U.S., Canada Will Not Support Euro Bailout: Does It Matter?
NEW YORK (TheStreet) -- When it comes to eurozone solutions, it is interesting how different ideas take hold. The current idea is that if there is a big enough firewall, all will be well. This is the position of IMF Managing Director Christine Lagarde and the strong eurozone countries.
So far, there is more than $1 trillion in the euro firewall, and the IMF is trying to raise more. The U.S. is at best lukewarm and has made no commitment. And just yesterday, Canadian Finance Minister Flaherty said "no" firewall monies for the eurozone.
So there is already $1 trillion available plus the $320 billion the IMF has already raised. How will more firewall funding end the euro crisis? The table below provides a snapshot of the current economic situation in the eurozone area.
Note the differences within the euro area. Germany's GDP is growing and it has a 5.5% unemployment rate. In the other countries listed, GDP is falling which means the unemployment rates of Spain (24.2%), Greece (19.4%) and Portugal (14.4%) will increase further (see table below)Spain and Greece have huge deficits. Greece and Italy have large government debts. And while Germany is running a current account surplus of 5.2%, the other countries are running large deficits. Back to the firewall. How exactly will this firewall help eliminate these imbalances? And this in an area that must have the same monetary and fiscal policy for all its countries? It won't. All the firewall can do is protect the banks. As I have suggested earlier, these imbalances can only be eliminated if the euro area is broken up and the countries go back to their own currencies.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
24/7 market commentary from Jim Cramer and 20+ veteran Wall Street gurus. Get access to the latest trading ideas on stocks, options, and ETFs as well as a real-time forum to see the pros exchanging their investment ideas.
- Jim Cramer + 20 Wall Street pros
- Intraday commentary & news
- Real-time trading forum
- Actionable trade ideas
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV