Although the Euro crisis is miles away, but the impact is just less than a meter away. The correlation between each country in the financial world is closely related, merely because banks and countries borrow from each other.
“How would the crisis in Europe affect us?” As our class speaker asked.
Just as the crisis right now, “with the European Central Bank still refusing to act as a lender of last resort, contagion in Europe’s bond market threatens to engulf the eurozone’s largest economies.” Euro just slid to its lowest in five weeks against the dollar, effecting the world economy. The world stock market just dropped again after the worsening of European debt threatening the US. Stocks are suddenly selling off quickly, but less buyers are buying in, fearing the Euro affecting US’ top banks. Fear emerges from each corner of the world, traders are slowing down their trades, causing the market to slow down. Not just in the stock market, but locally in retails, food industry consumers are also slowing their money output. Their income is lowered, their purchasing power is lowered, companies receive less income, all cause a decrease in stock exchange. This then fears the banks in Europe since the money is trading in too slow to recover itself. Then, its crisis continues and this turns into a loop.