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Currency News – World Economy In Trouble Says World Bank Chief

The World Bank president has stated once again that if the US, Europe and Japan don’t get their financial issues under control, they are going to start dragging down the economy around the rest of the world, and the results will be disastrous.

This really isn’t anything new, but when you get someone who doesn’t really have that big of a vested interest in the situation (relatively speaking, or course) saying these things, people will start to listen.

Even though everyone knows things are bad, not much action is being taken. Everyone is waiting to see what everyone else is doing, and nobody is acting as a trailblazer and are willing to make big changes. There is a fear that making a big fiscal policy change will put them at a relative disadvantage and that other states will take advantage of them, and therefore they think it is better to not act at all. This is the kind of thinking that got us in this position in the first place, and the dogma will have to change if we hope to get back anywhere near where we were before.

 

Credit Crunch Coming For The Eurozone?

As the situation in the Eurozone continues to spiral downward, the danger of a credit crunch seems to be returning and if it does, the results will be disastrous.

The main problem is the lack of confidence in the system. After all, the financial system was operating in the way it was designed and then this happened, so what is to prevent it from happening again. Two French banks have since been downgraded and the availability of credit and capital continues to fall.

Because of all this, there is increased talk of the introduction of Eurobonds, something Angela Merkel has spoken out against in the past. Many people believe that everyone must work together now and in the future to ensure that the financial health of the 17 member Eurozone stays in tact, but that may not be possible.

It is coming down to crunch time – things have to happen soon. But then again, that has been said for quite a while now, and things just keep on dragging on. Things have gotten so bad that Timothy Geithener has even said that the EU needs to be doing a better job handling the crisis, and for him to say that when the US is in the position it is in means a lot.

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