Tightening is Not Conducive to European Settlement of the Debt Crisis
- By Orietta Qi
- Published 02/3/2012
- Business
- Unrated
Orietta Qi
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From Ireland to Portugal with the debt problems of the spread, the market's focus suddenly secondary quantitative easing by the U.S., go to the second round of the debt crisis in Europe, Spain and even France and other European countries, have been involved in sovereign debt trust whirlpool of crisis. Affected, the euro / dollar hit a two and a half since Tuesday low of 11 full month fell nearly 7%, the worst since the May monthly performance.
The economic data between Europe and America, is given a more bearish on the euro were the reasons. Nearly a week since the U.S. data, clearly show the strength of their economic situation, as announced Tuesday night, the Chicago purchasing managers index, to 62.5 well above the 60.0 expected, the consumer confidence index hit its highest level since June, reaching 54.1, New York business activity continued to expand. The unemployment data in the most interesting, and in recent weeks the number of weekly claims for unemployment were significantly better than market expectations, which further enhance the November payrolls report a sharp increase in employment possibilities. In contrast, the euro zone economic data demonstrated significant differences in the rate of unemployment in October appeared to rise, while the euro zone's economic growth may slow further next year, thus exacerbating the debt problems of investors worried about the euro.
Therefore, we can not help but need to rethink the question, what led to Europe and America such a big difference between? The tightening in Europe and the United States easing policy, which in the end, what kind of role play.
Early
in the first half, Greece broke out, its response to introduction of the euro zone for the current situation encountered by other countries sowed the seeds, for Europe to address the debt problems of concern to European investors the best way to , should be sought in the monetary and fiscal policy harmonization, however, the Greek authorities to the EU from other countries, the pursuit of solutions is based on spending cuts the way to achieve the objective of reducing future budget deficits, order to calm investor fears.
The short term, this approach has achieved some results, however, due to financial constraints brought about by the slowdown in economic growth in other European countries have followed this policy, the euro touched on the inevitable slowdown in economic growth issues. Even more serious is the economic downturn caused by the decline in future revenue growth, not only may be completely offset by financial constraints brought about by the reduction of the surface of the budget deficit, and even can make the future a further increase in the deficit from This in turn makes the debt problem is more severe in Europe. When the market took note of the risks, Europe's second round of the debt crisis has become a more difficult problem.
Thus, the next European response would be very critical, if budget deficits continue to be tight approach to the problem, I am afraid will not help solve the debt problem, while market risk sentiment in the lingering relaxation and will appear further amplification, and more European countries involved. Conversely, if appropriate adopt a liberal policy, but instead may be beneficial for future economic growth, and gradually reduced the negative impact of debt problems in Europe.
The economic data between Europe and America, is given a more bearish on the euro were the reasons. Nearly a week since the U.S. data, clearly show the strength of their economic situation, as announced Tuesday night, the Chicago purchasing managers index, to 62.5 well above the 60.0 expected, the consumer confidence index hit its highest level since June, reaching 54.1, New York business activity continued to expand. The unemployment data in the most interesting, and in recent weeks the number of weekly claims for unemployment were significantly better than market expectations, which further enhance the November payrolls report a sharp increase in employment possibilities. In contrast, the euro zone economic data demonstrated significant differences in the rate of unemployment in October appeared to rise, while the euro zone's economic growth may slow further next year, thus exacerbating the debt problems of investors worried about the euro.
Therefore, we can not help but need to rethink the question, what led to Europe and America such a big difference between? The tightening in Europe and the United States easing policy, which in the end, what kind of role play.
Early
The short term, this approach has achieved some results, however, due to financial constraints brought about by the slowdown in economic growth in other European countries have followed this policy, the euro touched on the inevitable slowdown in economic growth issues. Even more serious is the economic downturn caused by the decline in future revenue growth, not only may be completely offset by financial constraints brought about by the reduction of the surface of the budget deficit, and even can make the future a further increase in the deficit from This in turn makes the debt problem is more severe in Europe. When the market took note of the risks, Europe's second round of the debt crisis has become a more difficult problem.
Thus, the next European response would be very critical, if budget deficits continue to be tight approach to the problem, I am afraid will not help solve the debt problem, while market risk sentiment in the lingering relaxation and will appear further amplification, and more European countries involved. Conversely, if appropriate adopt a liberal policy, but instead may be beneficial for future economic growth, and gradually reduced the negative impact of debt problems in Europe.
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