Where to start? Germany, otherwise the European economic juggernaut, faces a crisis because its biggest bank, Deutsche Bank, holds a lot of bad investments and loans.
Why not bail it out, you ask? Because that might open the door to rescues of one sort or another from Portugal and Italy. Portugal’s debt has skyrocketed to 130 per cent of GDP, while several of Italy’s banks are practically insolvent.
Germany and France have national elections next year and the campaign atmosphere is almost sure to be as volatile as the one just passed in the US. Immigration and slow economies are major issues in both countries.
Italy’s authoritarian-oriented prime minister Matteo Renzi is trying to push through a political reform that he says would make it easier to pass economic reforms, though no one actually knows what would really be needed to jumpstart the country’s anemic growth rates. The referendum on the political reform package is set for Dec. 4. If the referendum fails, Renzi may have to go, opening the way for an anti-EU movement to press Europe to permit greater spending to stimulate the economy.
Of course, then there’s the United Kingdom, which voted to let its government leave the European Union, only to have a court judgment say the government, now headed by Teresa May, has to ask parliament for permission on when to actually leave or maybe whether to leave at all and who knows what. Plus, the EU seems intent on punishing the Brits for leaving by giving the worse terms possible in future trade and insisting on open migration borders.
Austria votes on a new president next month after a summer election was disallowed due to voting irregularities. The next vote, scheduled Oct. 2, was cancelled because the glue on envelopes used for mail-in votes became unstuck. The Austrians will try again December 4. A Trump-like far right candidate might win.
And don’t forget Greece. Two years after promising a reform package in return for money, the country’s national debt–187 per cent of GDP–has shrunk none. While Greece’s money flows to creditors, Greek poor, pensioners and unemployed youth continue to suffer and the economy grows not.
WSJ on Portuguese tremors.
Greece struggles via BBC.