the day, but I don't know if they still do.
@Bolaji: I am scared already. I don't have a lot of insight into Asia, except that China can control its economy to a greater degree than ROW. Yet, it operates on self-interest alone. And that isn't working, if I understand correctly. Has China figured out we all swim or sink in a global economy?
@tech4peopple Possibly, but I do know of people with gov't jobs in the US who also get a great deal of vacation, not necessarily 3 months, but quite a few weeks plus unlimited sick days (hey, Verizon workers got that too) and days like Lincoln's birthday
Susan - yes, some people in parts of southern Europe have long lunches...many, many others do not. It's an unfair generalization. Many are working under American models of business, and are almost at the poimnt where they have to bring brown lunch bags and eat at thier desk.
It's this wretched cycle where every is squeezing every last dime out of costs, but beyond government and changes in regulations, companies need to start being more creative about how they fund projets. I don't where they'll get the money from, but wanting for EU governments to fix this crisis won't be adequate.
@Barbara, Wait until the shoe drops in China! If you look at valuations of Chinese companies on Hong Kong Stock Exchange and Beijing exchange you may be scared. Investors know there's money to be made in China but they are wary of the opacity.
@Bolaji/Jennifer/all: [part-2] after Lehman crack, some Govs have had to provide a funds policy,in order to avoid the crack of major national banks, increasing this way public debt till a gap which will be very hard to fill. Right now, this is the status of Spain, Greek, Italy, Irland a in part also France and a few countries in the Eastern region.
@Rich, Europe is actually still the world's biggest economic region. The purchasing power of the people (despite high debts) is very high and demand for necessary services and products has stabilized. The complaints about sales in Europe is that they aren't as high as they used to be but if you manage GE, Microsoft, Apple, HP, Dell, Lenovo, SAP, Intel, Samsung, HTC, Nokia, name the company, you want to be in Europe.
@Tech4People, Thanks for bringing up the global implications of events in Europe on other regions. In additon to falling sales to the region, many foreign customers of companies in Europe cannot get the same financing conditions they used to get because their European partners don't have the ability to grant them extended payment terms.
anandvy - yes, I think the euro will drop a little more as the next round of austerity measures play out. When I first came here in 2002-2003 it was about 1.15. At it's peak, I think it was 1.60 against the dollar... I'd have to check that, but yeah, I think it will be on a roller coaster ride for a while longer
@Bolaji/Jennifer/all: [part-1] the thesis is that the collapse of Lehman in 2008 (which had granted lines of credit even to those who were able to repay and selling financial products with a limited warranty to European banks), has been the source of financial difficulty.
@Jacob, Yes. If you are traveling today in euro-currency countries you are likely to get a lot of value for your dollar. The euro dropped again today but only because it is now seen that U.S. employment conditions might start to improve soon.
Jacob - yes tourism is a good thing and is a life-saver for many economies right now, but it's not enough. There has to be an investment in high-skill labor and more entrepreneurial endeavors... that's lacking in large parts of Europe since, like in the US, lots of things were shppped off shore.
Someone asked about the laid-back lifestyle. I don't think that's completely fair. I know a lot of people are are working two or three jobs right now to make ends meet, and many people who are working 10-12 hour days. Somewhere in recent history, a 10-hour day has become the norm, and I think Europeans are staunch defenders in saying we'll work hard, but there's more to life than working all day
@Wale, The smaller businesses in Europe are suffering the impact of outsourcing to China also. During a recent visit, I found a contract manufacturer in Switzerland that has innovative processes but which is also finding itself struggling to expand operations because of competition from the Far East. It has struggled but it is surviving and proving it is possible to manufacture in Europe.
There is a lot of talk about countries wanting to exit the EU. I don't how how wise that it, but I do think the currency has long been overvalued, and the fact that it dropped to a two-year low may help things like exports, but I can't say I'm a big fan of stripping the euro as a long term solution. It sounds more like a band-aid solution to me.
@Tech4people, England already sent George Soros "a thank you" card. He made a huge profit betting against the sterling. But the British were not going to give up the pound anyway. It is attached to the monarch, which they rail often against but won't give up.
