Victor Quinn Valued Contributor
Posts : 46 Join date : 2010-08-25 Location : Central New Jersey
| Subject: The Global Economy 10/27/2010, 22:39 | |
| The vast stimulus packages that countries launched during the economic crisis are starting to be scaled back and phased out. There is no sudden cut in public spending, but the pump priming is not sustainable indefinitely. There are signs of growth, albeit uneven, around the world, and while it is far from spectacular and strong concerns remain that the apparent recovery will not last long, there is a tenuous stability globally. Two areas where this could become unhinged in the quarter are Europe and U.S.-China relations. Europe is shifting its attention from Greece and Spain to Ireland and Portugal, countries that will prove less cantankerous politically and thus easier for Germany and the Europeans to manage. If the regional management falls short, however, there is a small chance that Europe could fall back into financial crisis — something that would ripple outward. We do not foresee this happening, however, and expect the combined effects of European Central Bank operations and the reassurance of the 440 billion euro ($615 billion) European Financial Stability Fund to make the fourth quarter far less dramatic than the second quarter. Although Washington appears more ready to take measures against China regarding the yuan, in this quarter it will not carry out measures that do anything much more than require additional talks, at least in the near term. Should the White House suddenly feel pressured to take more concrete action that fundamentally affects trade, the system could come unhinged quickly. While that is highly unlikely at the moment, there is growing pressure inside Washington for more substantial action against China. | |
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