Tags: Europe | Push | US | Recession

Experts: Europe to Push US Back Into Recession

By    |   Wednesday, 02 Jun 2010 12:56 PM

The U.S. economy has grown for three straight quarters, but some experts see the European debt crisis putting that recovery at risk.

“We were counting on a weak dollar and a strong European economy,” Nobel laureate economist Joseph Stiglitz says.

“Instead we got a strong dollar and a weak Europe. That is clearly not good for our economy. It certainly increases our likelihood of a double-dip recession,” he recently told the New York Times.

He sees the recent jump in Libor as a negative omen too. Libor – the London Interbank Offered Rate – is the rate banks charge each other for short-term loans.

“The credit markets’ reaction is sending a strong message that the banks don’t trust each other’s balance sheets,” Stiglitz said.

The risk of a double-dip recession has increased to 20 percent from 5 percent a few weeks ago, Robert Barbera, chief economist at ITG, told the Times.

To be sure, he remains bullish on U.S. fundamentals, but others aren’t so optimistic.

David Rosenberg, chief economist at Gluskin Sheff, has been bearish throughout the rebound.

“This has to go down as one of the most fragile economic recoveries in recorded history,” he told the Times.

Others are worried too.

“If this (slow bank lending and money circulation) persists, markets will face worryingly low GDP growth in the U.S. going into 2011,” Christopher Wood, equity strategist for CLSA Ltd., wrote in the Wall Street Journal.

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The U.S. economy has grown for three straight quarters, but some experts see the European debt crisis putting that recovery at risk. We were counting on a weak dollar and a strong European economy, Nobel laureate economist Joseph Stiglitz says. Instead we got a strong...
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2010-56-02
Wednesday, 02 Jun 2010 12:56 PM
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