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

TEXT SIZE - +

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

Wikipedia Proves Useful for Tracking Flu

Technique gave better results than Center for Disease Control (CDC) and Google’s Flu Trends More

Turkish Law Gives Spy Agency Controversial Powers

Parliament approves legislation to bolster powers of intelligence service, which government claims is necessary to modernize and deal with new threats Turkey faces More

Video Face of American Farmer Changing

Average American farmer is now 58 years old, and farmers 65 and older are the fastest growing segment of the population 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.
Face of American Farmer is Changingi
X
Mike Osborne
April 18, 2014
The average American farmer is now 58 years old, and farmers 65 and older are the fastest growing segment of the population. It’s a troubling trend signaling big changes ahead for American agriculture as aging farmers retire. Reporter Mike Osborne says a new report from the U.S. Census Bureau is suggesting what some of those changes might look like... and why they might not be so troubling.
Video

Video Face of American Farmer is Changing

The average American farmer is now 58 years old, and farmers 65 and older are the fastest growing segment of the population. It’s a troubling trend signaling big changes ahead for American agriculture as aging farmers retire. Reporter Mike Osborne says a new report from the U.S. Census Bureau is suggesting what some of those changes might look like... and why they might not be so troubling.
Video

Video Donetsk Governor: Ukraine Military Assault 'Delicate But Necessary'

Around a dozen state buildings in eastern Ukraine remain in the hands of pro-Russian protesters who are demanding a referendum on self-rule. The governor of the whole Donetsk region is among those forced out by the protesters. He spoke to VOA's Henry Ridgwell from his temporary new office in Donetsk city.
Video

Video Drones May Soon Send Data From High Seas

Drones are usually associated with unmanned flying vehicles, but autonomous watercraft are also becoming useful tools for jobs ranging from scientific exploration to law enforcement to searching for a missing airliner in the Indian Ocean. VOA’s George Putic reports on sea-faring drones.
Video

Video New Earth-Size Planet Found

Not too big, not too small. Not too hot, not too cold. A newly discovered planet looks just right for life as we know it, according to an international group of astronomers. VOA’s Steve Baragona has more.
Video

Video Copts in Diaspora Worry About Future in Egypt

Around 10 percent of Egypt’s population belong to the Coptic faith, making them the largest Christian minority in the Middle East. But they have become targets of violence since the revolution three years ago. With elections scheduled for May and the struggle between the Egyptian military and Islamists continuing, many Copts abroad are deeply worried about the future of their ancient church. VOA religion correspondent Jerome Socolovsky visited a Coptic church outside Washington DC.
Video

Video Critics Say Venezuelan Protests Test Limits of Military's Support

During the two months of deadly anti-government protests that have rocked the oil-rich nation of Venezuela, President Nicolas Maduro has accused the opposition of trying to initiate a coup. Though a small number of military officers have been arrested for allegedly plotting against the government, VOA’s Brian Padden reports the leadership of the armed forces continues to support the president, at least for now.
Video

Video More Millenials Unplug to Embrace Board Games

A big new trend in the U.S. toy industry has more consumers switching off their high-tech gadgets to play with classic toys, like board games. This is especially true among the so-called millenial generation - those born in the 1980's and 90's. Elizabeth Lee has more from an unusual café in Los Angeles, where the new trend is popular and business is booming.
Video

Video Google Buys Drone Company

In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
AppleAndroid

World Currencies

EUR
USD
0.7217
JPY
USD
102.17
GBP
USD
0.5949
CAD
USD
1.1009
INR
USD
60.326

Rates may not be current.