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Impact of European crisis in America
European problems have been at the center of a world economy increasingly uncertain and volatile. The projections are becoming increasingly more disappointing: a final report of the International Monetary Fund points out that this year there would be a recession of - 0.5% in the euro area and the World Bank projected - 0.3%. Both documents correspond to January of this year. However, any projection is subject to correction, considering that the European authorities still fail consensus in the mechanisms of the crisis.
The European economic crisis originated in 2007, after the collapse of the "Bear Stearns" American investment banking, situation which led to the insolvency of several banks. This situation was extended to the State sphere, generating scenarios of crisis in Greece, Portugal and Ireland, to which the European Union decided to adopt "rescue packages" to attend to these economies.
With the introduction of the euro in 1999, unified interest rates allowed members of the Monetary Union to borrow strongly. Bonds issued by countries in southern Europe were regarded as safe as the Germany. Capital flowed towards Greece. Goods markets roots of Spain and Ireland lived times of splendor.
But the bursting of the bubble in United States and in Europe at the end of the 2007 struck a first blow to the aura of invincibility of the zone euro. Then, at the end of 2009, when a new Greek Government found that his predecessor had lied about their tax figures, came a huge loss of confidence which spread throughout the block.
Many of the inmoviliarios projects were not profitable, because there was not enough demand for everything what was offered. For example, Spain were building more houses than in United States. When an investor does not have how to service the loan, it will a portfolio due to the Bank that lends money. When this past-due portfolio becomes heavier, the banks come into crisis, to have losses, do not have liquidity, not give credits, etc.
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With all this Greece stated that it could not pay its debt. The European Union decided to bail out Greece twice, under conditions of extreme austerity of the Government to pay their debts, spending cuts, reduce the salaries of the country, etc.
This has caused great social unrest in Greece and in other countries in the same situation as Spain, where there is an unemployment rate of 50%, and Ireland, where they are taking austerity measures, and the difficulty of starting a business in recent months. In the coming months, Greece will decide if it comes out of the euro zone, and returned to its previous currency called dragma.
The eurozone consists of 17 countries. All are part of the European Union, which is composed of 27 countries. The euro zone is a monetary Union, which since 1999 uses the euro as its official currency and has its institutional foundations in the Maastricht Treaty of 1992. This means that an entity called the European Central Bank (ECB), has responsibility for the monetary policy of the 17 countries and, therefore, the issue of the euro.
The Member States do not have its own currency and used as common to the ECB Central Bank. However, in addition to being economies with different levels of competitiveness, it is not a fiscal Union. In simple terms, while the monetary control is in the hands of a common institution, the fiscal discipline depends on each Government, which is why they can take debt and generate high fiscal deficits. This despite the fact that the Treaty imposes fiscal restrictions which are under the responsibility of each Government.
Crisis consequences European union a Market
Only for Europe, the consequences of this output are watching. Phenomenon where people is taking your money has occurred in several countries, and turning it into cash, mainly out of fear that from one moment to another, his country to return to the previous currency and money will be devalued, i.e. losing value.
Also investors probably lead their money out of the euro, to turn it into a more stable currency like the dollar, and that would cause the euro to lose value, and are cheaper. When this happens, the exports of the countries become less profitable, this affecting the balance of trade, and already in a State of recession hurting economic growth.
All these consequences will clearly be in Europe, even for Britain which is not associated with the euro, but their banks and its exports are primarily aimed at Europe.
It is not known to wait, already refers to the European crisis will take to overcome up to two years, and that perhaps then you can see best news, indices positive, and of course a significant growth in the economies of every country in the region, however at the moment the European problems to the world, and of course American continent.
You can divide America by areas, and then mention that the first part would be Canada and United States, the second would be Mexico, the third countries of Central America and the fourth from the South, by who, in reference to the first, the fact that Europe is currently in a deep crisis worry for the destabilization of markets, but represents an opportunity to find benefits between trade and political ties that unite them currently, United States seeks to continue a long-term global leadership, and the counterweight which could represent some European powers is necessary in some respects, so his role probably intends to obtain the greatest possible advantages in the moments in which the euro area requires credibility and support of international investors that also have many interests in the United States and Canada, and that that seek to maximize profits combined in the two territories, so that the Europeans seek the support of United States and they somehow support their European peers international decisions, so the benefits could be mutual. However, the weakness shown in the euro area requires they have to accept conditions which at other times had not even considered for analysis.
Central America continued in the intense fighting of its development and progress, and the truth be told in the majority of cases they are not doing badly, however the European crisis can result them in the absence of foreign investment, in a very expensive currency, and consequently in an onerous standard of living.
In the case of Mexico and the countries of South America, the situation is more or less similar investments in Europe in these territories have been very extensive, and they remain, Spanish banks BBVA and Santander (regarded as systemic) have a very important presence, the automotive industry, commercial ties are large, Europe has an important market in this Americaget their products in good way and accept good liking their investments, given that they serve to generate a stronger economy, Brazil as sixth world economy has extensive commercial relations with Europe, Mexico and Argentina fighting day by day their various internal problems, but the investment of the old continent in them is obviously wide and necessary.
If Europe fails to stabilize its economy, could be in an extreme case to destabilize the growth of countries such as Brazil, Mexico and Argentina, that although perhaps with indexes, not very high they have growth, and already not to mention the rest of the countries such as Chile, Uruguay, Paraguay, Bolivia, Peru, Ecuador, Colombia, etc., which also have an important investment of the European continentthe situation is clear, Europe has widespread influence in this areas of America and the European crisis affects directly in these economies, so it also must look at whether these markets of America could represent an interesting option for Europe to continue to invest in them, that existing investments have not provided poor results.
On the other hand the Barack Obama President, wanted to make it clear in the last Summit G8 than Europe "has the ability to" to overcome this crisis and that it will have the support of the United States.UU. to this end. Will "Europe emerge from the crisis by combining fiscal control and growth, and also to recapitalizing the banking."We have to make sure that the banks are recapitalized in Europe so that investors have confidence. "And we have to make sure that there is a strategy of growth with the need for fiscal discipline".
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The United States is interested in the eurozone out of the crisis, because that will affect favourably the economic recovery in the United States.UU., still fragile. "If a company is forced to make cuts in Paris or Madrid, that can mean less business for the manufacturing of Pittsburgh or Milwaukee and can mean hard times for families and the communities that depend on those businesses," mention Obama.