22 Reasons for a possible economic collapse in Europe next year are outling by theeconomiccollapseblog. The main points are listed below but I recommend reading the full article to find out their sources.
#1 Germany could rescue the rest of Europe, but that would take an unprecedented financial commitment, and the German people do not have the stomach for that.
#2 The United States could rescue Europe, but the Obama administration knows that it would be really tough to sell that to the American people during an election season.
#3 Right now, banks all over Europe are in deleveraging mode as they attempt to meet new capital-adequacy requirements by next June.
#4 European banks are overloaded with “toxic assets” that they are desperate to get rid of.
#5 Government austerity programs are now being implemented all over Europe. But government austerity programs can have very negative economic effects.
#6 The amount of debt owed by some of these European nations is so large that it is difficult to comprehend. For example, Greece, Portugal, Ireland, Italy and Spain owe the rest of the world about 3 trillion euros combined.
#7 Europe was able to bail out Greece and Ireland, but there is no way that Italy will be able to be rescued if they require a full-blown bailout.
#8 An Italian default may be closer than most people think.
#9 European nations other than just the “PIIGS” are getting into an increasing amount of trouble. For example, S&P recently slashed the credit rating of Belgium to AA.
#10 Credit downgrades are coming fast and furious all over Europe now.
#11 The financial collapse of Hungary didn’t make many headlines in the United States, but it should have. Moody’s has cut the credit rating of Hungarian debt to junk status, and Hungary has now submitted a formal request to the EU and the IMF for a bailout.
#12 Even faith in German debt seems to be wavering. Last week, Germany had “one of its worst bond auctions ever“.
#13 German banks are also starting to show signs of weakness. The other day, Moody’s downgraded the ratings of 10 major German banks.
#14 As the Telegraph recently reported, the British government is now making plans based on the assumption that a collapse of the euro is only “just a matter of time”….
#15 The EFSF was supposed to help bring some stability to the situation, but the truth is that the EFSF is already a bad joke. It has been reported that the EFSF has already been forced to buy up huge numbers of its own bonds.
#16 Unfortunately, it looks like a run on the banks has already begun in Europe.
#17 Confidence in European banks has been absolutely shattered and virtually nobody wants to lend them money right now.
#18 There are dozens of major European banks that are in danger of failing. The reality is that most major European banks are leveraged to the hilt and are massively exposed to sovereign debt.
#19 According to the New York Times, the economy of the EU is already projected to shrink slightly next year, and this doesn’t even take into account what is going to happen in the event of a total financial collapse.
#20 There are already signs that the European economy is seriously slowing down.
#21 Panic and fear are everywhere in Europe right now. The European Commission’s index of consumer confidence has declined for five months in a row.
#22 European leaders are really busy fighting with each other and a true consensus on how to solve the current problems seems way off at the moment.