5 Myths About Sick Old Europe

[billbuckhead]

5 Myths About Sick Old Europe
By Steven Hill
Sunday, October 7, 2007; Page B03


In the global economy, today's winners can become tomorrow's losers in a twinkling, and vice versa. Not so long ago, American pundits and economic analysts were snidely touting U.S. economic superiority to the "sick old man" of Europe. What a difference a few months can make. Today, with the stock market jittery over Iraq, the mortgage crisis, huge budget and trade deficits, and declining growth in productivity, investors are wringing their hands about the U.S. economy. Meanwhile, analysts point to the roaring economies of China and India as the only bright spots on the global horizon.

But what about Europe? You may be surprised to learn how our estranged transatlantic partner has been faring during these roller-coaster times -- and how successfully it has been knocking down the Europessimist myths about it.
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They're way ahead of the USA in preparation for more expensive energy.

[OHdem10]

1. It was Europe leading the way, when our Stock Market

was tanking so horribly recently. More than one
Business Analyst was breathing a sigh of relief as
they watched the European Markets.

[Kutjara]

2. Our economic "miracle" has been a lie...

...perpetrated by easy credit, sky-high borrowing and "don't worry, it'll never happen" irrational exuberance. People have been living off the "equity" created by an unsustainable house price bubble, borrowing and borrowing against fantasyland valuations. Personal "net worth" has skyrocketed, but virtually all of this wealth is measure in home equity and share portfolio valuations. Most of our assets are illiquid or subject to wide price swings, while most of our liabilities are in expensive credit card debt personal loans.

This liquidity imbalance has the potential to be disastrous if the economy enters a recession. Falling consumer demand will lead to reduced output, increased unemployment, a falling stock market, increased foreclosures and a massive liquidity squeeze. Personal asset values will collapse overnight, but of course, liabilities will retain their value. Our credit card debt, mortgages and loans will be worth the same after a stock market crash as before.

We've been running a national kite scam for the past decade. And our markers are about to be called in.