News / Europe

EU Leaders to Continue Search for Economic Answers

European Council President Herman Van Rompuy during a news conference at the Moncloa Palace in Madrid, Spain, July 12, 2011
European Council President Herman Van Rompuy during a news conference at the Moncloa Palace in Madrid, Spain, July 12, 2011

European leaders may hold another crisis summit on the struggling eurozone as early as Friday. The euro currency area is experiencing another grim week - and America's own debt problems only add to the uncertainty.

More bleak news for 17-nation eurozone. This week, Moody's ratings agency cutting Ireland's debt rating to junk status - echoing similar action targeting Portugal last week. It predicts both countries will need a second bailout - like fellow eurozone member Greece.

Speaking from Spain Tuesday, European Union president Herman Van Rompuy sought to calm jittery markets.

"I am fully aware of the current tensions in the debt markets. But let me be very clear that there is a very strong commitment at the highest level to do whatever is necessary to safeguard the financial stability of the euro area," said Rompuy. "Leaders have to [rise] above their domestic political agendas and they will."

But European finance ministers meeting in Brussels earlier this week failed to come up with a clear plan of action. That might be left up to EU leaders, if they hold emergency talks on Friday.

At issue - how much the private sector should contribute to another Greek bailout and whether to completely overhaul the bloc's bailout fund to make it more flexible.

Gilles Moec, London-based co-head of European Economics Research for Deutsche Bank, says private sector involvement is mainly a political issue. "The idea - especially in the core [eurozone] countries - is to say the taxpayer should not be the only actor in the system having to pay for the bailout," said Moec.

Results from so-called stress tests of European banks are due out this week -- and they should show banks' resilience in limiting the spreading crisis - and their ability to contribute to a bailout.

While unlikely, chances the United States could default on its massive debt is another concern. U.S. central bank chief Ben Bernanke has warned such a scenario could trigger a major world crisis.

"All these discussions about the debt ceiling in the U.S. are clearly not helping in the sense that it's adding another layer of anxiety in the situation, which is already complicated enough," said Again Deutsche Bank's Gilles Moec.

A more immediate worry, says Bruegel think tank researcher Benedicta Marzinoto, are fears larger European economies will be pulled into the eurozone debt crisis. Markets nosedived this week over fears about the health of the Italian and Spanish economies.

"Things have certainly deteriorated, because financial markets are attacking large markets like Italy and Spain. I'm more concerned about the two big countries than about the downgrading of Ireland - which in a sense was inevitable, if you think of a contagion from Greece," said Marzinoto.

Italian Prime Minister Silvio Berlusconi has vowed to swiftly push through a contentious austerity bill. The initial reaction by analysts has been positive. But they say the EU still must come up with a long-term strategy for the eurozone - and there are fears that tough decisions may be pushed back until the fall.

You May Like

Nearly 900 Dead, Missing in 2014 Air Disasters

Southeast Asia took a particularly heavy hit; 3 major events involved weather, two planes were shot down in eastern Ukraine, and one crash was attributed to mechanical problems More

Video Islamic State Emergence Transformed Syria, Iraq in 2014

'It was very clear that there were problems building up in Iraq at the end of 2013 but everybody was distracted by Syria,' says one expert, in explaining group's rapid rise More

Rights Group: IS Executed Nearly 2,000 People in Syria in 6 Months

Islamist group also killed 120 of its own members, most foreign fighters trying to return home, in past two months, according to Syrian Observatory for Human Rights More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Russians Head Into Holiday Facing Economic Malaisei
X
Daniel Schearf
December 25, 2014 4:34 PM
Russian preparations for the New Year holiday are clouded by economic recession and a tumbling currency, the ruble. Nonetheless, people in the Russian capital appear to be in a festive mood. VOA's Daniel Schearf reports from Moscow.
Video

Video Russians Head Into Holiday Facing Economic Malaise

Russian preparations for the New Year holiday are clouded by economic recession and a tumbling currency, the ruble. Nonetheless, people in the Russian capital appear to be in a festive mood. VOA's Daniel Schearf reports from Moscow.
Video

Video Mombasa in Holiday Tourism Slump Due to Security Fears

Kenya's usually popular beachside tourist destination of Mombasa is seeing a much slower holiday season this year due to fears of insecurity as the country has suffered from a string of terror attacks linked to Somali militants. Mohammed Yusuf reports for VOA on how businessmen and tourists feel about the situation.
Video

Video For Somalis, 2014 Marked by Political Instability Within Government

While Somalia has long been torn apart by warfare and violence, this year one of the country's biggest challenges has come from within the government, as political infighting curtails the country's progress, threatens security gains and disappoints the international community. VOA's Gabe Joselow report.
Video

Video 2014 Saw Intensification of Boko Haram Insurgency

The year 2014 saw Nigerian militant sect Boko Haram intensify its five-year insurgency and target civilians in large numbers as it seized territory in the northeast. The kidnapping of nearly 300 schoolgirls in Chibok in April sparked global outrage, but failed to become the turning point against the sect that Nigeria’s president said it would be. The picture at year's end is one of devastation and uncertainty. VOA’s Anne Look reports.
Video

Video Estimates Rising of Foreign Fighters in Iraq, Syria

Foreign fighters are making more of a mark on the battles raging across Syria and Iraq than initially thought. VOA's Jeff Seldin has more.
Video

Video US Political Shift Could Affect Iran Nuclear Talks

Secretary of State John Kerry’s efforts to resolve Iran’s nuclear crisis are continuing into 2015 after Iran and six world powers failed to agree by a November deadline. U.S. domestic politics, however, could complicate efforts to reach a deal in the new year. VOA State Department correspondent Pam Dockins has the story.
Video

Video NYSE: The Icon of Capitalism

From its humble beginnings in 1792 to its status as an economic bellweather for the world, the New York Stock Exchange is an integral part of the story of America. VOA’s Bernard Shusman reports from Wall Street.
Video

Video Syrian Refugees in Lebanon Fight to Survive Water Crisis

In a region choking from dwindling water supplies, Lebanon has long been regarded as one of the few places where there is enough. But in recent years, half the people in the country have faced severe shortages. And the more than 1 million Syrian refugees in Lebanon are hit the worst by the water crisis, making the country's most vulnerable people increasingly impoverished and sick. Heather Murdock reports for VOA in the Bekaa Valley in Lebanon.

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

All About America

AppleAndroid