Since we are on the subject of Europe and basically whether or not its recovering,these articles should clearly demonstrate that Europe continues to flounder in a massive Recession;just the Recipe we need for a Breakup of an Unhappy Union.
Nokia loses crown to Samsung
European Auto Sales are Down
Eurozone retail sales fall to record Lows
Unemployment in Spain Hits record
Uk continues slide into Recession
Petrochemical Sales are down in Europe.
The Former Head of the Bundesbank admits the Eurozone is a failure.
And most importantly Banks continue to contract credit by reducing exposure to Loans.A European Depression is all but certain now.
If you mean That Top Executives continue to get paid insane amounts as Compensation then you are right.But Shareholders and Customers continue to suffer.
Even here we are on the verge of seeing a real revolt.
You have to realise that most Banks have the World's Central Banks in their total control-This is why Central Bank policy is geared to defend them above everything else.
Otherwise would Interest rates in America for Savers be at 0.5%-1%??? Even when Inflation is well in excess of 5% today???
Banks get to borrow super-cheap funds from Central Banks like the Federal Reserve,the ECB and BoE and then invest those in Buying Safe Government Bonds(at 4% Interest rates).They then make money on the Spread.
Think about it,Can you Borrow Money from the Federal Reserve at 0.5%???
Americans(working in the Private Sector) have openly accepted that they won't retire until they are probably close to 80.And for most Young Workers(ages of 20-40) their expectations on Social Security have gone down and down.You don't see the protests(&riots) like what you see in Europe today..
I was also reading that if things stay as there,Social Security and Medicare will run out before 2030.Which is not that far off for most people looking to plan for retirement.
And both leading candidates for the Presidential election(Obama and Romney) don't have serious proposals to plug that deficit...
Romney would cut Taxes and Spend more and Obama would raise Taxes and Spend more!!!
Even under Obama's Buffet Tax rule;there would not be any major change in the Deficit(hard as it sounds but its true!!!).
Check these sets of Amazing interactive graphs out to get a clearer idea...
To sum up,quite simply Americans also face very serious Retirement challenges but its nothing like what the Europeans face.In Europe's case the problems are today and increasingly over the next decade while in America's case the problems are atleast over Two decades away.
I agree and appreciate most of what you said in your post here.
The UK is a different case as they have their own independent currency ;so atleast they can control their own Monetary Destiny.
The Reason why I clubbed France in with the PIIGS is primarily because the solution to their Economic woes is similar in nature and right now that is the simplest way to sort out the Existance issues that the Euro faces today.
If Germany+Holland+Luxembourg+Finland(only countries with AAA rating left in the Eurozone);choose to exit the Eurozone together in an organized and coordinated manner for a New Euro/Deutschemark;the Old Euro will collapse in value by sufficent amounts(I am betting on a 100% fall in value from current valuations) to enable the remaining countries to Inflate away their debts.The Old Euro HQs will stay in Belgium while new Euro HQs will move to the Bundesbank in Germany.
The countries which form the Old Euro will be given the option to join the New Euro after they have sufficently inflated away their debts and brought their competitive levels closer to that of the countries in the New Euro.
Its also true that this will result in a massive Burst of Inflation for most People residing here-But after this initial burst of Inflation;they can raise Interest rates sufficently to atleast give savers some semblance of protection against Inflation.
Instead of this constant worries about whether or not the Euro will survive (alongwith the real human cost of German imposed Austerity on the rest of the Eurozone),tackling the problem head on and aggressively will help a lot today.
The rationale behind the Eurozone;to bind constantly warring people together in a common Union was a noble one.Unfortunatly noble intentions without decisive actions led to this current situation.Either they choose this solution today or wait for a total breakup and resultant chaos(wars will very likely breakout as a result) in the Eurozone.AS far as the Schengen Treaty goes;its already on the verge of getting destroyed today.So no real stakeholders left amongst ordinary Europeans for the Eurozone.
"The big problem that nobody in Europe wants to accept is that Europe is a Two-Speed economy and not everybody has benefitted equally from the Eurozone."
I think two-speed economy is greatly hurting the EU and creating a rift between the two sets of countries. With current situation in Spain, the gap is enlarging. I think there's a limit to how much one country or two or three countries can support the rest of the zone. Unless the situation in other countries improves, I don't think the EU can survive for very long.
"All of the European companies mentioned are large global organizations, so softness in Europe is only one part of the equation"
Given the economic conditions in Europe, I think the reason why companies like Phillips and Siemens have gained success is because of their global nature. It's important to see their revenue breakdown in detail and see what part of the revenue is coming from sales in other countries. Also, both these companies have looked to innovate on the consumer side so this may be a reason behind the success.
I agree with you that due to financial crisis the lending ability of the banks has become extremely weak. At your point about dependancy of corporations on financial institutions, if you mean that they dont 'depend' but they use it frequently, then its correct but if you mean that corporations have made a habit of doing business without debt financing, it wont be reflective of the situation esp in the global scenario. Corporations use a debt-equity mix that suits their profile and profitability even these days and trend might not change.
Sitting In America we don't realize it,but imagine if we were told that our Salaries would fall by 10% every year for next five years??? At the same time Taxes and all Benefits would also not be like what they were when our Parents Retired...
@Asish, Unfortunately, some people are in just that situation. In fact, in some industries, the salaries are now 40% lower than they were prior to 2008, though the cost of living is higher. As for retirement, that gets complicated, in part, because people are living longer than did in the previous generation on average. I do know of people who are still working at 80 and others who are not yet 70 but forced into retirment when their jobs are cut.
Ashish, I disagree with you only in one tiny detail. Europe does not have a 2-speed economy. Believe me what they have in France is not what they have in Germany, which is quite different from what's in the United Kingdom, which, of course, is not what holds in Spain, Portugal or even Ireland. And, you know as well as anyone the Greek and the Italians are on a different planet. Mixed bag? Certainly, but more like a a bag of mixed nuts!
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