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  • EU: Saving Spanish and Italian Banking Industries, By Any Means Necessary

    We just learned of French banks, Societe Generale and BNP Paribas, creating tremors in world markets, because their stock price lost 21% and 13% percent respectively, and those were banks that were supposed to be solid. The European Union (EU) has been transfixed, almost paralyzed by Greek debt, and now Spain and Italy are suffering from the same symptoms within their banking industries.

    How much are European banks exposed to debt? It seems like this is the only economic conversation we’re having: not about stabilization – not about growth – definitely not about employment: this thing is getting away from us, because global leaders are reacting, not responding.

    We just learned of French banks, Societe Generale and BNP Paribas, creating tremors in world markets, because their stock price lost 21% and 13% percent respectively, due to debt exposure and those were banks that were supposed to be solid. The European Union (EU) has been transfixed, almost paralyzed by Greek debt, and now Spain and Italy are suffering from the same symptoms within their banking industries.

    In the New York Times Article, Insiders See No Limits to European Central Banks Arsenal in Debt Crisis Fight , Jack Ewing and Raphael Minder, illustrate the EU’s position of doing whatever is necessary to triage and move beyond the crisis.

    The article states, “The central bank’s move, much more ambitious than its previous forays into the bond market, has set off a debate about how far the bank legally can go under its charter. According to bank insiders and analysts, the answer seems to be: as far as it wants.But the bigger questions may be how much intervention the central bank’s balance sheet can sustain — and how much help it will get from European governments. The pan-European bailout fund, the European Financial Stability Facility, is politically loaded and months away from having new money brought to a vote by member nations in the euro area.”

    The real issue is that we are looking at institutions that should be more solvent, and if the largest banks have this much exposure, you can expect the same for multinationals, as well as municipalities. This is not a problem that can be resolved piecemeal: global leaders should create a plan that addresses the needs and uplift of all their economies simultaneously, and that plan should include cuts, taxes and most importantly, job creation. We cannot cut our way to growth: we must find a way to cut what’s superfluous, and build upon workforce, innovation and technology that avails efficiencies and effective measure.

    Good Luck.

    Calvin Wilson
    Founder and CEO
    Upstart: Business and Management for 20-40 Year Old Professionals
    calvin.wilson1@verizon.net
    http://twitter.com/Upstart__Nation

     

    Filed Under: Global Business

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