Similar to the comments we posted on our site awhile back, this article talks about how the effects of Europe could ultimately spark a chain reaction throughout the global economy. The markets are very fragile right now and any major or possibly minor hiccup could bring those domino falling down. (PHOTO: Nelson Ching/Bloomberg News)
Have read through…
If the trouble starts — and it remains an “if” — the trigger may well be obscure to the concerns of most Americans: a missed budget projection by the Spanish government, the failure of Greece to hit a deficit-reduction target, a drop in Ireland’s economic output.
But the knife-edge psychology currently governing global markets has put the future of the U.S. economic recovery in the hands of politicians in an assortment of European capitals. If one or more fail to make the expected progress on cutting budgets, restructuring economies or boosting growth, it could drain confidence in a broad and unsettling way. Credit markets worldwide could lock up and throw the global economy back into recession.
For the average American, that seemingly distant sequence of events could translate into another hit on the 401(k) plan, a lost factory shift if exports to Europe decline and another shock to the banking system that might make it harder to borrow.
– Howard Schneider and Neil Irwin, Washington Post
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