Leaders from all over Europe will meet this Sunday with the intention of coming up with a plan to overcome the sovereign debt crisis. 17 nations, who all share the euro currency, are trying to reach a deal to strengthen its EFSF (European Financial Stability Facility) fund (which has already assisted in bailing out Ireland and Portugal), present a strategy to bolster European banks, and agree on a new aid package for Greece, which is in financial trouble.<\/p>\n
This is not the first time euro zone leaders have gathered in the last year and a half to try to solve the debt problem. During their last effort in July, they reached a deal to give Greece about 110 billion euros and aid while the nation\u2019s private creditors were to sustain an approximately 20% loss on their bond holdings. That deal, however, has since fallen apart, which is why there is a summit in Brussels this Sunday. Meantime, in an attempt to make the Sunday gathering a success, Euro-area leaders are meeting in Frankfurt meeting now to try to resolve certain disagreements in advance.<\/p>\n
According to the Washington Post, the specter of the Lehman Brothers bankruptcy has been hanging over European leaders, who are committed to not making the same mistakes made by the Federal Reserve and the Bush Administration that led to the US\u2019s economic crisis in 2008. Although that was a domestic emergency here, the ripples were felt globally and the Europeans don\u2019t want that to happen again this time around. Per the Post, when European Central Bank President Jean-Claude Trichet warned US officials against letting Lehman file for bankruptcy, he\u2019d cautioned that doing so would be \u201csomething\u2026exceptionally grave.\u201d<\/p>\n
Reverberations soon followed. For example, after one market mutual fund\u2019s shares dropped to under $1 because it had invested heavily in short-term loans to Lehman, others then pulled their investments out of money market funds. Because no one knew what other banks might be at risk of failing, lending between them stopped. Global markets then went into upheaval.<\/p>\n
US leaders have learned much from the 2008 economic crisis. The Washington Post says that now it is the Obama Administration\u2019s that is pressing Europe to take aggressive action to solve its debt crisis. If Greece fails, Portugal, Ireland, Spain, and France may follow. Who knows what would happen next.<\/p>\n
Shepherd Smith Edwards & Kantas LTD LLP<\/a> founder and Stockbroker Fraud Attorney William Shepherd<\/a> offers this analysis:<\/p>\n After the financial crash of 1929, U.S. legislation was passed, including securities laws and regulations and the Glass Steagall Act (banks, brokerage and insurance companies were separated). Barriers were enforced to prevent unfair trade acts and policies. For the next seven decades the U.S. economy boomed and our financial system became the envy of the world.<\/p>\n Those changes made in the 1930\u2019s were implemented despite cries that such legislation, regulation and protection for our economy would doom capitalism. Generation after generation of so-called \u201cfree-traders\u201d and \u201cfree marketers\u201d continued their drones to return to yesteryear – an era in which globalists could do as they pleased in their race to the bottom for the sake of profit for the few at the expense of the rest of us.<\/p>\n By the 1990\u2019s, billions financed a lopsided body of \u201cthought\u201d that a return to the 1920\u2019s would cure world problems and lead us into a new and better future. Wise folks screamed that a return to \u201cderegulation\u201d of the financial system and instantly forcing Western World workers into competition with near-slave labor in third-world nations would lead to dire consequences. But true wisdom was overwhelmed by the bought-and-paid-for-voices that occupied major political parties.<\/p>\n Reversal to the 1920\u2019s \u2026 fait accompli. The result was both predictable and predicted. Welcome back the 1930\u2019s \u2026 except, where is an \u201cFDR\u201d who can reverse the insanity of the last decade?<\/p>\n Ghost of Lehman Brothers haunts European politicians and bankers<\/a>, Washington Post, October 18, 2011<\/p>\n Europe’s leaders take another swing at debt crisis<\/a>, Reuters, October 19, 2011<\/p>\n Lehman Brothers Lawsuit Claims Its Bankruptcy Was In Part Due to JP Morgan Chase\u2019s Seizure of $8.6 Billion in Cash Reserves<\/a>, Stockbroker Fraud Blog, June 14, 2010<\/p>\n
\nMore Blog Posts:<\/strong>
\nUBS to Pay $2.2M to CNA Financial Head for Lehman Brothers Structured Product Losses<\/a>, Stockbroker Fraud Blog, January 4, 2011<\/p>\n