Tags: Europe | Global | Credit | Access

Analysts: Europe Threatening Global Credit Access

Wednesday, 30 Nov 2011 11:45 AM

Think the European credit crisis will stay in Europe and only mildly affect the U.S.?

Think again, experts say.

Default fears are already threatening access to credit worldwide. U.S. money market funds are lending less to European banks, which are shoring up capital to cushion themselves against a possible meltdown.

Less lending worldwide ups the chance of an economic contraction taking place worldwide.

"If your largest banks aren’t able to provide credit, it hinders economic development and contributes to a recession ," says Alex Roever, a fixed-income research analyst at JPMorgan Chase, according to the New York Times.

Airline manufacturer Boeing is feeling the pinch as is Embraer, a Brazilian aircraft maker.

With European banks out of the picture, "this leaves a difference that must be made up by other sources if airplane deliveries across the industry, already set to increase in 2012, are to occur as planned," John Kvasnosky, a spokesman for the company, tells the Times.

As banks lend less the world economy will feel the pinch.

"The strains and stress are increasing," says Dirk Schumacher, a senior European economist at Goldman Sachs.

"Funding conditions for corporations will get tougher going forward."
Even China is feeling the squeeze due to the prospect of a recession in Europe, a key export market.

China's gross domestic product will rise 8 percent in 2012, less than a previous call of 8.3 percent, according to UBS while Citigroup has cut its forecast to 8.4 percent from 8.7 percent, Bloomberg reports.

"Much weaker euro zone growth will affect the rest of the world, including China," UBS economist Wang Tao says in a report, Bloomberg adds.

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Think the European credit crisis will stay in Europe and only mildly affect the U.S.? Think again, experts say. Default fears are already threatening access to credit worldwide. U.S. money market funds are lending less to European banks, which are shoring up capital to...
Europe,Global,Credit,Access
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2011-45-30
Wednesday, 30 Nov 2011 11:45 AM
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