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European Debt Crisis

Posted by: chanceb | November 27, 2010 | No Comment |

Whereas many people in the United States seem to think the recession has ended or is at least nearing the end, people think little of what is happening in Europe which indirectly affects the economy of the US. So far the European Union has had to bail out the Greek, as of last Sunday the Irish economy and now the Spanish and Portuguese economies are nearing the point where they might need such a bailout. The problem is that the “faltering [spanish] economy is more than twice the size of the Greek, Irish and Portuguese economies combined – meaning that a bailout there could run into the hundreds of billions of dollars” which would virtually drain the one trillion dollar bailout fund the European Union and the International Monetary Fund set up. This would critically feeble the economic power of the European Union and the International Monetary Fund because with much of the fund possible depleted bailing out Ireland, Greece, Portugal and Spain they would not have the fund available if another of the 12 economic powerhouses of Europe should falter. US holds about “133 billion in debt from Ireland, Spain, Portugal and Greece” whereas Germany and France hold almost 5 times as much debt in these four countries. Therefore for the European countries, if Spain is not bailed out investors could loose large amounts of money and set back the rebuilding process.

under: Britton, Reflexiones, Otoño 2010

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