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An Escalating Crisis in Europe and the United States

The global economic crisis is rapidly worsening. The United States suffered its first ever downgrade of its credit rating, and the Eurozone is threatening to collapse altogether, or alternately, face insolvency of sovereign debt, which would shake up financial markets all over the world. At the same time, leading economists are making foreboding statements, such as Nouriel Roubini’s, “There's a significant probability ... that over the next 12 months, there's going to be another recession in most advanced economies,” [64] or Joseph E. Stiglitz’s, “In a way, not only there is a crisis in our economy, there ought to be a crisis in economics.” [65]

The economic interdependence among countries makes it impossible for them to isolate themselves and resolve their problems separately. An example of that is the attempt of the Eurozone to save the faltering Greek economy. The Polish Finance Minister, Jacek Rostowski, speaking before the European Parliament, warned that “Europe is in danger, and the breakdown of the Eurozone would lead to a chain reaction leading to the breakup of the European Union (EU) and ultimately to the return of war in Europe.” [66] Also, German Chancellor Angela Merkel stated that “Euro-region leaders must erect a firewall around Greece to avert a cascade of market attacks on other European states.” [67]

Naturally, investors are concerned about the future of the world economy. During weekend talks of policy makers, investors and bankers in Washington, Mohamed A. El-Erian, CEO of PIMCO, the world’s largest bond investor, predicted, “Economies will stall over the next year as Europe slides into a recession.” [68]

Regarding that same event, former U.S. Treasury Secretary, Lawrence Summers, said he has been to 20 years of International Monetary Fund (IMF) gatherings, and “There’s not been a prior meeting at which matters have had more gravity, and at which I’ve been more concerned about the future of the global economy.”

Unemployment in Europe and the United States is high and rising. For example, Spain's unemployment rate rose sharply to a new Eurozone high of 21.3 percent in the first quarter of the year, with a record 4.9 million people out of work [69]. In the United States, the unemployment rate is 8.6, with 13.3 million people out of work [70].

[64] Nouriel Roubini, “ROUBINI: Ignore The Recent Economic Data — There's Still More Than A 50% Chance Of Recession,” Bussiness Insider (October 25, 2011),

[65] “Short films from the 2011 Lindau Nobel Laureate Meeting in Economic Sciences,” The New Palgrave Dictionary of Economics Online, (the above-mentioned statement is in Stiglitz’s video after 10:05 minutes.

[66] Amiel Ungar, “Polish Finance Minister Warns of War if EU Collapses,” Arutz Sheva (September 16, 2011),

[67] Sebastian Boyd, “Chilean Peso Advances After Merkel Urges Firewall Around Greece,” Bloomberg (September 26, 2011),

[68] Simon Kennedy, Rich Miller and Gabi Thesing, “Pimco sees Europe sliding into recession,” Financial Post (September 26, 2011),

[69] Daniel Woolls, “Spain's Unemployment Rate Hits New Eurozone Record Of 21.3 Percent,” Huffington Post (April 29, 2011),

[70] United States Department of Labor, Bureau of Labor Statistics,

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