If the jobs report confounded investors Friday, problems in the European Union scared them. The problem isn't so much that a nation defaults on its sovereign debt — the bonds that individual countries issue — but that such a default could trigger a chain reaction of global panic similar to what happened after the bankruptcy of U.S. investment giant Lehman Brothers in September 2008.
That scenario would add to the hurt on American shores, since it would slow the global economy, bring more bank losses and hurt U.S. exports.
Even without a panic, weaker European economies such as Spain's and Portugal's already face a credit crisis as they're hit with higher borrowing costs because investors consider them riskier bets.
An economic slowdown in Europe would hurt Main Street America because exports have been one of the few drivers of economic growth, and Europe is a chief buyer of everything from farm products to expensive U.S. technology.
Sunday, February 7, 2010
all eyes right now should be on europe...
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