Sep
24
A Cascading Recovery
Posted by: Paul Dhaliwal | September 24, 2011 | Leave a Comment
In a manner eerily similar to the days after the crash of Lehman Brothers, the Dow Jones Industrial average fell 6.4% this past week; the steepest fall since October of 2008. As the severity of the European debt crisis grows, the Brazilian and Chinese governments have strongly advised the E.U that it must take stronger steps to prevent the “threat of cascading default, bank runs and catastrophic risk,” if countries such as Greece, Portugal and Ireland are forced to default.
Indeed the economic crisis in Europe is underlined by a weakened global economy, especially in the United States, compounded by an apparent lack of confidence in fiscal policy actions in developed nations. Regardless, the IMF and E.U must agree upon a large scale bailout plan with Greece, perhaps one that will swap Greece’s existing debt with longer term debt that has a lower interest rate attached to it. Such a move would be advisable as it is imperative that the faltering economies of Europe experience a recovery, before their economic downturn spreads to nations such as Spain and Italy.
Stock Quotes in Red- Courtesy of the Daily Mind
Hopes of a speedy global economic recovery are perhaps best answered by the words of the Indian prime minister “In many respects the crisis has deepened even further.”