Friday, September 16, 2011

Stand or Fall Together

New York Times
Editorial
September 15, 2011


European leaders have at last begun edging, haltingly and reluctantly, toward the only realistic solution to the continent’s debt and banking crises: refinancing unpayable government debts and reinforcing weakened banks. If their monetary and political union is to survive, all members must start acting more like a union and less like a collection of jealous sovereign states.

Unless they quickly convince stock and bond markets that they are truly ready to stand together, Europe risks a spiral of disasters, including a Greek default and the failure of one or more major debt-weakened banks. If things get bad enough, the euro zone could fracture, and that could lead to the fracturing of the entire European Union.

The United States would not escape. A collapse in Europe would sap confidence in global markets and shrink demand for American exports when Washington is struggling to avoid a double-dip recession.

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