economic problems

DealBook: In Davos, Merkel Presses Leaders to Keep Focus on Economy

January 24, 2013 by NewsMaker Leave a Comment

Anja Niedringhaus/Associated PressAngela Merkel, the chancellor of Germany, said recent moves had calmed markets but had not solved the euro zone’s underlying economic problems.

DAVOS, Switzerland — Angela Merkel, the German chancellor, on Thursday warned her fellow euro zone leaders not to falter in their efforts to reinvigorate their economies now that they face less pressure from financial markets. She gave voice to widespread concern here that a tentative European recovery could be undercut by political complacency.

Measures in recent months by the European Central Bank to help banks and struggling euro zone countries have calmed markets but have not solved the euro zone’s underlying economic problems, Ms. Merkel said in a speech to participants at the World Economic Forum.

“The E.C.B. has done a lot,” she said. Now, she added, “there is a political duty for us to do our homework.”

World Economic Forum in Davos

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Reprising the role of European taskmaster for which she is often resented, Ms. Merkel made her remarks shortly after Mario Monti, the prime minister of Italy, assured an audience at an auditorium in Davos that his country was making progress in efforts to reduce its debt load and streamline its economy. Italy is removing barriers to competition, rebuilding infrastructure and dismantling labor regulations that inhibit hiring and firing, Mr. Monti said.

But among big investors, many of whom are here, there is skepticism over whether Europe’s political leaders will follow through on such changes.

“These are fairly important measures,” said Olivier Marchal, managing director for Europe at Bain Company, speaking on European reform efforts. But, he predicted, “apart from the psychological effect, there will not be any tangible impact before 2014.”

David Cameron, the British prime minister, has intensified pressure on the euro zone — the 17 European Union members that use the euro — with his announcement Wednesday that he would ask Britons to vote on European Union membership within five years. He amplified those remarks here Thursday, saying that Britain did not want to turn its back on Europe but wanted to make it “more competitive, open and flexible.”

The discussion about European competitiveness came after a business survey released in London on Thursday raised hopes that the euro zone could emerge from recession sooner than expected. But the survey of purchasing managers, by the data provider Markit, showed a sharp divergence among countries. While German managers became more optimistic, French sentiment slumped.

Separately, a report from Madrid on Thursday showed that Spanish unemployment rose to a record high of 26 percent at the end of 2012, with six million people out of work.

Mr. Marchal of Bain Company said many of the businesspeople he had talked with remained cautious and reluctant to invest. “Many of them are either postponing strategic moves or preparing for things to get worse,” he said.

During her speech, Ms. Merkel described herself as “conditionally optimistic” and said, “The investment climate in Europe has improved.” But she went on to lament the high level of youth unemployment. The Spanish data released Thursday showed that the jobless rate among people from 16 to 24 years old was 55 percent in the last three months of 2012, up from 52 percent in the previous quarter.

“Our biggest burden is youth unemployment,” she said.

Europe needs to better exploit its status as the world’s largest market, Ms. Merkel said. “We can make a lot of that if we remain open, innovative and when we don’t take it for granted that Europe has a right to be the leading continent on the world.”

While Germany is considered healthier than other large economies in Europe, growth is hardly dynamic. Output shrank in the last three months of 2012. This year, the German economy will grow by about 1 percent, according to numerous forecasts.

“Things are better,” Thomas J. Donohue, president of the United States Chamber of Commerce, said in an interview here. “But there’s a big distance between things being better and having the growth we need to start hiring people.”

Mr. Donohue noted that the United States, Europe and China had become highly dependent on trade with one another. “If the E.U. has even a little bit of negative growth, that’s not going to be good for any of the three of us,” he said.

Ms. Merkel praised Mario Draghi, the president of the European Central Bank, for insisting that countries improve economic performance as a condition for his help containing market pressure.

But many of the business managers who predominate among the attendees in Davos are worried that progress will stall because of resistance from interest groups that stand to lose quasi-monopolies or other privileges ensured by government regulation. In addition, they say, European labor unions have held up changes in laws that make it nearly impossible to dismiss workers who are not needed or not performing.

