Simon Johnson, almost as big a bear as Roubini, has a good analysis of what’s wrong with the Eurozone, and how it may push the world into a double dip recession.
Paul Krugman also has a useful note on the Spanish problem.
The more or less solvent Northern Europeans (Germany and the Netherlands) once again are faced with having to bail out the so-called PIIGS (Portugal, Ireland, Italy, Greece, and Spain).
Johnson’s great fear is a speculative attack on the Euro, followed by a cataclysmic event like the Germans or Greeks leaving the Eurozone.
He believes the banks there, and the banks here, are too weak to stem the inevitable losses that will come.
Krugman sees the Spanish difficulty as emblematic of a currency union that’s not working.
The US, as usual, seems to be in cloud cuckooland, fantasizing that more robust growth is just around the corner.
Consumer and business demand say this is utter nonsense.
Will our undercapitalized banks be back at Uncle Sam’s trough if the dollar carry trade suddenly goes the other way?
Gorilla’s only slightly more optimistic: “Simon says, and Brussels pays!”
