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Real-Time Insight … E. U. Sovereign Debt Crisis ( PART 1 OF 2 )


The more I read about the European Sovereign Debt Crisis, the more frustrated I become. It is a really delicate issue, but not as complex as many would think. People need to focus on the data, facts and trends that matter to properly evaluate the risks and challenges, while not being bogged down by fear and doubt. Ever heard of the phrase, ” Paralysis by analysis ” ? Here are some of the major players, issues /  facts and data that matter.  Some of the major players in this high stakes game include: German Chancellor Angela Merkel, Germany, France, The International Monetary Fund, The European Central Bank. In an earlier article, months ago, I tried ( hopefully with some success  ) to lay the ‘ groundwork ‘ in attempting to clarify the some of these issue regarding EU Sovereign Debt. See link     New REAL-TIME Financial Blog Post ( PART 1 of 2 ) SOVEREIGN DEBT … Global Financial Markets and the European Union.

The following are the issues,  facts and data that matter most. The data that REALLY  matters, essentially involves Gross Domestic Product figures and ratios, which will be clarified in Part 2 of this article. Individual nationalism of each country in the EU is also and issue. There is a deep rooted sense of nationalism in every country ( inside the EU and for countries around the world. ) It is based on national pride, history and culture, among other things. I guess you could say a lot of this is regarding sociology and human nature. This issue of nationalism vs. EU identity can not be understated for all EU country members.

The preceding are some, but certainly not all , of the most  relevant issues, facts and data that matter most. Now, here are some newer developments to take note of. As far as EU country influence is concerned, Germany is by far at the top. German Chancellor Angela Merkel ( economist by training ) is extremely popular. She has recently suggested  ( or at least floated the idea ) that private bondholders  should help provide assistance with the EU Sovereign Debt Crisis. Leveraging her popularity and power, Merkel realizes that many private sector companies in the EU have much to lose if there are EU sovereign debt defaults. KEY POINT ! We will see how this progresses. The attitude inside Germany seems that, as long as Germany continues to prosper economically, they are willing and determined to help save the Euro. Another issue is the somewhat recent agreements and mutual understandings that German and France ( the 2 leaders of the EU ) have come to share. Building consensus among EU countries is very important. A third more recent issues that I would like to point out is that China has expressed interest ( if not already acted ) in purchasing EU sovereign debt. One could make the argument that this particular development underscores the idea that EU Sovereign Debt problems effect the entire global financial market system and it is even in China’s best interest to make sure that the EU Sovereign Debt Crisis is successfully resolved. This last argument regarding China may be a little bit of a stretch ( maybe not ) , but likely has some validity.

( PART 2 of 2 to be posted at a later date )

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About Neven's Blog

My blog focuses on FINANCIAL MARKET ANALYSIS & INSIGHT from a macro as well as a micro - level point of view. The information is straight forward, honest, simplifies complex matters, questions some oversimplified matters, all while being as easy as possible for readers to understand. I primarily focus on capital and currency markets by combining insights, analysis & ideas from the fields of finance, economics and geopolitics.

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