Who's got the right plan

Our European masters came out with a cunning plan, they were going to have a currency across all of europe
one minor little problem, some countries are industrialised some were not far from being Agricultural economies all with differing growth, export and income rates.


So in this cunning plan weaker countries were brought up to the economic levels of other countries, fine so far ?

The problem is I have not mentioned that the weaker countries borrowed money to do it, then along came a rainy day
ie, banks funding this growth made some bad deals around property building, yep everyone was building houses, the USA, Ireland , Spain and it needs an ever increasing number of people to buy them.

http://www.investopedia.com/features/crashes/crashes9.asp#axzz1xsKiW6uv


this is a bubble

we should all be used to bubbles

see
South sea bubble  http://www.historic-uk.com/HistoryUK/HistoryofEngland/South-Sea-Bubble/  
Dotcom bubble  http://news.bbc.co.uk/1/hi/business/8558257.stm

bubbles should come as no shock to older people, but now the bubble burst and with it land and home values fell, banks assets, went overnight real cash became king




But I fear that leaves us with another bubble being inflated,its called Government debt

We now have a stupid situation were Spain has been given E100 Billion, problem is Italy has had to bung money into that fund to help Spain

Italy as borrowed the money to pay Spain at 7% and is loaning Spain the money at 3%

so we have Italy's debt rise from the borrowing and on top Italy pays the 3% difference



http://www.bbc.co.uk/news/business-18438044
  

Now Spain's borrowing costs have risen
 http://www.bbc.co.uk/news/business-18438044  so  10-year bonds hit 7%    even countries cant afford those rates


And a major credit organisation cut Spain's credit rating to just above junk and Italy's borrowing costs rise to 5.3%,

we will soon have countries that have had bail outs bailing out other countries , what a complete mess
and all we hear from Labour is Spend some more or Britain's doing it all wrong.


Sandwell Tory said
What a complete mess,  Labour take a look across the channel