Mr. Monti’s reform drive has helped Italy win back international respect, but there is considerable nervousness about what will happen after elections in February. Because Italian borrowing costs have retreated from alarming highs last year, political leaders feel more heat from voters than they do from bond investors.

Since Mr. Draghi promised last year to do whatever it took to preserve the euro, “I have seen in no country hard new measures,” Maximilian Zimmerer, chief financial officer of the German insurer Allianz, said in an interview.

Mr. Zimmerer expressed optimism that reforms would resume, but added, “You do not have the pressure of markets for now.”

Article source: http://dealbook.nytimes.com/2013/01/24/in-davos-merkel-presses-leaders-to-keep-focus-on-economy/?partner=rss&emc=rss

Filed Under: Global Business Tagged With: economic problems, euro zone, ms merkel

Debt Crisis to Cut Growth in Eastern Europe, Report Says

October 18, 2011 by NewsMaker Leave a Comment

The European Bank for Reconstruction and Development, which lends to businesses and governments in the former Soviet bloc and is underwritten by Europe and the United States, cut its growth estimate for Central Europe and the Baltics to 1.7 percent for 2012.

In July, the bank predicted an expansion of 3.4 percent for the eight countries in the region, which stretches from Croatia to Estonia.

Southeastern Europe, which includes Romania, Bulgaria, Serbia and four other countries, will grow 1.6 percent next year, the bank said, down from a forecast of 3.7 percent in July. Those countries are suffering from their ties to Greece, the euro zone country with the gravest debt and economic problems.

Even the revised predictions may be optimistic, because they are based on the assumption that Western Europe will slow to a standstill but avoid recession, and that policy makers will manage to contain the debt crisis. In recent weeks many economists have started predicting that Europe is headed for recession. Whether European leaders manage to tame the debt crisis is an open question.

“For next year there is an exceptional uncertainty about the course of developments in the euro zone, and the ramifications for Central Europe,” the European Bank for Reconstruction and Development wrote in its report on prospects for the region, which was released Tuesday.

Eastern Europe has been hit harder by the financial crisis and recession that began in 2008 than any other part of the world, with output plunging more than 5 percent in many countries. The bank’s report highlighted the region’s continued vulnerability to its richer neighbors.

Countries like Hungary and Slovakia depend heavily on the euro zone for trade and capital. In addition, most banks are foreign-owned, and there is a risk that West European institutions could starve their eastern subsidiaries of credit.

In 2009, only an emergency accord among lenders, known as the Vienna Initiative, prevented wholesale capital flight and the collapse of local banks.

While the region is less susceptible to banking woes than during the previous crisis, the bank said, the number of bad loans is still high and many consumers and businesses continue to have loans denominated in euros or Swiss francs. Foreign currency loans can become ruinously expensive for borrowers when local currencies plunge in value, as happened in 2009.

The European Bank for Reconstruction and Development did not forecast that any of the countries in which it is active would fall into recession, but said that even star performers like Poland would experience markedly slower growth. The bank cut its growth forecast for Poland to 2.2 percent for 2012. In July, the bank had forecast a 3.5 percent expansion for Poland next year.

The development bank, which is underwritten by 61 countries, also predicted a sharp slowdown in Turkey, to 2.5 percent in 2012 from 7.5 percent growth this year. The Turkish economy is suffering from excess borrowing and has become overheated, the bank said.

Growth in Russia will accelerate slightly next year to 4.2 percent, from 4 percent in 2011, the bank said, because of strong commodity prices. But it cautioned that the outlook for Russia was vulnerable to volatile oil prices.

If euro zone leaders tame the sovereign debt crisis, the development bank said its predictions could prove overly pessimistic. But it also warned that a failure to control the crisis could have dire effects on Eastern Europe. “The potential for worsening of the current situation in the euro zone beyond the baseline scenario poses significant risks even to the lowered outlook,” the bank said.

