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Has Europe Done Enough and What Does This Mean for the World?
Oliver's Insights: Has Europe done enough and what does this mean for the world?
This note looks at the latest package out of Europe designed to deal with its sovereign debt problems. The key points are as follows:
- > Europe has announced plans to write down more Greek debt, recapitalise banks, expand the firepower of its bailout fund and strengthen fiscal integration.
- > Apart from a lack of details, the latest response suffers from a number of weaknesses and it's doubtful it will mean the end of the European debt crisis. The vicious cycle of fiscal austerity, weaker growth, budget blowouts, ratings downgrades and more fiscal austerity will likely remain. Europe desperately needs easier monetary policy.
- > The latest plan should help avoid a near-term global financial blow-up and it adds to confidence that global growth will remain positive (albeit sub-par) which should offer some support for share markets which have been fretting about a global recession.
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Source: AMP
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