Reuters sees the effect; it misses the cause. Debt is not catchy... It's the result of behaviour, not the result of contagious disease.
Paris, France
The euro is taking a beating. Investors are worried that it won’t survive Europe’s debt problems.
Note, we said ‘debt’ problems. Many experts still believe it is a liquidity problem. That is, they think it’s just a problem of finding financing. They blame speculators and hedge fund for panicking... or for deliberately cutting off the flow of juice.
But the speculators are just doing their job. They see that the real problem is debt. Greece, for example, has government debt equal to 120% of GDP. It’s too much… And even if all their austerity measures are put in place successfully – that is, if the Greeks go along with proposed budget cuts – the level of Greek debt will still increase, to 150% of GDP.
In other words, the fix makes things worse, not better. Debt needs to be defaulted... and restructured... not increased.
