A few very small countries in the Eurozone, and a couple of larger ones – Italy and Spain – have borrowed too much and will eventually have to default. Let’s ignore the small countries, and assume Italy and Spain default. Their total GDP is 3.5 trillion dollars per year, the world total is 63 trillion dollars*. Their total debt is 3 trillion, of which say half needs to be written off. It’s do-able.
The real problem is not that these countries will eventually need to default, it is that Europe isn’t allowing it to happen. Iceland effectively defaulted a few years ago, banks lost money, the country is struggling, but it is not a crisis any more. Iceland, however, isn’t part of the Eurozone.
Europe is throwing good money after bad in trying to shore up these countries, and is only weakening itself in doing so. Europe must go back in order to go forward. What is spooking the markets is not the prospect of default, it is the prospect of disorderly default, events happening in an uncontrolled way. It does not have to be like this.
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Behind the scenes, governments are planning for countries defaulting and leaving the Eurozone. But they are not allowed to say so, it’s like revealing your contingency plans for defeat when you’re fighting a war.
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This uncertainty is classic Uranus territory. He is currently going backwards in early Aries, and will slow down and change direction in early December. That will usher in a new phase. We are likely to see some sort of bubble burst in the period around the change of direction, something like Greece defaulting and Europe having to work out the implications. Over this period, transiting Pluto will square the Asc, and conjunct the IC of the chart for the Treaty of Rome, the founding vision of the EU.
It may be that Greece leads the way. If it defaults and leaves the Eurozone, then a precedent has been set, if you like the unthinkable will have happened. Because that is part of the problem: Europe has been on a trajectory of closer integration for many decades now, often against sense, and the dream has never been seriously questioned. And the resistance to doing so is the real problem. So a few countries leave the Eurozone and maybe come back at a future date. It would be expensive, but do-able.
Europe shows all the signs of being in the grip of an ideology, and that is why it cannot sort it’s house out. It’s like the free market ideology leading against all sense to an under-regulated financial industry, which sooner or later goes tits up. Or the Catholic Church’s inability to deal effectively with paedophile priests, because it is unwilling to question the priests’ training which arrests their sexual/emotional development.
The unthinkable is good Uranus-Pluto territory. We are forced, institutions are forced, to question the unquestionable. I think this is the real issue behind the Eurozone crisis, because the practical solutions are relatively straightforward, albeit expensive.
There may be a much bigger problem looming that doesn’t seem to get a mention: Japan. It is the world’s 3rd largest economy, and it’s public debt is 198% of GDP. Compare that to Greece and Italy, which are a mere 143% and 119% respectively. Japan is way more indebted than any other major country. It has almost as much debt – 8.5 trillion dollars – as the much larger US at 9 trillion dollars. If the markets lost confidence in Japan’s ability to repay its debts, and raised the interest rates on its borrowings, then there really would be a problem.
*Throughout I’m using statistics from 2010