Article source: http://www.nytimes.com/2011/10/18/business/global/euro-crisis-weighing-on-east-european-growth.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: economic problems, former soviet bloc, reconstruction

Bucks Blog: Questioning a Standard Piece of Investment Advice

October 1, 2011 by NewsMaker Leave a Comment

The long list of economic problems around the world — from high unemployment and legislative gridlock in the United States to deep debt problems in Europe — makes these scary times for investors, Paul Sullivan writes in his Wealth Matters column this week. The usual advice is to focus on a long-term plan and not abandon it when the times get tough.

But Paul notes a new study that raises questions about another standard piece of investing advice — investing money regularly over a period of time. This is the type of investing, known as dollar-cost averaging, behind 401(k) plans. The idea is that regular purchases reduce the risk of investing a large amount in a single investment at the wrong time.

But the new study, from Gerstein Fisher, a New York money manager, found that investing a lump sum yielded better results over a 20-year period than investing the same amount of money in equal amounts over 12 months. “The faster you invest the money the better you do,” Gregg Fisher the president and chief investment officer of Gerstein Fisher, told Paul.

What is your investment strategy? Have you found a way to ride out the market?

Article source: http://feeds.nytimes.com/click.phdo?i=c9117824937990bef91b4eee921bff90

Filed Under: Your Money Tagged With: economic problems, money manager, paul sullivan

In Texas, Perry Has Ridden an Energy Boom

August 15, 2011 by NewsMaker Leave a Comment

Is Texas just lucky, or has the state benefited from exceptional leadership? As Gov. Rick Perry campaigned Monday in Iowa for the Republican presidential nomination — with the economy dominating the national political landscape — the answer to that question is central to his candidacy.

Even before he formally entered the race over the weekend, Mr. Perry and his allies set out to dictate an economic narrative on his terms. A radio spot last week in Iowa told voters that the governor “has a proven record of controlling spending and creating jobs” and suggested that he could replicate the success of Texas on a national scale. In a budget speech a few months ago, Mr. Perry boasted that Texas stood “in stark contrast to states that choose to burden their residents with higher taxes and onerous regulatory mandates.”

But some economists as well as Perry skeptics suggest that Mr. Perry stumbled into the Texas miracle. They say that the governor has essentially put Texas on autopilot for 11 years, and it was the state’s oil and gas boom — not his political leadership — that kept the state afloat. They also doubt that the Texas model, regardless of Mr. Perry’s role in shaping it, could be effectively applied to the nation’s far more complex economic problems.

“Because the Texas economy has been prosperous during his tenure as governor, he has not had to make the draconian choices that one would have to make in the White House,” said Bryan W. Brown, chairman of the Rice University economics department and a critic of Mr. Perry’s economic record. “We have no idea how he would perform when he has to make calls for the entire country.”

And if Mr. Perry were to win the Republican nomination, he would face critics, among them Democrats, who have long complained that the state’s economic health has come at a steep a price: a long-term hollowing out of the state’s prospects because of deep cuts to education spending, low rates of investment in research and development, and a disparity in the job market that confines many blacks and Hispanics to minimum-wage jobs without health insurance.

“The Texas model can’t be the blueprint for the United States to successfully compete in the 21st-century economy, where you need a well-educated work force,” said Dick Lavine, senior fiscal analyst at the Center for Public Policy Priorities, an Austin-based liberal research group.

On the campaign trail, Mr. Perry is hearing none of it. In announcing his candidacy in South Carolina on Saturday, he pointed to his policies of low taxes, reduced government spending and regulatory easing as “a recipe to produce the strongest economy in the nation” and one that Washington would do well to duplicate. The next day, he told Iowa Republicans that the party needs to nominate “somebody who understands, knows how and has had job-creation experience.”

Since Mr. Perry succeeded George W. Bush as governor in 2000, he has viewed his role as mostly staying out of the way of the private sector. When he has stepped in, he has tweaked the system, not remade it.

