This article is about the European Sovereign Debt Crisis.
Although it has not been drawing as much attention since this fall and the
economy seemed to be recovering, there are still major problems that need to be
addressed. Spain’s unemployment rate is almost one fourth of the workforce and Spanish
homeowners are struggling to repay their loans. Italy does not have the housing
crisis but is faced with immense public debt. Last week’s increased borrowing
prices of Spain and Italy reflects that. The upcoming EU economic health
releases to be made over the next several weeks will demonstrate the extent of
the problem as well. Southern countries have been using the European Central
Bank loans in order to pay off their own national debt, which has not helped
recovery since investors are cautious about entering the tumultuous market. The
situation is influencing the political and economic climate of all of Europe.
How do you think the EU should deal with the PIIGS countries?
http://www.nytimes.com/2012/04/16/business/global/for-europe-a-return-of-the-jitters.html?pagewanted=2&_r=1&hp
1 comment:
You are right in saying that these events are influencing general European politics, with Nicolas Sarkozy running for re-election in France and claiming that his country will end up like Spain if his socialist opponent is elected.
I think that the EU and ECB will adopt a wait and see approach with both Italy and Spain. Both are behind on what they need to have but the year is long and they do have time to get the necessary funding, though Italy looks like a bigger problem because it has a lot of public debt weighting down its government rather than dealing with predominately market issues like Spain. If either nation requires a bailout it could end the Euro because the expense would be tremendous.
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