European Debt Crisis and Market Instability

If you’re like me and you think that the next SHTF event is going to be an economic/market/currency crisis/crash then you’ve likely had your eyes on Europe over the last few months.  You wouldn’t be the only one watching Europe as the markets have been on a crazy rollercoaster ride every time there’s news – good or bad – having to do with the debt crisis.

What strikes me as particularly interesting is that the Greece default is barely mentioned any more as all eyes have turned to Italy and their financial mess.  Now that it’s been established that they are (almost certainly) going to default on their debt the world is already looking at the next domino:  Italy.

Greek debt is somewhere in the neighborhood of 340 billion euros, which in the grand scheme of things is inconvenient, but Italy is in it to the tune of 2.6 trillion.  That’s a big wad of cash.

Some people argue that the “system”, that is banks and government, won’t let Italy and the rest of Europe fail.  And they might find a way to swing it for awhile, but at some point the whole house of cards is going to come tumbling down.  I don’t see how it can sustain itself for more than a couple of years, but having said that the governments have been remarkably adept at keeping things afloat.

Complex Systems

The more complex the system the harder it is to determine the outcome of events.  The world economy is incredibly complex and no one person or group of people have any idea of the outcome of the current situation.  If you put ten brilliant economists in a room together they will come up with ten conflicting ideas of what the economy will do with very good arguments as to why they think that way.

There are so many variables and inputs that it’s nearly impossible to factor everything in.  I suspect a supercomputer would melt down trying to figure it all out!

I don’t pretend to understand everything to do with the economy other than recognizing how complex it is; however, I do think it’s possible to get a general flavor  of how things are going.  And with the amount of debt run up by some of Europe and the United States that flavor is a lot like rotten eggs.

Who Knows?

Ultimately nobody knows for sure what will happen.  Will the world economy crash sending us back to the 1800s?  Will the US inflate its debt away leading ultimately to hyperinflation?  Will the banks forgive all debt and reboot the economy?

Knowing the uncertainty of world politics and economics here’s what I do:  I try to be ready for as many different scenarios as possible.    I make friends who have like minded opinions.  I stay out of debt.  And last, but certainly not least, I take care of my family to the best of my ability.

Now I want to know what you think.  Is European debt really a problem to the U.S.?  What’s your opinion on the economy?

Share your opinion in the comments.

-Jarhead Survivor