The financial crisis in Europe has jeopardized the well-being of the global economy. Some countries are threatened with ruin. Whether the crisis is accidental, or is it due to the mistakes of politicians and economists.
Who is guilty?
There is a link between the collapse of the American stock market and the crisis in Europe. Greece, Cyprus, Spain and Iceland were under attack. These countries brought the national debt to the annual GDP (gross domestic product; all goods and services produced in the country, in monetary terms). The countries of the European Union have almost caught up with the United States in terms of the size of the national debt to their creditors. Objectively, the leading economy at the moment is China, which is a creditor to the largest countries in the world.
What to do?
According to the theory of the Soviet scientist Nikolai Kondratyev, crises contribute to the cyclical development of the economy. The “Kondratieff Cycle” has a duration of 45-60 years, which includes the rise and fall of the market.
Despite the danger of the European crisis for the world economy, there are people who earn large sums of money from serious fluctuations in exchange rates and the general chaos. The behavior in the stock market should be the opposite of nervous crowd movement. Warren Buffett, one of the most famous investors in the world, made the largest sums at a time when the shares of famous companies on the stock exchange fell to record lows.
Real estate in Spain and Greece has fallen in value. In this regard, the governments of these European states have simplified the procedure for the privatization of apartments, houses and land plots. Selling property can ease the burden on governments and be a good investment for foreign investors.
Black Swan
The Greek economy has a budget deficit of 150% of GDP. The national debt of France, Germany and the UK exceeds 100% of GDP.
American economist Nicholas Taleb, in his book "Black Swan", accused prominent world politicians and financiers of blatant carelessness. Trusting complex formulas and mathematical models, they ceased to sense reality, Taleb writes. The Black Swan is a serious event that has never been prototyped before. The thought: "If you have not seen black swans, this does not mean that they are not at all" runs through the work of a recognized financier and thinker.
Possible developments
Europe's economy is rather fragile. The gold and foreign exchange reserves of many of the largest economies (Germany, Great Britain, France) do not rely on gold, but on US Treasury bonds. America's national debt is growing, and Barack Obama has not yet found an "antidote" to the US economic stagnation.
The economies of European countries can come out of the collapse by cutting costs and increasing financing of enterprises in the real sector. The "bubbles" that have accumulated in the field of finance, IT and consulting will burst sooner or later. European governments must reduce the amount of essentially debt benefits and investment in failing banks and monopoly structures.
If Europe does not respond to the signals given by the crisis and continues to increase its debt to strong states, this could lead to another “Black Swan” of an unprecedented scale. Millions of people may be left without pensions and salaries. Europe's economy is under threat, and only sound policies can improve the situation without resorting to populism.