For example, he pushed through tort reform to limit lawsuits against doctors, which encouraged the continued expansion of major medical centers around the state. He also set up an enterprise fund that gave businesses nearly a half a billion dollars in grants and financial incentives over the last eight years to encourage their expansion.

For homeowners, he cut real estate taxes to make the state’s already cheap housing a bit more affordable. And a few months ago, with the state facing a $27 billion deficit in its two-year budget, Mr. Perry called state lawmakers into a special session and insisted lawmakers not raise taxes. The Republican-dominated Legislature complied, slashing billions of dollars in aid to public schools.

“He’s been a promoter of stability in regulatory policy and stability in spending,” said Talmadge Heflin, director of the Texas Public Policy Foundation’s Center for Fiscal Policy and a former Republican state representative. “That gives him something to show for whatever he runs for.”

This article has been revised to reflect the following correction:

Correction: August 15, 2011

An earlier version of this article rendered incorrectly part of the name of the Maguire Energy Institute at Southern Methodist University.

Article source: http://feeds.nytimes.com/click.phdo?i=0c9ac11b2149cd97656e1b83fb88642c

Filed Under: Business News Tagged With: economic problems, political landscape, rick perry

High & Low Finance: Who Is to Blame if Shares Continue Steep Declines?

August 15, 2011 by NewsMaker Leave a Comment

William Shakespeare,

Macbeth, Act V, Scene 5

At the end of last week’s wild stock market gyrations, share prices were down only a moderate amount for the week, leaving investors to wonder whether there was any meaning at all to the volatility.

As is often the case when market gyrations become excessive, governments have good reasons to hope that the significance, if any, lies in market imperfections rather than in fundamental economic problems.

If it is the latter, attention is likely to be focused on issues of sovereign debt in Europe and on whether governments on both sides of the Atlantic have the ability and the will to prevent a new global credit crisis and recession.

If it is the former, then it is the behavior of market participants, or problems of market structure, that is to blame. In the past, that explanation has been much more palatable to politicians. Sometimes it has even been correct.

If it is not real economic problems that are responsible for sharp falls in stock prices, then the blame is likely to fall, as it has in the past, on people who seek to profit from declines and on market innovations, such as stock index futures and computerized trading strategies.

Short-sellers, who bet that prices will go down and thus perhaps help to push them down, are almost always among the first targets of political criticism, and this year is no exception. At the end of last week four European countries banned short-selling of financial stocks, and Germany renewed its push to get Europe to prohibit what it calls “naked short-selling” of credit-default swaps.

It is particularly angry about swaps that allow people to place bets that governments will default on their debts. Germany’s proposal would mean no one could obtain such protection against, say, an Italian default unless he owned Italian government bonds and needed protection.

Until 2008, Wall Street almost always opposed restrictions on short-selling. But that year investment banks became strong supporters of banning such sales and investigating people spreading negative rumors.

It was not, of course, a coincidence that the rumors then were about banks. After Lehman Brothers collapsed, short-selling of financial stocks was banned. It bolstered stock prices for a while, but did nothing to halt the rot that really was spreading within bank balance sheets.

So far this year, the United States has not joined in taking action against short-selling, although regulations on it have been strengthened since the 2008 plunge.

In the 1920s, the targets of scorn were Wall Street pools, thought to be pockets of capital that would manipulate a stock up and then profit by dumping overpriced shares on speculators lured into thinking the rising price was a result of more than manipulation. After the 1929 crash, the pools were widely blamed for bear raids, which were more or less the opposite and used short-selling to drive down prices. Attacking the speculators did not, in the end, do much to help the prices.

In the 1987 crash, portfolio trading, made possible by the relatively new stock index futures market, became a target of criticism. That strategy involved taking offsetting positions in the futures market and the stock market, such as by buying a futures contract and selling short the underlying stocks

Traditional money managers loved being able to sell a futures contract quickly to protect against losses in a declining market, but were outraged that the buyer of the contract immediately sold shares short, seemingly without regard to price.

