The unemployment rate in the eurozone is now 10.7 percent. That is the highest the unemployment rate has been since the introduction of the euro. The unemployment rate in the eurozone never got any higher than 10.2 percent during the last recession.
This is very troubling news. It was just recently announced that the eurozone has entered another recession, and already the unemployment rate is hitting new record highs. So how bad are things going to get in the months to come? The truth is that the problems for Europe are just starting.
The European sovereign debt crisis continues to get worse, and another major global financial crisis is going to be here way too soon. The EU as a whole has a larger population, a larger banking system and more Fortune 500 companies than the United States does. When the financial system of Europe crashes, the entire world is going to feel it.
Some of the unemployment numbers coming out of Europe are absolutely staggering.
Unemployment in Spain is 19.9 percent.
Unemployment in Greece is 23.3 percent.
And when you look at youth unemployment the numbers are far worse.
The unemployment rate for workers under the age of 25 is 48.1 percent in Greece and 49.9 percent in Spain.
If you look carefully at the photos of the austerity riots happening in Spain and in Greece you will notice that the vast majority of the protesters are young people.
Instead of getting better, the unemployment numbers in Europe just keep getting worse. Many analysts were shocked by these new numbers. The following is from a CNN article….
“This is appalling,” said Carl Weinberg, chief economist at High Frequency Economics, highlighting that the unemployment rate following the collapse of Lehman Brothers peaked at 10.2%.
The frightening thing is that we haven’t even had a major financial crisis in Europe yet. So far, the powers that be have been able to keep Greece from defaulting and have been able to keep major banks all over Europe from collapsing.
But there are quite a few signs that the “moment of reckoning” for Europe is rapidly approaching….
-The European Central Bank announced on Tuesday that it would no longer take Greek bonds as collateral from European banks. That is a really bad sign.
-Major European banks are revealing unexpectedly huge losses on Greek debt. The following is from a Reuters article….
The scars of Greece’s debt crisis were laid bare in heavy losses from a string of European banks on Thursday, and bosses warned the region’s precarious finances would continue to threaten economic growth and earnings.
From France to Germany, Britain to Belgium, four of the region’s biggest banks lined up to reveal they lost more than 8 billion euros (6.8 million pounds) last year from their Greek bonds holdings.
“We are in the worst economic crisis since 1929,” Credit Agricole chief executive Jean-Paul Chifflet said.
-The International Swaps and Derivatives Association has ruled that the Greek debt deal will not trigger payouts on credit default swaps. This is going to make it less likely that private bondholders will voluntarily agree to the debt deal.
This ruling is also seriously shaking confidence in credit default swaps. After all, they are supposed to be “insurance” in case something happens. But if they aren’t going to pay out when you need them, what good are they?