@AnnaYoung: just a thought to share about EU and UK; feeling is that quite huge distance in terms of decisions on economy is still in place, despite the geography, UK is in Europe but still away from EU, is only a feeling from people living in West-Central Europe?
@mfbertozzi, I believe history is a part of the problem in Europe. In fact, some of the fundamental problems date back to the end of World War 11. This is addressed in the book "Postwar: A History of Europe Since 1945" by Tony Judt. The problems include the ownership of commercial institutions and banks by governments, which then used this to win elections by paying hefty social compensations that the state could not really afford. The debt mountain has been building for quite a while.
This is especially the case for countries like Italy and Spain. In the case of Greece, it won the right to join the EU plus hefty payments from Brussels that allowed the government to build a large bureacrazy that couldn't be supported from very low taxes. To finance this they had to borrow.
I don't think some of the numbers countries are held accountable to were good targets to set (debt vs GDP growth. Because they were based on the strongest country's economic models, not realtistically on how the weaker ones could attain that.
@Rich, Thank you for bringing up Poland. I believe that many observers continue to focus primarily on the core EU nations. They've not paid enough attention to the fringe and newer member states most of which don't have the debt burdens of their richer neighbors.
@Jennifer/Bolaji/all: It is really fascinating trying to deep understand the origin of Europe's financial crisis; knowing the past could help in planning better the future. Any thoughts? Jennifer told earlier " it is a mess ", but what was the real cause in principle?
@Tirlapur, Interestingly enough. Europe is already stabilizing to some extent due to the agreement I referred to earlier. At least, governments are beginning to evaluate the extent of their indebtedness while they are also finding out what exactly lenders are willing to accept. This clarity was not there until the recent crisis. If the agreement unravels there will be more problems.
I understand Poland is doing fairly well in that it has basic, non-transportation energy nailed down with local coal production, manufacturing is supposed to be doing well with the Fiat 500 (made in Poland) a hit, and exports of furniture via Ikea doing well. Local natural resources are still reasonably plentiful. Social supports are not so good compared to the rest of Europe, but they cost the government less, or so I understand, if I understand correctly. Anyone else have a comment on that? I am interested in Poland because I have been considering relocating to there.
@Anandvy, The recently held elections will have limited impact. The main mover in Europe is Germany and that's where we should pay the greater attention. If the German Constitutional Court rules against the recent fiscal agreement struck by Angela Merkel, bondholders will start fretting again and this could impact even larger economies like France.
@Jacob, The link I provided earlier addressed your question. However, some European countries, like even the U.S. have been living beyond their means. Governments could not continue to borrow and lenders were querying the ability of these countries to repay bonds.
1. In today's global scenario the Automobile and Electronics are the two major economic health indicators. How is Europe's present condition in these sectors?
2. Are the europe's problems compounded because of the loosly coupled strcuture of the EU?
Some of Europe's biggest manufacturing companies aren't expecting a robust quarter. However, they've also expanded sales outside the region. This category includes companies like Siemens, Philips, Alcatel-Lucent, STMicroelectronics. Another group of companies that is hurting are American and Japanese companies that generate large portions of their sales from the region.
The region has been going through what's been described as "acute crisis" for a while. Recent policy decisions and fiscal measures haven't solved the debt and unemployment problems. The high unemployment means sales to the region are depressed, banks are tightening up lending and governments are also cutting expenses, which is putting a break on economic growth.
Good afternoon and welcome to EBN's weekly Live Chat. Today, we will be talking with Jennifer Baljko, a long-term observer of events in the electronics industry and contributor to EBN. Jenn will be answering questions and commenting on economic events in the Euro-area with contributions from myself. Jennifer has been living in Europe for about 10 years and once worked with me at EBN before that. She travels regularly on the continent and can lend some insight into how events in the region are impacting the electronics industry. Welcome Jenn.
In case someone didn't read Jennifer's blog on the topic, here it is for a quick warm up before the live chat: http://www.ebnonline.com/author.asp?section_id=1061&doc_id=246966&
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