Here we go again
The Europeans are pushing the global banking system to the edge
Oct 8th 2011 | from the print edition
http://www.economist.com/node/21531467
The current situation in Europe is dramatic. Banks are holding back money for lending to other banks. The signs of the last bank crash in 2008 are very similar. In addition, Institutions who lose out as well are a burden to the current situation.
In America a supplementary has come up as well. China has manipulated the own currency, this is a sign that America has not a lot to be joyful of in economic policy.
At least this is not a problem in the euro-zone. Another central reason is there to be concerned about: the failure of payments, this might lead to chaos. Losses on the governemnt-bond holdings on the European banks would be immense.
The failure of the banks, especially in Europe, is tremendous. As banks are not able to pay any institution back, the consequence will be large disorder in the governments. If the crisis is not solved soon, governments will have lack of money. If the government is lacking to pay any institutions back the economy of a certain country will decrease by even more, especially in Europe. The chain-reaction could lead in an overall failure of the European Union, by this other countries will take large advantage of. Countries such as China that have cheap production and cheap labor, they can use this and increase export, strengthening their economy even more.
________________________________________________________________________________
Vocabulary
Word 1: infected
“Fears of contagion from Europe have now infected America.“
infected: to affect someone/something. First known use: mid. 16th century, from inficere, meaning “put, do“.
The temptation to study has infected many Woodstock students.
Word 2: manipulating
“An ill-conceived congressional bill to punish China for manipulating its currency is yet another sign that America has little to be proud of in terms of economic policy“.
manipulating: to handle or control. First known use: early 19th century, from manipulus, meaning “handful“.
Teachers try manipulating certain students so that students do what they want them to do.
Word 3: guarantee
“France and Belgium this week said that they would guarantee the debts of Dexia.“
guarantee: formal promise or assurance. First known use: early 16th century, from old french, meaning garantie.
Some Woodstock students can give a guarantee that they get an A+ on their next test.
joenumber1 