From The Heritage Foundation:
Monetary Policy/Financial Regulation
How Did Europe’s Debt Crisis Get So Bad?
by John H. Makin
American Enterprise Institute
December 01, 2011
Economic Outlook
The quickly worsening European debt crisis—preordained by a false belief that sovereign governments do not default—constitutes the biggest threat to the US economy and its financial system. Europe is caught in a vicious cycle where an intensifying financial crisis slows growth and raises borrowing costs, exacerbating the crisis. Europe has three ugly options: (1) borrow more money from outside; (2) have the European Central Bank (ECB) buy more government bonds; (3) allow the European Monetary Union to collapse. In the end, the ECB will probably be forced to triple its balance sheet.
URL: www.aei.org/files/2011/11/30/-how-did-europes-debt-crisis-get-so-bad_165634547049.pdf
Monetary Policy/Financial Regulation
How Did Europe’s Debt Crisis Get So Bad?
by John H. Makin
American Enterprise Institute
December 01, 2011
Economic Outlook
The quickly worsening European debt crisis—preordained by a false belief that sovereign governments do not default—constitutes the biggest threat to the US economy and its financial system. Europe is caught in a vicious cycle where an intensifying financial crisis slows growth and raises borrowing costs, exacerbating the crisis. Europe has three ugly options: (1) borrow more money from outside; (2) have the European Central Bank (ECB) buy more government bonds; (3) allow the European Monetary Union to collapse. In the end, the ECB will probably be forced to triple its balance sheet.
URL: www.aei.org/files/2011/11/30/-how-did-europes-debt-crisis-get-so-bad_165634547049.pdf
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