Germany and the ECB have less power over the eurozone’s peripheral countries than they seem to believe. If they continue to insist on concentrating all the pain of economic adjustment in the periphery, the monetary union’s slow-developing train wreck will accelerate as peripheral countries default and revert to national currencies.
Financial analysts and economists from around the world are baffled by how the euro currency has “mysteriously” remained relatively stable all year round, despite the mounting problems that have threatened to break up the eurozone region and its currency.
Reading some economists, it might seem that the answer to all current problems is to tax the richest 1 percent and redistribute to everyone else. But if governments tax their rich more, they should do it with the aim of improving access and opportunity for all, rather than as a punitive measure to rectify some imagined wrong.
The odds of the United States slipping into a double-dip recession are placed at 50 percent, with economists from the Federal Reserve Bank of San Francisco saying the world’s biggest economy might not be able to withstand the rippling effects of Europe’s debt crisis.
German Chancellor Angela Merkel has said that the eurozone’s financial problems may be worse than previously thought, calling it Europe’s biggest crisis since the World War Two.
A quick preview of the key economic events for the upcoming week:
Italy hogged headlines last week, becoming the main player in the EU debt crisis. Greece’s debt woes and problems of finding a replacement to the newly resigned Prime Minister George Papandreou took a backseat as the drama enfolded for Italy.
In a clash of words, US president Barack Obama and Chinese premier Hu Jintao outlined duelling visions for world trade in back-to-back speeches at the APEC Summit, with Obama warning that Americans were growing increasingly frustrated and impatient over what they see as unfair Chinese trade and currency manipulation.
Taking China to task with some of his sharpest words yet, Obama used a CEO-address at the Asia-Pacific Economic Cooperation (APEC) summit to threaten punitive economic steps unless China started “playing by the rules.”
The European Union was formed by high-minded elites who believed that closer economic integration and interdependence between nations would result in fewer military conflicts that stemmed from nationalism. However, the financial crisis that has engulfed the continent has since revealed the fault lines to the EU’s system – one that replaces military conflicts with economic ones. As such the ongoing crisis in Europe should not be seen as a crisis about the euro, or even a crisis about economics. Rather, it is actually a crisis about nationalism.
Mexico has raised the stakes, threatening to seek arbitration from the World Trade Organisation, in a long-running dispute over the sale of cheap Chinese products in its markets.
In a letter to his Chinese counterpart on Wednesday, Mexican Economy Minister Bruno Ferrari asked Chinese officials to address trade practices that are distorting and hurting several sectors of Mexico’s manufacturing industry.
China’s import numbers grew sharply last month while export growth rates slowed to its lowest in months, according to custom figures released by Chinese authorities on Thursday.
The import growth for China in October was 28.7 percent year on year, well ahead of the 23.0 percent forecast and far in excess of September’s 20.9 percent growth rate.
Related: China Trade, Imports and Exports
