Global Economy and the Financial System on the Cliff’s Edge?

The illusion of economic stability convinced most people that the great economic crisis of 2008 was exceeded. The truth is that it’s just beginning, and the next wave of crisis is very close. Europe is experiencing economic depression and is only a matter of time before the U.S. will follow.

Unemployment rate at high alert

Published last Friday, this index shows a new historic high in the euro area unemployment rate: 11.9%. In Italy it rose to peak last 21 years, while in Greece reached 27%. More worrying is the unemployment rate among young people under 25 years: in Greece and Spain is close to 60% and in Italy and Portugal is 40%.

Jobs crisis is a direct consequence of the global crisis of 2008 and may generate a political crisis. In general for each unemployed person three people have to suffer. For the euro area the real test is not the debt crisis, but how to avoid the consequences of high unemployment.

G20 vows to avoid currency war

A single country can win for a while the devaluing commercial advantages. This operation makes imports more expensive and favors the local domestic products. On the other hand, exporters get higher profits when they change back to local currency the international revenue. But this brings prosperity measure only temporary, illusory, when trading partners respond with custom barriers or similar policies to depreciate the currency

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The yen rallied on Tuesday, reversing the previous day’s late selloff against the dollar and euro after an official with the G7 said it is worried about excess moves in the Japanese currency.

World stock markets edged higher and the Dow Industrials climbed within striking distance of an all-time high as investors looked ahead to President Barack Obama’s State of the Union address on Tuesday evening.

E.U. budget could be reduced

E.U. is approaching British perspective

British proposal is gaining momentum, German austerity now has an ally with a renewed bargaining power, Britain. The debate now is concentrated on a limit of 960 billion euros wich is under the European Council’s proposal of 1.03 trillion. Austere approach was supported by those who contribute more than they receive back from the EU (Germany, Netherlands, Sweden is the name most difficult).