Will European Countries Get Their Debt Under Control Before Economic Stagnation?
European Countries in economic turmoil will not get their debts under control quickly enough before economic disasters. The main reason for this is that unemployment in these countries is very high. And how can the populace pay income taxes if people do not have jobs? The point is that they will not be able to pay income taxes to help their economies if jobs are not available for their citizens!
A recent forecast by the European Commission projected that over 19% of the population in Spain will be unemployed by 2010, followed by Ireland with 14% unemployment, Greece, Portugal, and Italy with 10.2, 9.0, and 8.7 percent, respectively. The unfortunate truth is that 2010 is currently upon us as we speak. Now, we can see why countries such as Greece and Spain are currently in the news about their faltering economies.
Until, unemployment gets under control, there will always be the possibility of a weak economical prospect in European countries experiencing economic difficulties.
There are economic variables at play in such situations. They are the decreases in mortgage rates and home prices. If people do not have jobs, they also do not have money; therefore, they cannot buy homes, and neither can home owners sell their homes—no one to buy, a very vicious cycle indeed!
The housing market then becomes stagnated. This intern causes the economy to falter, which further leads to more chaos. People begin rioting in the streets because they are being laid-off from their jobs. This phenomenon is what is currently taking place in Greece. In fact, such phenomenon will also be the cause of much civil unrest in years to come in countries experiencing large-scale unemployment, not only Europe.
So as a result of a fading economy, mortgage rates tumble. Therefore, a similar situation that has occurred in the US stock market with respect to housing will soon begin to occur in these fading European economies and markets.
The housing markets in these European countries will begin to sputter. A prime example of this will be the decrease in home values, making it easier for people to buy homes. People who could not afford houses a few months or a few years ago will soon be able to do so with ease. This cyclical phenomenon will be good for the economy in the long-run.
The increase in home ownership will then trigger an upward spiral of mortgage rates and home prices, thus making it difficult again for Europeans to buy homes. This phenomenon will then stabilize the market back to normal. By this time, countries such as Greece and Spain will be back on their economic feet again.
So to answer the question of whether or not European countries will ever get their debt under control before economic stagnation, we must reply with a strong, "not really." European countries experiencing economic difficulties will have to go through the vicious cycle brought on by unemployment before they will ever be able to get their debt under control. This is unfortunately one of the pitfalls of capitalism.
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,and 8 7 percent unemployed
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