Euro Drama Rises As Domestic Markets Falter

Includes: ADRU, ERO, EU
by: Accrued Interest

The euro economic crisis is far from over as renewed fears have spooked the markets once again. The eurozone has been in the middle of a huge crisis for the last several months with no clear solutions in sight. This has had ripple effect on the United States and the rest of the global economy.

This helped contribute to the largest fall of the S&P 500 in over a month last week. In Spain, borrowing rates soared thanks to their uncertain economic status. As a result of the higher bond rates, other members of the eurozone commented that they are ready to provide help as needed. Luc Frieden, Finance Minister of Luxembourg said that he and most of the other members of the area are ready and willing to help at a moment's notice.

Because of the mess in Spain, there is a lot of debate as to what should happen to help them out. At the moment, Spain Economy Minister Luis de Guindos is currently in talks with the Economy Minister of Germany trying to work out some kind of a deal. Germany and the European Central Bank are currently in the driver's seat when it comes to determining what will happen to Spain, Greece, and some of the other struggling parts of the European Union.

Some are hoping that the European Central Bank will start purchasing Spain's bonds in large numbers, even though the yields are extremely high. This would provide Spain with much needed capital, and keep other countries from having to pony up the cash to get the job done. This would essentially be a bailout that Spain and most of the other members of the EU could live with.

Although Germany has been seen as the economic safe haven in Europe, it has not been without some problems of its own. Recently, ratings agency Moody's decided to downgrade the outlook of Germany's financial situation. This lead to some unrest in the markets, and raised Germany's cost of borrowing by six basis points. They still have some of the lowest borrowing rates in the world, and they are generally considered to be a safe bet in the eurozone overall. Business coaches and financial analysts alike say low borrowing rates are largely the key to whether the other countries in Europe are going to be able to pull out of this mess.

In addition to problems in Germany, the United States has also been negatively affected by the unease in the markets in general. Many stocks have fallen in recent days thanks to the uncertainty in the euro situation. This has lead to many up and down days in the New York Stock Exchange and the NASDAQ.

What will happen in the coming weeks and months is largely unknown. Many people fear that the market will eventually collapse, causing chaos in Europe, the United States and the rest of the world. This in turn has caused many investors to seek business and financial tutelage from coaches. Directories like Noomi can be relied upon for a solid list of resources and advisers for these uncertain times.

Ultimately, what many analysts are saying is that this crisis reveals how the economic policies of the central banks of Europe and the United States have largely failed and been ineffective. Many are calling for more transparency in their decisions and less interference over the long-term. Printing money is never a solution that works over the long-term, and that is about all that the central banks have to offer.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.