The Week: Most Recent World Economy:Europe's Economic Crisis

The return of Silvio Berlusconi: Is the euro in trouble again?

The Week — Mon, 10 Dec 2012 17:20:00 -0500

Silvio Berlusconi, the former prime minister of Italy, just doesn't seem to get the hint. Mere months after Berlusconi was publicly shamed by a fraud conviction, this weekend his People of Liberty party withdrew its support for Berlusconi's successor, Mario Monti, forcing new elections in February in which Berlusconi will try to return to power. The prospect of Berlusconi's resurrection drew barely suppressed cries of "Mamma mia!" in capitals across Europe, with many fearing he could derail a slate of belt-tightening reforms Monti had pushed through to shore up Italy's finances. Berlusconi...

Can Spain survive tough new austerity measures?

The Week — Fri, 28 Sep 2012 11:39:00 -0400

This week, the government of Spanish Prime Minister Mariano Rajoy unveiled a slate of tough new austerity measures that are intended to reduce the government's budget deficit by $84 billion over the next two and a half years. Rajoy's proposal is likely to pass given his party's control of parliament, but that didn't stop tens of thousands of protesters across the country from rioting and clashing with police. Another escalating factor: The leader of Catalonia, a region with a historically tense relationship with the central government, said he may allow Catalans to vote on secession. Analysts say...

Why are Germans still using the deutsche mark?

The Week — Thu, 19 Jul 2012 16:25:00 -0400

With the eurozone debt crisis still raging, Europeans could be forgiven for pining for the days when nations had their own currencies. But many Germans are taking their love of the deutsche mark to a whole new level, says Vanessa Fuhrmans at The Wall Street Journal, "indulging their nostalgia for the abandoned mark by shopping with it again — and retailers are happily going along." Indeed, "the 'die gute alte D-mark,' or 'the good old D-mark,' as it is still affectionately called, is far from dead." Here, a guide to the currency's renewed popularity:

Wait. Isn't the deutsche mark defunct...

Global rate cuts: Are central banks bracing for economic calamity?

The Week — Fri, 06 Jul 2012 10:20:00 -0400

In one wild hour on Thursday, central banks in Europe and China slashed interest rates, hoping to encourage businesses and consumers to borrow — and spend — more. At the same time, the Bank of England renewed an economic stimulus program it had suspended just two months ago. And here in the U.S., it was only two weeks ago that the Federal Reserve announced that it would extend a similar effort. Central bankers insist the moves weren't coordinated. Still, is this flurry of activity a sign that the world's financial leaders are starting to panic in the face of a scary global slowdown...

The latest euro rescue plan: Crisis averted?

The Week — Mon, 02 Jul 2012 11:21:00 -0400

Over the past two years, Europe has teetered on the brink of disaster more than once, and each time, leaders have intervened just in time to preserve the euro currency. Late last week, with borrowing costs for Spain and Italy skyrocketing to unaffordable levels, European leaders reached a "major breakthrough" in their attempts to finally resolve the crisis, adopting several far-reaching measures that have long been the subject of heated disagreement. The plan allows the European Union to use its 500 billion euro ($622 billion) bailout fund to directly recapitalize ailing banks in Spain and elsewhere...

This week's EU summit: The last chance to save the euro?

The Week — Tue, 26 Jun 2012 18:35:00 -0400

When European Union leaders meet on Thursday in Brussels, they will be under immense pressure to finally agree to the types of far-reaching reforms considered necessary to resolve the continent's long-running debt crisis. This week, tiny Cyprus became the fifth European country to seek a bailout, a sign that the crisis is only spreading. Spain's borrowing costs have risen to perilous levels, even though European leaders have already announced a whopping 100 billion euro bailout for the country's banks. And in another sign that the crisis has finally come to a head, on Monday billionaire George...

Should Germany reward Greece for forming a government?

The Week — Fri, 22 Jun 2012 15:05:00 -0400

Following landmark elections, Greece formed a new government this week that has promised to abide by the terms of a European bailout designed to keep the country from defaulting on its debt. The bailout has inflicted harsh debt-cutting measures that are keeping Greece in a near-permanent state of recession, and many analysts had feared that Greek voters would rebel by supporting anti-bailout parties that threatened to pull Greece out of the euro (and plunge the global economy into turmoil). Now that cooler heads have prevailed and Greece has averted a euro exit, Athens is reportedly pressing...

Did the U.S. cause the European debt crisis?

The Week — Wed, 20 Jun 2012 18:43:00 -0400

Debt-saddled Europe may be staring into the abyss, but there's apparently still time for a little trans-Atlantic smack-talking. This week, Jose Manuel Barroso, the president of the European Union's political arm, lashed out at critics of Europe, and pointed a finger at the U.S. "This crisis was not originated in Europe," he claimed. "This crisis originated in North America and much of our financial sector was contaminated by, how can I put it, unorthodox practices from some sectors of the financial market." Barroso's claim drew strong objections from investors and economists, some of whom...

