Skip to comments.U.S. and Europe – Economies and Financial Markets Integrated (Till Death Do Us Part?)
Posted on 03/24/2012 11:03:19 AM PDT by whitedog57
Over the years, the economies and financial markets of the U.S. and Europe have moved as one. That is, one falls, the other falls for the most part.
This is not surprising. The US and Europe are major trading partners. We have aging populations with explosively growing entitlement programs. We have become regulatory nightmares. We have gone wild on borrowing to consume (spend) leaving us on the debt train. And head for that proverbial bridge that has collapsed.
I was speaking in Washington D.C. and one person was standing in the back of the room making bored and negative facial expressions. I approached him and asked what he was thinking. He said I disagree with everything you are saying. Even if Europe blows up, it wont even touch the U.S. I asked what he did for a living. International business professor at a Washington D.C. area university.
Sorry Charlie. The U.S. and Europe are integrated and our futures are linked together. So unlike the Vegas commercials, What happens in Rome, comes over here.
The U.S. and Europe have similar problems (pensions, debt, slow growth, active Central Banks), but to differing degrees. Chairman Ben Bernanke at The Fed said in one of his recent lectures at George Washington University that Europe is improving
and for our sake, I certainly hope so!
(Excerpt) Read more at confoundedinterest.wordpress.com ...
If you think we AREN'T Socialist Europe, look at his charts. Wow! Of course, I live in NorCal so I am used to Greece!
you go ahead and call it blasphemy if you want,but the free market has made all markets linked.
True, but Socialism does the same thing. And drags everyone down.
Starting from the begining, the first “Socialists” were the ones who tied most foreign currencies to the dollar, as currency reserve. Hence, all movements from the Federal reserve must be mimicked, as far as they can, by foreign central banks. This is especially noticeable now that the euro exists.
Secondly, indeed economies have become more integrated as capitals are moved freely, import fees have been reduced and probably as important, information travels instantly: what happens on one side of the world has influence in the rest of it.
Finally, what the professor was refering, IMHO, is that even in the case Europe bursts, the Federal reserve could print and there will be in the world enough demand of dollars (especially from the sinking Europe), to keep the US economy going.
So at least from the economic point of view the professor is right. However, the political consequences from an imploding European economy (i.e. wars) could be much worse.
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