While the Obama administration continues to spread the word that the United States is in a recovery, other world leaders are hesitant to jump on the bandwagon, due to their economic troubles. Today’s release of the unemployment numbers, which rose to 8.2 percent, from 8.1 percent was devastating news to President Barack Obama. Economists were expecting the United States economy to add close to 150,000 jobs last month, instead of the 69,000 jobs that were added to the private sector. The Stock market, which has virtually wiped away all gains thus far for the year. China’s economy is faltering, Europe is on the brink of a monetary separation. Needless to say, the entire outlook for the world economy looks dimmer now, than it did ever before.
Reuters quoted Diane Swonk, who is the chief economist at Mesirow Financial in Chicago;
“It is difficult for anyone to commit to hire when growth remains subdued, and our fiscal problems both at home and abroad appear to be compounding.”
The tricks of the Federal Reserve are running out, and there are few places left in the world that have the capacity to lend money on such a grand scale, to reduce the burden of a debt crisis. In 2008, the Federal Reserve reduced the interest rates close to zero percent and purchased over 2 Trillion dollars in bonds to try and assist in jump starting the United States economy. The Federal Reserve, which is now the largest holder of United States debt will face massive financial troubles if the United States economy continues to slow, and the jobs numbers continue to a drag on the economy. The stock market will continue to fall as which will be a massive dark cloud hanging over every economic indicator along with the housing numbers that are close to 1930s levels during the great depression. Every economic indicator is being propped up by some government program that is paid for by the citizens of those nations. If the citizens of every nation continue to reduce their spending, which will slow the economy, which will reduce government revenue, in turn will slow down these government programs that are propping everything up,which will end in an economic collapse. No country has ever lasted very long under that cycle of false economic growth. Government can only borrow money from itself for so long before it implodes.
The leader of the world bank said yesterday that there could be a return to the 2008 panic. With governments around the globe fleeing to put their money in countries that seemed safer, Germany, the United States and the United Kingdom were some of the countries that presented themselves as the safest place to invest. While these three countries may be the so-called “safest,” they are just the strongest weak link in a world economic chain ready to snap.
Greece, still facing the same problems that it was before, with bailout after bailout, which has done nothing to assist in them in stabilizing their situation. The leaders of Greece continue to kick the can down the road hoping that the rest of the world will continue to throw money down the drain. The Eurozone is closing in on the brink of a collapse themselves, and Greece, Spain, and Portugal fighting to keep their countries from falling into a massive depression as well. World leaders are rushing to find a way in which they can slow down the process of a collapse. Greece will be the first start a chain of events that will bring down the entire world. The United States will feel the impact of a Euro-crisis or collapse. However, the United States will most likely not be damaged as badly as the rest of Europe. American exports are around 20 percent of the products shipped to Europe, which will be a huge impact here at home if Europeans are unable to purchase those products that America needs to sell to bring in revenue. As reported by Dailymail.co.uk, Mr. Zoellick said;
‘Events in Greece could trigger financial fright in Spain, Italy and across the eurozone. The summer of 2012 offers an eerie echo of 2008.”
Recently Greece had a run on their banks due to economic woes across their country. The Greek unemployment rose in February to 21.7 percent according to the Athens News Agency website. According to the same website Athens News Agency, their stock market has continued to take a downward spiral. All of the surrounding countries are starting to realize that the failed attempts to prop up the Greek economy with a continuous influx of money from around the globe, has done nothing more than buy Greece, and other troublesome countries time to prepare for the inevitable.
If the Obama administration continues to follow the same course as Greece and other failing Eurozone countries, America could be headed down the same road as Greece. Greece has now shown the rest of the world that a fiscal policy driven by a large central government spending program, ultimately fails in the long run. Mr Zoellick also said:
‘Eurozone leaders need to be prepared to recapitalise banks. In the eurozone, the guarantees of some national sovereigns are unlikely to be sufficient and only that of the “euro-sovereign” will suffice. as reported by the Dailymail.co.uk.
The question becomes, When does the Eurozone break up or collapse under its own failed fiscal policies? How much will this truly damage the United States economy? Suspicions are that the Euro-crisis will hurt the United States economy in more ways than just export revenue. Many also think that with the fragile U.S economy already on the edge, even the whisper of a Eurozone collapse will drive America into a slower GDP growth rate, consumer spending will drop off dramatically, because consumers will be weary of spending money with a faltering economic system at home and abroad.