HIGHLIGHTS OF THE WEEK
United States
• European leaders are meeting in Brussels this weekend to try and come up with a plan to restore market confidence and secure the future of the common currency. But those hoping for a grand bargain are likely to be disappointed.
• The real challenge is deeper than European policymakers have publicly acknowledged: how do you restore confidence in a union of countries that, with few exceptions, are highly indebted and relatively uncompetitive? A successful solution must involve the reform of European institutions themselves, as well as an understanding among member states over the responsibilities they hold to themselves and to each other.
• The U.S. financial system, and the broader economy, will remain at risk as long as doubts linger over Europe’s future. Although the economic recovery has proven stronger than many had feared, the risk is that troubles in Europe throw it off course.
Canada
• Europe’s debt crisis has had a severe impact on Canadian financial markets in recent months.
• In addition to double-digit declines in equity markets and the Loonie, increasing concerns about counterparty risk and contagion effects have led to increased interbank funding costs.
• Fortunately, the escalation in financial volatility has not yet led to significant downgrades to the Canadian economic outlook, but a key risk lies in whether or not European leaders can contain the crisis.
• If control is lost, a systemic European banking crisis could spread to Canada and lead to an economic and financial environment similar to that of 2008 during the fall of Lehman Brothers -- but unlike 2008, both households and governments are too indebted to spend their way out of a full-scale financial crisis.
Webcasts:
Canada: https://www.brainshark.com/tdeconomics/vu?pi=zGPz13Z8N3z1sQYz0
United States: https://www.brainshark.com/tdeconomics/vu?pi=zGNzEa2MPz1sQYz0
No comments:
Post a Comment