Sunday, February 15, 2009

Trouble in Europe

From the excellent Baseline Scenario blog:

Europe is in bigger trouble than the U.S.

This is a theme that Simon in particularly has been sounding. Now, according to the Telegraph, a confidential European Commission memo confirms this. To review, the basic problems, relative to the U.S., are:

  • Disproportionately large banking sectors (the Iceland problem) in some countries, such as the U.K.
  • High exposure to U.S.-originated toxic assets (up to 50% of those assets, I have heard estimated).
  • Major exposure to emerging markets, primarily Eastern Europe and secondarily Latin America, which have been harder hit by this crisis than anyone else.
  • Higher pre-crisis national debt levels (for many but not all countries).
  • For countries that use the euro, no control over monetary policy.

Le Vieux Chef

Sarko has moved so far to the left, says Jean-Marie Le Pen, un brin provocateur, that he might just vote for Aubry in 2012 if it came down to a contest between the two of them. And though he might be old, France has a hankering in hard times for old leaders: just think, he says, of de Gaulle and ... Pétain. The guy may be old, but he still knows where to stick the knife in, and how to twist it to cause maximum pain.