Salient to Investors:
Overall debt of the 17 euro countries reached 90% of output, the highest since the euro’s creation in 1999, and 9 are in recession.
Zanny Minton Beddoes of The Economist said:
- Europe has a very big, chronic problem but has moved away from an acute phase. The risk that the Eurozone would fracture has receded quite dramatically in the past couple of months. There has been a profound shift within certain parts of Europe, particularly within Germany. For the next year or so, until the German election next year, Europe will maintain some form of calm.
- The real problem is where Europe ends up in five years. There’s little that the U.S. can do about Europe.
- China is being vilified which is a dangerous thing to do when there is a leadership transition.
- Europe remains the biggest uncertainty hanging over the world economy. A Europe that is stagnating for the next five or 10 years would be a big drag on the US economy, but any kind of financial catastrophe in Europe would be worse.
- Slower growth in the emerging world is here to stay which will hurt US plans for an economy focused more on exports to faster-growing economies.
James Surowiecki at The New Yorker said:
- The ECB has basically said it would backstop the debt of a number of these countries. The threat to the US is not so much the debt crisis in Europe, but the significant weakness of Europe’s economy as a whole.
- Spain got into trouble not because of too much government spending, but because of a real estate bubble that burst.
- China’s economy has slowed significantly. which has a profound impact on the US.
Watch the video or read the full transcript at http://www.pbs.org/newshour/bb/politics/july-dec12/europe_10-25.html