Related to that was a product called “portfolio insurance,” which convinced money managers they could buy stocks without much regard to price, secure in the knowledge they could use futures — or options on futures — to exit quickly in a down market.

Since the sale of futures by portfolio insurers was based on a computer program that assumed continuous markets, it had no way to stop selling when prices became ridiculously low. Humans who understood what was happening had no desire to buy until they were sure the portfolio insurance traders were through.

The Dow Jones industrial average fell 22 percent on one day, on Oct. 19, 1987.

In a way, the flash crash of May 6, 2010, was similar. It brought high-frequency trading firms to the fore. As markets became more and more electronic, and computers enabled trades to be completed in milliseconds, those firms had come to supply most of the liquidity needed to allow markets to function.

That is, when normal investors wanted to buy or sell stocks, the high-frequency firms were often on the other side of the trade, making small amounts on many trades. They had taken over a profitable function once restricted to stock exchange specialists and Nasdaq market makers, which were required to post bid and asked prices and to step in to buy when others did not wish to do so.

Article source: http://feeds.nytimes.com/click.phdo?i=2dafd696f44d15ded86e3829e1a1611f

Filed Under: Economy News Tagged With: economic problems, european countries, political criticism

Group of 7 Will Meet to Address Debt Issue

August 6, 2011 by NewsMaker Leave a Comment

The Italian prime minister, Silvio Berlusconi, whose nation has been viewed as the next potential debt-laden domino to fall, also announced a number of measures Italy would take to restore the confidence of investors and creditors.

The G-7 meeting is meant to show that leaders are taking action to address the crisis, even before votes occur in national parliaments next month to expand Europe’s rescue fund for its most financially troubled members.

While no details of the meeting’s agenda were given, the situation “requires coordinated action,” Mr. Berlusconi said. “We have to recognize that the world has entered a global financial crisis that concerns all countries.”

For all the hum of activity on Friday, though, many economists and analysts remained unconvinced that sufficient steps were being taken to resolve the problems engulfing the European nations that share the euro.

European stocks were down for a second consecutive day on Friday, on the gnawing realization that Europe and the United States may face fundamental economic problems for years to come.

The turmoil prompted a flurry of phone calls between President Nicolas Sarkozy of France from his vacation retreat on the French Riviera, and Chancellor Angela Merkel of Germany, who had chosen an August getaway to Italy. Mrs. Merkel and Mr. Sarkozy also each spoke with President Obama on Friday, the White House said, but offered no details on their discussions.

Mr. Berlusconi, meanwhile, spoke by phone Friday with Mrs. Merkel and, separately, with Herman Van Rompuy, the European Council president, and with José Luis Rodríguez Zapatero of Spain — the other big debt-saddled European country that, like Italy, is seen as teetering.

Mr. Zapatero of Spain, whose economy is in greater peril as investors drive up borrowing costs, also spoke separately to both Mr. Sarkozy and Mrs. Merkel from his vacation in Andalucia.

At a hastily called news conference, Mr. Berlusconi, who has been criticized for being too slow to recognize that Italy’s debt problems threaten the euro union, said his country would take various steps to address the crisis.

He said Italy would aim for a balanced budget a year earlier than a previously stated 2013 deadline, seek a constitutional balanced-budget amendment and make other moves to liberalize the nation’s economy — which is so sclerotic from bureaucratic rules that it has barely grown for a decade.

Parliament may shorten its August recess to pass the measures, Mr. Berlusconi said. He appeared alongside the economy minister, Giulio Tremonti, whom Mr. Berlusconi had recently treated with public disdain that added to the market’s concerns about Italy.

Many analysts remain skeptical that European leaders have grasped the problems confronting them.

“Politicians have done everything to demonstrate they are not ahead of the curve,” said Stefan Schneider, the chief international economist at Deutsche Bank in Frankfurt. “That is hitting market confidence and creating a self-fulfilling feedback loop.”

