Europe Stands on the Brink of New Debt Crisis
Jan 16, 2011
Debt crisis of the European countries of Spain, Portugal and Greece will cause the EU to experience a new crisis, says Ethan Harris, principal analyst for the economies of developed countries BofA Merrill Lynch. The crisis will begin in the coming months if the EU does not find ways to solve sovereign debt problems. Yet, China is already rushing to help and ready to buy Spanish bonds.
Infox.ru is citing Harris who said that the EU continues to take steps which in reality do not solve the problems of the market and the economy, and raise serious concerns about the situation with the European banks. So far the EU has not comprehensively addressed the banking problem. This means that in a few months the crisis will reemerge.
This has a negative impact on the single currency, the expert believes. He said that in the short term the dollar would rise against the euro, because the crisis in Europe continued. But in the long run, the exchange rates would stabilize. Both the U.S. and Europe face serious problems, and the possible consequences of this are mitigated by developing countries. But in fact, neither the U.S. nor Europe can now have a strong currency.
At the end of the last year the Speaker of Slovak Parliament Richard Sulik said that the actions of the European Commission could not be considered responsible. “Financial infusions can save Greece and Ireland, perhaps – Portugal. The attempts to rescue Spain are a gamble with the euro,” said Sulik. He added that Italy in general is out of the question since its debts are twice as high as those of Greece, Ireland, Portugal and Spain combined.