The current crisis in Europe is fast becoming more of a free-fall than just a temporary blip. And the news of the Euro hitting a four year low versus the dollar only added to the gloom. The Euro ended the day’s trade at $1.2116 to a Euro, the worst since the April of 2006. With the crisis, dubbed the PIGS crisis (Portugal, Ireland, Spain and Greece) now taking shape of a full-fledged recession of the European economy, market sentiments across the globe are taking an untimely hit.
The world economy is still reeling from the after-effects of the Great Recession of 2008 could not have asked for a worst time for such a crisis that now looks to have at least temporarily halted the recovery.
Budget-cuts, strengthening tax-nets and austerity are the buzz words in the corridors of power across Europe even as Germany continues its hardliner stance against its suffering neighbors. Facing internal resistance against having to pay up for the excesses of the economies now in suffering the German is not too keen on becoming an ATM machine for Europe.
Drunk on a heady concoction of politics and economic factors, the sixteen member Euro zone entity seems to be on the cusp of something big – whether good or bad, can be told only with hindsight!