The American Economy and Consequences for Europe?

TBroedsgaard · Tar Sands Joined: Jul 17, 2006 Posts: 28

There's a lot of talk about the falling faith in American economy, and if America looses it's position as sole petrocurrency, it seems plausible that America will be subject to another Great Depression.

If this happens, what will the consequences be for Europe? Back in '29 and the thirties the Western-European economies suffered hard, and unemployment rates soared.

Will this happen again, if the American economy comes crashing down? Or will we go through with no trouble?

Any educated guesses?

malcomatic_51 · Heavy Crude Joined: Dec 24, 2005 Posts: 186 Location: UK

The answer is "yes" Europe will be hit hard, but different countries to different degrees. The US consumer dominates the global economy to an remarkable degree. I am sure I heard that US consumers account for a quarter of the world economy. Anyway, it's a huge contribution.

I'm taking a guess that countries with the most money, strongest local politics and strong manufacturing base will weather the storm best. The UK is heavily in debt and would fall after the US into depression. Germany is the world's greatest exporter, will suffer from loss of export earnings, but they are not heavily in debt now so they'll be able to just hunker down and get on with it. My impression of Germany is that its people are very laid back and mature and they are not likely to react badly to a crisis. Can't say the same for the French though. Britain probably will get nasty as unemployment balloons and small minds blame immigrants. Don't sunbathe in Britain, if you know what I mean, and beware of tar brushes.

I won't cry when the current Kindergarten culture drops off the cliff. It has bred selfishness and expediency to an extraordinary degree.

Kingcoal

What caused the Great Depression to be so bad was the illogical reaction to the stock market crash. Led by the US, the big players in the world economy erected trade barriers which effectively shutdown the world economy.

I think that we've avoided several crashes since that time. We did learn a lot since then. I think that a crash is unlikely. However, slow rot may still happen.
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EnergyHog · Heavy Crude Joined: Mar 27, 2006 Posts: 215

It's a global economy now, we're all in this together. Obviously the magnitude of the pain will vary from person to person, city to city, country to country.
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chris-h · Heavy Crude Joined: Oct 11, 2004 Posts: 447

kevincarter

Consequences for Europe will be that everybody will crap on their pants and start selling, so we'll end up crashing as well. If its not crash but slow motion we will still follow the exact same path as the Americans since economy is totally globalized.

In a European economic crisis: (depends on the country, Finnland is not the same as Spain for instance)
People will go straight to get their unemployment pay to face the not-so-funny-anymore mortgages that they have. Also they will cut loose all extra non-necessary expenditures such as fun, out dinners, movies, entertainment and vacations, that will force business and shops to shut down, so more people will be unemployed and asking for unemployment pay and social help. Once they run out of unemployment money (2 years max. here) and if things have not improved yet they'll realize they can't pay their houses, so they'll try to sell them, but nobody will be able to pay the extra expensive prices due to lack of good jobs, so house prices will go down. Once they go down constructors will stop building like madmen, so all construction workers, truck drivers, factories, sellers etc… that work for the real state will go out of business quick and then LOTS of people will be without a job and some without a job or a house where to live. And that means crime, drugs, violence and probably corruption.

Politicians will do the only thing they know, rise taxes.

Blame will be put on immigration without a doubt and tensions will arise among poor/rich EU countries.

Add an energy crisis to all that and you’ll find all the good reasons to move to the countryside, rise some chickens and get a garden going, why suffer?
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LX1 · Tar Sands Joined: Apr 07, 2006 Posts: 68