Investors Fear Europe’s Woes May Extend Global Slump

[TomCADem]

Source: NY Times

Just as America’s recession begins to ebb, trouble is brewing in Europe that may prolong a downturn on the Continent and ricochet through the global economy as it struggles toward a recovery.

A rout in stock markets that began in Europe spread to Wall Street on Thursday and around the globe to Asia on Friday, amid fears that Europe may be the world’s next financial flashpoint. Pressure has been mounting across the Atlantic as Greece, Portugal and a handful of struggling countries that use the euro scramble to pay off mountains of debt accumulated from years of profligate spending.

The Dow Jones industrial average slid 2.61 percent, or 268.37 points, to 10,002.18 Thursday, after briefly falling below 10,000 for the first time since November, as American investors grew more uncertain about Europe’s economy.

Stock markets across Europe slumped as much as 6 percent, and worries that the troubles might push even big European nations like Spain into a financial crisis drove the euro to $1.37, a seven-month low against the dollar.

Read more: http://www.nytimes.com/2010/02/05/business/05markets.html?hp

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I have to say that I am somewhat surprised at Europe's troubles, since there is so much focus on U.S. economic troubles. Who knew that Europe was also having serious troubles. I wonder how is unemployment in European countries.

[No Elephants]

1. We sold our derivatives all over the world. Our current recession hit them first.

[willing dwarf]

2. The derivative trades are part of the story

but arrogance, greed and over-reaching to make a quick buck are not just American exports.

The deregulation of the global marketplace has highlighted the reality that if given the chance to make a quick profit and play loose and fast with the rules, people will do that.

[JDPriestly]

5. Maybe American investors are playing the same games in the European

markets that they played here.

Selling short and then pulling out the plug on their own holdings in the market. They make money that way. I do not trust any "investments" in any stock market. They are not related to the economic health of a country.

But yes, European countries did by a lot of derivatives. Remember what happened in Iceland. And remember that some of the worst of the derivative trading was done out of London.

[DCBob]

3. Unemployment is worse in most EU countries..

This is a worldwide crisis.. the only exception appears to be China and a few other Asian countires. But they will suffer too if the US sinks again.

[carla]

4. I read that Dutch unemployment was

4%. Could that be true, and if so, then how do they manage that with their social welfare policies?

[JDPriestly]

7. Rates in Germany

In former West Germany - 7.4%

In former East Germany - 13.5%

In all of Germany - 8.6%

Much better than here. And I would bet that the German numbers are far more accurate than ours.

http://www.spiegel.de/flash/0,5532,12125,00.html

[SKKY]

6. It certainly is here in Spain.