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The City Café

For those interested in sharing ideas and perspectives regarding local government.

 

 

By Doug Macdonald

The European sovereign debt and financial problems threaten to take down the European Union’s economy from the 3% level into negative, recessionary territory within the next few months.  There are two parts to the problem: 1) sovereign or government debt overload, ie., fiscal deficits are high as a percentage of the overall economy, and 2) undercapitalization of their private sector banks (unable to withstand loan nonpayments in a recession).  And, as our own Roger Tew pointed out this week there is another dimension to the problems:  “A common currency, but not a common political governance.”  Recently, the focus has been on Greece, which has very high sovereign debt.  Over the past week, property and income taxes have been raised and govenrment workers have received 10% to 20% wage and pension cuts, prompting major protests.  But as typical with austerity measures they often backfire.  This week manufacturing orders plummeted… Read More Here

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