Recession in America? 10 questions assessing the threat.
Concerns about weak economies in Europe have already rattled global financial markets, and things are hardly rosy at home. Is America heading into a recession? Here are answers to 10 questions about that risk.
What's the underlying issue in Europe?
There are several. Europe's problem is not just how to manage a large debt load. The US and Japan share that problem, for example. It's also that the eurozone combines economies at different stages of competitiveness and development. This results in big imbalances, with Germany as an export powerhouse while nations to the south or periphery struggle to cultivate jobs and growth.
Germany has taken on the aura of a fiscally responsible creditor nation, cajoling profligate Italians and Spaniards to mend their ways. But the reality is that Germany, which has reaped huge benefits since the euro currency launched in 1999, has its own job to do: making greater financial contributions to help the eurozone survive.
More broadly, the euro crisis is calling into question whether a currency union among disparate nations can exist without a degree of "fiscal union" – such as the ability to issue bonds backed collectively by member nations.