U.S. debt problems could slow down the global economy, and hit Europe dramatically. The U.S. is a key market for European exports, and a slow down in the U.S. would certainly have an impact on the other side of the Atlantic, notably in booming Germany, where exports are king.
Richard Kelly of TD Securities projects that, by year end with Basel III sorted out, banks should start lending again. But many others expect banks, regardless of confidence over Basel III, to continue cleaning up their balance sheets.
That means the U.S. growth could continue to be stymied, weakening the European recovery. Add that to the controlled slowdown in Asia, and there might be some serious growth problems in the medium term, if there aren’t already.
Check out this interesting discussion on the matter, from CNBC Europe:
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