Thursday, April 29, 2010

How does this play out?

How bad will things get in Europe? Please click on the title to read a NYT article on the subject.

Germany has high quality exports that can benefit from a declining Euro. Another matter that they also have the overhang of all the Greek (and soon other?) junk debt they own and will likely own. But what will drive the other economies?

Is this a case of an "old European" business model based on cheap labour and raw materials from former colonies now falling apart? If so, and let's hope that isn't the case, an alternative needs to be found quickly - European economic leaders need to look beyond bankers' bonuses and public grandstanding, among other things.

One other thing - this might be a good time for the economically challenged countries of the world today to look at the Indian case study as an illustration of the benefits of an IMF bailout.

To think that about $7 billion was all it took to bail India out - less than 20 years ago. Surely some lessons can and should be learnt?

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