Which Sovereign Nation is Next to Default?

[StuartCa]

Could be the Dutch
http://www.telegraph.co.uk/finance/fina ... -risk.html

[finley]

People respond to incentives. They respond to rewards and punishments. If bad behaviour is not only left unpunished, but actually rewarded, then the root cause of the financial problem never goes away. Europe's root problem is that everyone wants something for nothing.

I'm in the middle of an ebook ("Influence", Robert B. Cialdini) which examines how marketing tricks work. It's written by a psychology professor and most of the book is a discussion of various experiments; it's not pop-psychology nonsense. He has a chapter on 'hazing' in the military, fraternities, and suchlike and discusses the evidence that such things are necessary to make people value what they acquire and generate a sense of community and teamwork. It's possible that the complete lack of any real hardships in Europe has been a big contributor to institutional and individual fecklessness.

[GuyInTaiwan]

finley: Definitely. Looking at those figures originally posted about Spain's future worker to retiree ratios, it's absurd to think that Spain could, in any way, be even remotely competitive. Europeans have been too clever for their own good. They've granted themselves the most cushy existences in the world, except no one has quite figured out how that's going to last very far into the future. They thought they had, and it's absolutely amazing how amazed they are now that it's all falling apart. Every time I see a Spanish march or a Greek riot, I think that they must be taking the piss, surely. Whether it was last year, this year, next year or some other year, at some point, the music was going to stop.

[headhonchoII]

I agree of the need to face reality, there is no way to avoid it long-term. It also teaches people to make more responsible decisions. There is no better way than experiencing something 'in the gut'. Or as the Chinese say, 'bodily experience'.

However we should be careful to apply the logic that you apply 'they deserve it because of their reckless behaviour' too far. Who is they? Who is Europe? Not everybody is equally culpable or feckless. It's not like all Spanish or Portuguese or Greeks were raking in the money before. Many of the youth or unconnected have always had a tough time getting anywhere there. Now things are going to be even harder for them. Sometimes recessions just end up causing a whole bunch of emigration and not much changes with the people who are connected.

[GuyInTaiwan]

People aren't poor in Western Europe. Governments provide generous benefits for people there.

Recessions do sometimes cause collateral damage. However, if people have been prudent about preparing for the future, then they shouldn't have major problems. During the good times, people should lay up for the bad times that inevitably come. Who has though? They were all livin' large on their six week vacations to Thailand.

Likewise, at what point did responsible people look around at their friends, their family members, even their colleagues or customers, and criticise them for being reckless, and thus, endangering everyone? I know this will come as a great shock to people at this website, but I'm always telling various people (both known to me and unknown to me) to stop acting like dickheads and settle down because I see the wider implications for them, for me, and for everyone else.

[headhonchoII]

Again not everybody was 'living large'. These are lazy stereotypes. People work hard too. My colleagues in the UK work much harder than some of the colleagues I had in Taiwan. They have more days off and less hours worked per day but that's about it (what country doesn't have more days off than Taiwan, even China has FAR more national holiday days than Taiwan). Actually they have less public holidays than Japan and many other countries. They get 1 week off for paternity leave. Some of them actually do work a huge amount of hours if you include all the travelling they put in. There is more expected of them. They get paid more but if you don't perform, you won't last. That's the same in multinationals everywhere.
These people aren't getting any benefits, they aren't happy to pay tax for this, that and the other. They complain about the local govenment officials getting cushy deals.
There are sectors of society that have been taking advantage of the system, but the average working man or woman in the private sector, not really.

[GuyInTaiwan]

HH: Not so. Europeans famously get their six weeks or whatever it is. Also, what's the retirement age in countries like Greece or Spain?

I'm not talking about the U.K. I hardly class them as European. I'm talking about continental Europe where there are significant minorities, if not majorities, who get ridiculous conditions and can't, or won't, recognise their roles in their own demise.

[Shaktipalooza]

The thread name seems ironic considering the European Union member nations behave in no way like actual sovereign nations.

[finley]

well, they're certainly all out of sovereigns, in both senses of the word.

[SillyWilly]

You fucking bet. When they were collectively living beyond their means, they weren't thinking twice about who would have to bail them out and foot the bill for their irresponsibility. They're not innocent lambs in this. They're a bunch of stupid, lazy, irresponsible cunts. So, fuck 'em, they deserve to be punished and suffer.

Greed and stupidity drove the Spanish real estate bubble. Here are a few stories:
"Marta Afuera Pons is juggling two mortgages - one on her house, another on an investment property that went sour - and is about 350,000 euros in debt. She is trying to persuade her lender, the savings banks BMN, to take back the mortgage and the property.
But since the frenzy drove Spanish home prices to a peak in 2007, they have fallen by at least one-fourth, and the bottom seems nowhere in sight. As Spain endures its second recession in three years and unemployment nears 25 percent, an increasing number of debt-heavy Spaniards can no longer meet monthly payments on the mortgages that their banks were all too eager to give."

"In late 2010, Ms. Afuera Pons, who had just lost her job as a social security administrator, stopped making payments on the mortgage of 132,000 euros that she and the man she lived with had taken out for their home in Tordera, near Barcelona.

Separately, they still owe 185,000 euros to the same bank after receiving further financing in 2007 to buy a house that was never built, because the developer went bankrupt a year later.

Like many Spaniards, Ms. Afuera Pons is hitting the two-year limit for receiving unemployment benefits. This month, she will receive her last 1,100-euro unemployment check.

Finding no buyers for her Tordera house, Ms. Afuera Pons says she is trying to persuade her lender, the savings banks BMN, to take back the mortgage and the property. She would then probably move in with her mother, because her partner left last summer for Brazil and is now married there. "

Source:http://www.nytimes.com/2012/04/25/business/global/cost-of-spains-housing-bust-could-force-a-bailout.html?_r=1&ref=europe

Major mortgage defaults coming; Spanish banks will need to be bailed out; Who's going to bail them out? The bankrupt Spanish government. With what money? European bailout fund money. Where will the fund's money come from? The ECB, of course, - freshly created out of thin air.