Although there has been some degree of progress in both Greece and Italy, it is feared that Spain will be the next sovereign nation in the EU to succumb to the debt crisis. Around the world markets began gaining as news spread that political leadership in Greece and Italy had been revamped.
It is the hopes not only in the eurozone, but for investors around the globe, that a new government in Italy would be a turning point in that country’s troubled economy. Once the new government is in place and the austerity measures are instituted, the bail-out can go forward as arranged.
The European Central Bank noted that the most important problem to overcome in Italy is the installation of a new government that is ready to institute the changes necessary to turn their economy around. As well, with the installation of Lucas Papademos in Greece, markets rallied and inspectors from the IMF, the ECB and the EU arranged a visit to Athens in the coming week.
Unfortunately, just as news of progress in Greece and Italy boosted the markets, all eyes are now turned on Spain as the new nation with the potential to drag the euro back into crisis. Not only is their deficit a concern but their entire banking system has come under scrutiny.
Whether or not these new worries surrounding the situation in Spain will affect the global market is yet to be seen but there are fears that this will be the case. These fears are a result of a newly released report issued by the IMF stating that the world’s leading economies need to recognise the urgency of boosting economic growth. The spotlight is also on Japan and the US.
