While America’s political leaders continue to squabble about the “fiscal cliff” on this side of the Atlantic, leaders on the other side are hoping the quarrel ends soon.
European business leaders, already mired waist-deep in their own economic woes, groan at the dispute in Washington, but try to be hopeful. They worry that America’s inability to step back from the “fiscal cliff” will have a devastating effect on Europe’s sputtering economy. Finding any positive news to end the American stalemate has been challenging.
“If they can agree in principle on the broad issues and leave some of the negotiations for next year, that in itself would be a big step forward,” said Mike Lenhoff, chief strategist at Brewin Dolphin Securities Ltd. in London.
Republicans, Democrats Blame One Another
There are few signs that any sort of agreement is imminent.
Republican Speaker of the House John Boehner, who had a private meeting with Treasury Secretary Tim Geithner on Thursday about the Democrats’ plan for the fiscal cliff, came away very dissatisfied. He lashed out at President Obama and Democrats for not including significant spending cuts in their proposal.
“Despite the president’s claims that he supports a balanced approach, Democrats have yet to get serious about real spending cuts,” Boehner said. “Members of his own party seem quite comfortable sending the economy over the fiscal cliff.”
White House press secretary Jay Carney had a terse, and familiar, reply that put the onus on Republicans to come around to tax hikes. “There can be no deal without rates on top earners going up,” Carney said.
More Bad News for Europe
None of that was good news for countries in Europe, which already are coping with depressing unemployment news and a debt crisis of their own.
Data released today put the unemployment figure for the 17 countries that use the euro at 11.7 percent in October, the highest since the euro was introduced in 1999. The number of unemployed people in the eurozone stands at 18.7 million, up 2.2. million over the last 12 months.
Germany has the lowest unemployment rate at 5.4 percent, while France stands at 10.7. Spain has the worst unemployment rate at 26 percent, with Greece right behind at 25.4 percent. A long-term concern is that youth unemployment levels are heading toward 60 percent.
Those dreary numbers add more hurt to an aching European economy. Greece, Spain, Portugal and Italy have been, and continue to be, drags on the rest of Europe. Austerity measures have made no impact. Consumer confidence fell again in November, and analysts see only a 0.1 percent growth for the eurozone economy in 2013.
“The economic outlook for the eurozone remains pretty dreadful,” said Jonathan Loynes, chief European economist at Capital Economics in London.
Pier Carlo Padoan, chief economist for the Organization for Economic Cooperation and Development, which includes 34 countries from around the world, was not optimistic about Europe’s future.
“We don’t think the eurozone crisis is over yet,” Padoan said in a recent report. “The risk of a new major contraction can’t be ruled out. Fragility in the euro-area remains; the negative feedback loop between banks and sovereigns is still there. We believe that the European crisis represents the largest risk to the global economy.”
Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it in 2012, helping birth Debt.org into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering the high finance world of college and professional sports for major publications, including the Associated Press, New York Times and Sports Illustrated. His interest in sports has waned some, but he is as passionate as ever about not reaching for his wallet. Bill can be reached at [email protected].
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