Global markets rose Wednesday on hopes that financial authorities in the U.S. and Europe may take action to stimulate economic growth and ease the financial turmoil that is threatening to tear apart the 17-country eurozone.
LONDON — Signs of a deal to avert an economically damaging U.S. debt default boosted world equity markets and the dollar on Tuesday, though firm short-term interest rates highlighted concerns that the problem may just be postponed.
Hopes rose after U.S. Senate Majority Leader Harry Reid, a Democrat, and his Republican counterpart, Mitch McConnell, ended a day of talks on Monday, with Reid saying they had made “tremendous progress”.
Martin SantaBRUSSELS — The German and French economies grew faster than the United States in the second quarter, pulling the eurozone out of its longest recession.
Growth in the 17-country bloc was 0.3% from the previous quarter, with its two biggest economies both revealing unexpected strength, data from the European Union’s statistics office Eurostat showed on Wednesday. A Reuters poll had forecast 0.2%.
A pledge by Spain to cut its budget deficit and positive European economic data eased concerns that the eurozone crisis could hit the global recovery, lifting Asian markets and the euro Thursday.Sentiment was also bolstered after US shares rallied on data showing exports and imports soared, pointing to continuing improvement in global trade, while a flurry of strong corporate earnings results lifted Japanese shares.
By Simon Johnson
Eighteen months ago, on October 24, 2008, Peter Boone, James Kwak and I published an opinion piece in the Guardian (UK), “Start by Saving the Eurozone“. We argued that the recession would put a great deal of pressure on the eurozone, because of flaws in its design.
Our proposals for addressing these issues, and preventing a broader global crisis, included: