Europe’s Economy Expected to Drag for Another Decade

Europe’s economy has not bounced back from recession like the United States, and there are several things that need to be fixed before it can. Policy makers must enact reforms, and that’s going to be difficult. Chief Executive Officer of JPMorgan Chase & Co. Jamie Dimon said, “They have all the same structural issues that you read about of other countries, but it’s 17 nations — and some of those structural issues have to be agreed upon in 17 parliaments and then by Brussels.”

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Of course, policy concerns are not the only things holding Europe’s economy back. Inflation of the euro is really low right now at 0.4 percent. This makes is very difficult for people to get credit, especially for businesses. This keeps unemployment high and businesses very conservative with their money decisions. Until the euro starts to go up in value and people start spending again, it’s going to be hard for Europe’s economy to see any improvement. However, people are optimistic that bank reforms will help Europe’s economy.

Paul Krugman of the New York Times analyzes why Europe’s economy hasn’t bounced back. He claims, “Some governments have failed to behave with the prudence a shared currency requires, choosing instead to pander to misguided voters and cling to failed economic doctrines.” He goes on to blame Germany for a major portion of Europe’s economic troubles. Germany has had labor-cost growth of less than one percent. That’s much worse than France, Italy, and Spain. However, all 17 nations are responsible for some of the blame.

Regardless of who is truly at fault for the European economic crisis, the 17 nations must band together for anything to improve. New policies are just a starting point. A look at the euro is really what needs to be addressed. [/show_to]

 

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