European Union Facing Recession
The initial euphoria that greeted the European Union’s “shock and awe” measures to shore up the euro seems to be fading. On Friday, the euro hit a 14 month low against the dollar as investors began to realize that the underlying problems in many European economies are not going away.
The €750 billion ($1 trillion) rescue fund agreed upon by EU finance ministers late on Sunday night had initially eased fears that many euro-zone economies could end up defaulting on their mounting debts. However, the slew of austerity packages in countries with bloated budget deficits is now raising concerns that the severe cuts could actually stall growth and thus make paying off the debts even harder.
