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5 Reasons the Euro Zone Crisis Is Getting Even Worse

5 Reasons the Euro Zone Crisis Is Getting Even Worse

1. Moody’s is downgrading everyone.

Proving that Germany is no longer immune to the woes of other euro zone countries, Moody’s Investors Service downgraded its economic outlook to negative. Luxembourg and the Netherlands also had their economic outlook downgraded, as did that of theEuropean Financial Stability Facility, the rescue fund European leaders have created to bailout countries with troubled economies and to (theoretically, as it quite seems now) keep the crisis from spreading.

Only Finland is retaining its AAA rating.

2. The UK is in a double-dip recession.

The Diamond Jubilee, to mark Queen Elizabeth’s 60 year-reign, meant an extra bank holiday, meaning that many offices and factories were closed for two days in June (the 5th and 6th), with some even taking the whole week off. Bad weather in Britain — lowering jobs in the service sector and limiting construction work — has also pushed the economy back into a recession into the last quarter.

The UK last suffered a double-dip recession in 1975, when Margaret Thatcher became the leader of the Conservative Party.

Britain’s gross domestic product has fallen by a larger than projected 0.7 percent. All told, the UK economy is now 0.8 percent smaller than it was a year ago.

3. China’s seemingly unstoppable economic growth is declining.

The deepening economic crisis in Europe poses a “key risk” to China, the International Monetary Fund (IMF) says, along with risks within China’s own borders including a worse than expected decline in the real estate market.

China’s economic growth slowed to a three-year low in the second quarter. Euro zone countries are key export partners for Chinese companies and lessened demand is showing its effects.

4. Greece isn’t meeting the terms of its bailout deal, its economy is contracting, etc.

An assessment this week by the troika (the IMF, the European Central Bank, the European Commission) of Greece’s economic situation has found that the country hasfailed to carry out the debt reduction plan agreed to earlier this year. So Greece’s debt burden is only increasing in relation to its gross domestic product.

Moreover, the Greek economy is contracting by 7 percentthis year, more than the projected 5 percent — and JP Morgan is setting up “contingency plans” to limit disruptions to its clients should any nation (i.e., Greece) leave the euro zone.

5. It’s looking more and more as if Spain will need a full bailout.

The interest rate on Spain’s 10-year debt has risen to 7.56 percent, a new record indicating that before too soon, it could cost too much for Spain to borrow funds.

Spain, whose economy is the fourth-largest in the euro zone, may need 300 billion bailout funds. It has been seeking to avoid the “full-blown bailout” thatGreece, Ireland and Portugal have had to ask for, but many analysts thing this is inevitable as unemployment nears 25 percent and the list of semi-autonomous regions seeking financial assistance from the Spanish central government grows.

It’sapparently sunny today in London but will it last as the start of Olympics draws near? (Clouds are predicted.)


Related Care2 Coverage

5 Reasons for Spain’s Colossal Economic Troubles

Euro Crisis: Even Germany Is Taking a Hit

Euro Zone Crisis: The IMF’s Failure, The March of the Unemployed (Video)


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Photo taken in July in Dublin by Informatique

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5:28AM PDT on Jul 27, 2012

terrible state of affairs.. screw the heads who thought that the Euro zone would work!

4:52PM PDT on Jul 26, 2012

It's 2012 my dear ones!

4:23PM PDT on Jul 26, 2012

Angela, I said to live simply so you may simply live. I've done it: for 26 years, my wife and I chose to live below the official poverty level, and felt we were living like royalty. We raised 3 wonderful children during these years.
If you want to understand our motivation, read
Have you read, the Greenland ice is melting at an unprecedented level. Enough water is locked up there to raise global sea levels by 7 metres! If that all melts, where will Holland be? Boston? London?
We need to wake up. Now.

9:35AM PDT on Jul 26, 2012

Ah...For the very same reason that every other country that was to have had a brain, Just failed miserably to use it....Pretty simple deduction there!

9:27AM PDT on Jul 26, 2012

Moody is one of the criminal organizations that rated the housing junk bonds AAA just before the housing crash. Why are they still allowed to do ratings anyway?

9:27AM PDT on Jul 26, 2012

Moody is one of the criminal organizations that rated the housing junk bonds AAA just before the housing crash. Why are they still allowed to do ratings anyway?

9:25AM PDT on Jul 26, 2012

Moody is one of the criminal organizations that rated the housing junk bonds AAA just before the housing crash. Why are they still allowed to do ratings anyway?

8:13AM PDT on Jul 26, 2012

Reason #6: Capitalism only works for the Capitalists, the owners, not the workers.

7:15AM PDT on Jul 26, 2012

Oh dear, another day and another sniping (ill researched) article from Kristina Chew trashing Europe.

Enough already, we get it Kristina, you don't like Europe......


6:37AM PDT on Jul 26, 2012

One of the main reasons that the world's economic crisis, Ours included are so hard to solve.

Is that Politicians lack the backbone to make the hard choices.

It's bad for the next election.

Hence the short term "fixes" that lead to bigger problems down the road.

Borrowing your way out of a problem, is like digging your way out of a hole.

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Kristina Chew Kristina Chew teaches and writes about ancient Greek and Latin and is Online Advocacy and Marketing... more
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