This European crisis might be worse than we are trying to perceive it here. Around 4 wks ago when most of us were happy about a Greek deal i asked whether there was a financial institution ready to take a 50% haricut, wks later non is ready.
1. The austerity measures in Greece is making its citizenry poorer thus less taxes collected thus less govt spending thus high unemployment rate then people going for benefits at last making their 'debts' grow. (our coffee gets less consumers and the cost less tourists).
2. Italy with a debt book of $2 trillion becomes another story as many financial institutions are highly exposed there. I think everyone knows where the highest number of 'Coast European' tourists come from.
3. The speed with which Berlusconi has had to resign with and a new govt formed tells alot. The contagion effect was going to be massive.
4. If Italy goes down, the chinese will have lost a huge market and part of their investments. Kenya, no more cheap China loans and grants, cheap projects etc.
5. Having a two tier Eurozone after the crisis will make it hard for the markets to value the Euro. There are already talks that some financial institutions have started revaluing debts, mortgages etc in some of these countries so as to dispose them fast.
All in all a Europe without adequate disposable income means less tourists, reduction of market for our horticulture, reduction of FDI's from both Europe and Asia Pacific (including China). NSE down, govt securities yield up(not always good for the economy). Overnight borrowing rates up making banks become net borrowers. Cheap loans out the window.
'They say money cannot buy me happiness but when i compare when i had none and now, i'm happier' Kevin O'leary