News / Economy

Financial Problems Threaten Both Sides of the Atlantic

Striking taxi drivers protest part of the country's fiscal recovery program by driving their cars in convoy through the streets of Thessaloniki, Greece, July 20, 2011
Striking taxi drivers protest part of the country's fiscal recovery program by driving their cars in convoy through the streets of Thessaloniki, Greece, July 20, 2011

Multimedia

Financial crises on both sides of the Atlantic are heating up.  And in the United States, there is growing concern that President Barack Obama and Congress will be unable to agree on a deal to raise the government's debt ceiling in order to avoid a default on the federal debt.

The Greek financial crisis loomed over Europe for weeks as frequent and sometimes violent demonstrations and strikes took place to protest government spending cuts and tax hikes aimed at averting a default on Greece's massive debt.

Now there are concerns that the debt crisis will spread to Italy and Spain.

And the United States also is struggling with its own financial woes. Its most recent challenge: raising the government's debt ceiling to avoid default.

Already rating agencies are threatening a downgrade of U.S. debt, bad news for European countries and banks that hold more than $700 billion in U.S. treasuries with the Bank of England leading the way, followed by Switzerland and France.  A downgrade would diminish the value of those holdings, and could bring massive disruptions in the global financial markets.

Iain Begg is a research fellow at the London School of Economics. He says Europe's problems as well as the problems in the U.S. will have a dramatic impact on the world economy. "It's not so much that the first round effects of either event would be so dramatic. It is that the follow on from it, what you might call the tsunami effect, from the original earthquake would be so dramatic that I think it would derail the recovery  and quite possibly pitch the world into a fresh bout of recession," he said.

No matter what the outcome, it will not be easy for either continent to recover, says Begg.  "On both sides of the Atlantic, we see this strange kind of the same political economy trying to work out who is responsible; who should jump first; who should bear the pain on any of the solutions, knowing that someone has to bear pain somewhere," he said.

The danger posed by the eurozone's festering debt crisis was highlighted this week as government officials and commercial bankers remained divided over competing policy proposals for rescuing Greece.

The decision is key to in preventing the region's debt crisis from spreading to other countries.

"This sort of contagion is very, very difficult to control," said Stewart Fleming, a research fellow at Chatham House.

He says the EU should move much more aggressively to prevent the financial crisis from damaging the eurozone. "A severe debt crisis would deal a devastating blow  to the European economy and would lead almost certainly to the break up of the single currency area. It's that important that Europe gets a control of its sovereign debt," he said.

Regardless of what the outcome in both the United States and Europe, one thing most economists agree upon is that time is running out for containing our modern era's fiscal contagion.

You May Like

Video Indiana Controversy Points to Divergent Notions of Religious Freedom

Arkansas, North Carolina have approved similar laws that gay-marriage opponents say help maintain their beliefs in face of changing culture More

UNICEF Denies North Korean Measles Outbreak

Agency dismisses Russian media report after government, WHO assurances More

Turkey Seen Taking Harder Stance Against Militant Kurds

Stance comes as President Recep Tayyip Erdogan is being seen as moving closer to generals 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.
Indiana Controversy Highlights Divergent Meanings of Religious Freedomi
X
Jerome Socolovsky
April 01, 2015 1:41 AM
Indiana’s state government has triggered a nationwide controversy by approving a law that critics say is aimed at allowing discrimination against gays and lesbians. The controversy stems from divergent notions of religious freedom in America. VOA's Jerome Socolovsky reports.
Video

Video Indiana Controversy Highlights Divergent Meanings of Religious Freedom

Indiana’s state government has triggered a nationwide controversy by approving a law that critics say is aimed at allowing discrimination against gays and lesbians. The controversy stems from divergent notions of religious freedom in America. VOA's Jerome Socolovsky reports.
Video

Video Nigerians Welcome Buhari's Return to Power

Crowds of jubilant Nigerians nationwide have celebrated the return to power of former military ruler Muhammadu Buhari. The retired army general won this year's presidential election with more than 2 million votes more than incumbent President Goodluck Jonathan. Buhari's supporters hope he can strengthen the country's economy and security once he takes office in late May. Zlatica Hoke has this story.
Video

