The Brutal Reality Of Europe's Crushing Economy Just Exposed | Far Worse Than We Thought

The Brutal Reality Of Europe's Crushing Economy Just Exposed | Far Worse Than We Thought

#economy #market #crisis

As the European Union stands at a critical moment, it faces a scary range of economic challenges. The strong foundations of the European Union's economy are now showing signs of weakness. Several countries that use the euro as their currency are facing serious problems with high levels of debt.

The aftermath of the 2008 financial crisis laid the groundwork for a nightmare that unfolded in Greece in 2015, leading to one of the most massive financial rescues in history. The debt situation is not over yet. Italy, which is the third biggest economy in the group of countries that use the euro as their currency, is now on the edge of facing another economic crisis.

As we look more closely at the lasting effects of spending cuts and political choices, we see a troubling situation where the economy's output per person (GDP per capita) has not grown for almost twenty years. It's like watching a ship sink over time.

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So, the European Union is facing a tough situation right now. Some of its strong economies are losing their strength, and their debts are skyrocketing. It all started with that big financial crisis in 2008, and then Greece had a major economic meltdown in 2015.

They had to accept some tough measures and got a huge bailout to save them. But guess what? The bailout didn't help Greece that much, and now economists are worried about the long-term consequences of those tough measures on their economy.

The situation is pretty bad, and one of the other big EU countries, Italy, is also in trouble. Their economy is almost stuck, and their banks are struggling with huge debts. This could even affect the entire Eurozone.

Some statistics are showing Italy's GDP per person is stuck at the same level for 18 years. And their banks are in a tight spot too, having trouble getting the cash they need to support businesses. Loans to the private sector have gone down big time.

Let's see how the European Union tackles this crisis and what it means for all of us. But to get to that, we also need to know the reason behind this. Let's head to Italy. Their new government is causing a big crisis by trying to mess with the Italian central bank, Banca D'Italia.

They even want to take control of the bank's gold reserves. The Italian government also wanted to increase its budget deficit, but the EU did not allow it. This caused some major conflicts between them. And because they all use the same currency, they can't just devalue it like they used to with their old money, the lira.

Back in the day, Italy's stocks were doing even better than Germany's. But going back to the lira now would be a disaster. It would mess up the whole European economy and hurt investors everywhere. The situation is shaking up the eurozone, and it's not just Italy. Other countries like Portugal and Spain are also facing big debt issues. It's like a chain reaction.

The EU leaders are trying to get Italy to play nice, but it's turning into a big showdown. And let me tell you, this Italian crisis is just the beginning. More problems are lurking in the shadows. Some other European countries have weak economies too, like Spain and France.

The European Central Bank said they'll do whatever it takes to save the euro, but time will tell how much it'll cost them to fix this mess. Speaking of banks, more and more banks are doing their moves.

Europe's big banks, like Deutsche Bank and Lloyds, are facing a risk of bad loans because the global economy is struggling with slow growth and high inflation. Everyone's watching closely to see how banks handle this shaky economic situation.

There are some interesting trends in the banking world. Investment banks are feeling pressure due to a lack of deals, but higher interest rates are helping retail banking be more profitable. Lloyds, for example, had to take a bigger charge for troubled loans and missed profit expectations.

On the other hand, UniCredit did better than expected in the second quarter, thanks to those higher interest rates. But it's not all smooth sailing. The International Monetary Fund sees some challenges ahead, with inflation coming down, but risks are still hanging around.

The demand for loans in the eurozone has dropped to a record low, and banks are being careful about lending money. Germany's financial regulator is telling banks to set aside more money for bad loans. Deutsche Bank, for instance, had to double its provisions for bad loans in the second quarter.

Meanwhile, Santander is seeing some trouble in Brazil, affecting their net profit. Tough times for them.
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