Greece averts disaster: What's next for the eurozone?

The Week — Tue, 19 Jun 2012 12:45:00 -0400

This weekend, the center-right New Democracy party won the most votes in Greece's parliamentary elections, which had been billed as a referendum on whether the country should remain in the eurozone. New Democracy is expected to form a ruling coalition that supports a bailout from the European Union, despite accompanying austerity conditions that have angered many Greek voters, thus sidestepping a euro exit that could have unleashed chaos in global markets. However, the Greek vote was just one part of a hydra-headed crisis, and attention has already turned toward a host of other problems. Here,...

Greece's pro-austerity election results: 4 takeaways

The Week — Mon, 18 Jun 2012 11:55:00 -0400

Greek voters went to the polls on Sunday to decide the make-up of their next government and, in many ways, the fate of Europe's single currency, the euro. The result of the closely fought election: A "knife-edge" victory for the center-right New Democracy party, which supports enacting EU-backed austerity measures that Greece must observe to remain a member of the eurozone, narrowly beating the leftist Syriza party, which ran on a strong anti-austerity platform. The 30 percent to 27 percent edge gives New Democracy (ND) 129 of the 300 seats in parliament, and ND leader Antonis Samaras...

Spain's skyrocketing borrowing costs: 4 burning questions

The Week — Fri, 15 Jun 2012 13:01:00 -0400

This week, the yield, or interest rate, on 10-year Spanish bonds briefly reached 7 percent, a dreaded benchmark that led to massive bailouts for Greece, Ireland, and Portugal over the course of Europe's long-running debt crisis. Though European leaders have given Spain's banks a hefty bailout, they've been mum on their plans for Spain itself — while the world waits for the other shoe to drop. Adding a big dollop of anxiety to an already tense situation, Greek voters go to the polls this weekend, in an election that could determine whether Greece remains in the euro. Here, four burning...

The euro crisis: Is Italy the next domino to fall?

The Week — Tue, 12 Jun 2012 13:25:00 -0400

This week, European Union officials approved a $125 billion bailout for Spain's banks, in an attempt to prevent the continent's escalating debt crisis from overwhelming Europe's fourth-largest economy. However, markets gave the bailout an unequivocal thumbs down, and Spain's borrowing costs are still shooting up to dangerously unaffordable levels. Now, the contagion appears to be spreading to Italy, Europe's third-largest economy. The yield on its 10-year bonds is hovering above 6 percent, and getting closer to the 7 percent threshold that is widely considered to be the point of no return. Will...

Spain's bank bailout: Just kicking the crisis down the road?

The Week — Mon, 11 Jun 2012 11:37:00 -0400

This weekend, European leaders agreed to extend 100 billion euros ($125 billion) in aid to Spain's banks, the latest in a string of emergency bailouts intended to contain the continent's long-simmering debt crisis. Spain's troubled banking industry — which is rotted with bad loans from a housing boom and bust — has weighed heavily on the country's ability to sell bonds, pushing its borrowing costs to dangerously unaffordable levels. Without the bank rescue, Spain would likely have needed a super-sized bailout for the entire country, a development that would have emptied Europe's coffers...

Is the U.S. insulated from the European debt crisis?

The Week — Thu, 07 Jun 2012 13:50:00 -0400

Europe's monetary union continues to teeter on the edge. As Greece flirts with a euro exit, officials are scrambling to come up with a rescue plan for Spain's crumbling banks. President Obama is crossing his fingers that the Europeans can avoid a break-up of the euro, which many believe would send shockwaves through the global economy and kill the U.S.'s uneven recovery. Indeed, Europe's woes are considered one of the primary threats to Obama's re-election. But is the U.S. better protected from the European crisis than we think?

Yes. The U.S. recovery could survive: Most investors "mistakenly...

Will the euro crisis lead to a 'German empire'?

The Week — Tue, 05 Jun 2012 12:23:00 -0400

Billionaire business magnate George Soros is lighting up the financial world with an expansive speech on the history of the euro, which argues that, since its inception, the currency has been a bubble waiting to burst. Soros says the euro was forged on the untenable arrangement that saw creditworthy Germany balancing out weaker, debt-filled countries like Greece. Soros argues that Germany will do the bare minimum of what is "necessary to preserve the euro" — because its banks would suffer massive losses were the euro to crumble — "but nothing more." The result would be "a German...

Should Europe bail out Spain's banks?

The Week — Thu, 31 May 2012 13:15:00 -0400

On Wednesday, Spain's borrowing costs shot to dangerously high levels, stoking fears that Europe's fourth-largest economy will need a bailout to avoid going bankrupt. Spain's fiscal woes led to stock market drops around the world, and investors fled to safe havens in U.S. Treasuries and German bonds. Spain's problems stem from fears that the country is too broke to bail out its beleaguered banks, which are saddled with bad loans from a slumping real estate market. European Union officials have proposed creating a pan-European banking union that would provide aid directly to Spanish banks,...