Video Report: State of Black America a 'Tale of Two Nations'

The National Urban League has described this year's "State of Black America" report as a "tale of two nations." The group's annual report, released earlier this month (March), found that under an equality index African Americans had only 72% parity compared to whites in areas such as education, economics, health, social justice and civic engagement. It’s a gap that educators and students at Brooklyn’s Medgar Evers College are looking to close. VOA's Daniela Schrier reports from the school.
Video

Video Film Tells Story of Musicians in Mali Threatened by Jihadists

At this year's annual South by Southwest film and music festival in Austin, Texas, some musicians from Mali were on hand to promote a film about how their lives were upturned by jihadists who destroyed ancient treasures in the city of Timbuktu and prohibited anyone from playing music under threat of death. As VOA’s Greg Flakus reports from Austin, some are afraid to return to their hometowns even though the jihadists are no longer in control there.
Video

Video Gamma Ray Observatory to Open Soon in Mexico

American and Mexican scientists have completed construction of the world's largest gamma ray observatory, situated high in central Mexico’s Sierra Negra Mountain. The observatory's huge array of water-based detectors will soon start discovering secrets about black holes and supernovas. VOA’s George Putic reports.
Video

Video Ebola Vaccine Trials Underway in West Africa

Ebola has claimed the lives of more than 10,000 people in West Africa. Since last summer, researchers have rushed to get anti-Ebola vaccines into clinical trials. While it's too early to say that any of the potential vaccines work, some scientists say they are seeing strong results from some of the studies. VOA's Carol Pearson reports.
Video

Video Philippines Wants Tourists Spending Money at New Casinos

Tourism is a multi-billion dollar industry in the Philippines. Close to five million foreign visitors traveled there last year, perhaps lured by the country’s tropical beaches. But Jason Strother reports from Manila that the country hopes to entice more travelers to stay indoors and spend money inside new casinos.
Video

Video Civilian Casualties Push Men to Join Rebels in Ukraine

The continued fighting in eastern Ukraine and the shelling of civilian neighborhoods seem to be pushing more men to join the separatist fighters. Many of the new recruits are residents of Ukraine made bitter by new grievances, as well as old. VOA's Patrick Wells reports.
Video

Video Islamic State Prisoners Talk of Curiosity, God, Regret

Islamic State fighter, a prisoner of Kurdish YPG forces, asked his family asking for forgiveness: "I destroyed myself and I destroyed them along with me." The Syrian youth was one of two detainees who spoke to VOA’s Kurdish Service about the path they chose; their names have been changed and identifying details obscured. VOA's Zana Omer reports.
Video

Video Germanwings Findings Raise Issue of Psychological Testing for Pilots

More is being discovered about the co-pilot in the crash of Germanwings Flight 9525 in the French Alps. Investigators say he was hiding a medical condition, raising questions about the mental qualifications of pilots. VOA's Carolyn Presutti reports.
Video

Video Liberia's Almost Last Ebola Patient Grateful but Still Grieving

Beatrice Yardolo was to make history as Liberia’s last Ebola patient. Liberians recently started counting down 42 days, the period that has to go by without a single new infection until the World Health Organization can declare a country Ebola-free. That countdown stopped on March 20 when there was another new case of Ebola, making Yardolo’s story a reminder that Ebola is far from over. Benno Muchler reports from Monrovia.
Video

Video Cambodian Land Grabs Threaten Traditional Communities

Indigenous communities in Cambodia's Ratanakiri province say the government’s economic land concession policy is taking away their land and traditional way of life, making many fear that their identity will soon be lost. Local authorities, though, have denied this is the case. VOA's Say Mony went to investigate and filed this report, narrated by Colin Lovett.

VOA Blogs

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

World Currencies

EUR
USD
0.9220
JPY
USD
119.88
GBP
USD
0.6757
CAD
USD
1.2640
INR
USD
62.626

Rates may not be current.