Just days after Washington struck a harrowing, last-minute deal to lift America’s debt ceiling, a stark reality has come crashing in on both sides of the Atlantic. Neither the United States nor Europe has yet fully recovered from the financial crisis that spread from spring 2007 through early 2009.

Instead, brief bright spots of recovery have been overshadowed by rising unemployment and anemic economies, especially as debt-reduction austerity programs in Europe and spending cuts in the United States weigh on growth.

Signs of economic weakness continue to emerge. New data indicates that industrial output fell in June in Italy and Spain, and both economies grew at a tepid pace in the second quarter. While the German economy remained strong, industrial production there slid in June, by 1.1 percent, as construction activity also slackened.

Meanwhile, leaders in Brussels on Friday were trying undo the damage wrought by José Manuel Barroso, the European Commission president, a day after he frightened investors by conceding that Europe was gripped by political paralysis.

Judy Dempsey contributed reporting from Berlin, James Kanter from Brussels and Matthew Saltmarsh from London.

Article source: http://feeds.nytimes.com/click.phdo?i=ad182261588bea6907ac4eeb083e2706

Filed Under: Business News Tagged With: economic problems, silvio berlusconi, vacation retreat

Euro Zone Leaders Clinch Rescue Plan for Greece

July 21, 2011 by NewsMaker Leave a Comment

At a press conference late Thursday, German Chancellor Angela Merkel confirmed the 109-billion-euro aid package for Greece. European officials also said that financial institutions that own Greek bonds would contribute 50 billion euros through 2014 through a combination of debt extensions and the purchasing of discounted Greek bonds on the secondary market.

The outlines of the plan worked out by the 17 euro zone heads of government seemed particularly bold, dealing with the economic problems of bailed-out Ireland and Portugal as well as Greece, and calling for nothing short of a “European Marshall Plan” to get Greece itself on a road to recovery. The underlying economies of those countries — and others — remain remarkably frail, however.

On the central issue of extending debt, rating agencies had already issued strong warnings that such steps might constitute a limited form of default because creditors would not be repaid in full on the original terms.

The agreement came after days of conflict among Europe’s leaders over how to keep the debt crisis from engulfing the much-larger economies of Italy and Spain. Any contagion would not only pose a potent threat to the euro — the most important symbol of the European integration — but could destabilize the entire global financial system.

The plan calls for a “comprehensive strategy for growth and investment in Greece,” including the release of European Union development funds to finance infrastructure projects.

More significant, the euro zone leaders gave wide-ranging new powers to the bailout fund, the European Financial Stability Facility, by allowing it to buy government bonds on the secondary market and to help recapitalize banks where necessary.

That would effectively turn it into a prototype European version of the International Monetary Fund. The bailout fund would even be able to help shore up countries that had not requested a rescue.

Germany rejected such ideas only months ago.

Strengthening the bailout fund signals a new willingness to come to terms with the scale of the euro zone’s debt crisis by taking a big step toward common economic structures. The challenges for Greece and the other bailed-out countries remain enormous, however, and some fear a default may still happen, even though markets reacted positively Thursday.

Diplomats said that going forward with the proposals would require a change in the fund’s rules, which in turn would require approval by national parliaments.

On the eve of the summit meeting, a statement from the French president, Nicolas Sarkozy, and Mrs. Merkel said they had “listened” to the views of the president of the European Central Bank, Jean-Claude Trichet, who flew in from Frankfurt unexpectedly to join them in Berlin.

Though the statement from Mr. Sarkozy and Mrs. Merkel did not say whether they had settled the issue of allowing Greece to write down some of its debt — something Mr. Trichet has argued against publicly and adamantly — suggestions before the summit meeting in Brussels were that the E.C.B. had softened its stance.

“The demand to prevent a selective default has been removed,” the Dutch finance minister, Jan Kees de Jager, told Parliament in The Hague, Reuters reported.

That also appeared to be the sense of a draft meeting statement that circulated before the summit meeting ended.

“The financial sector has indicated its willingness to support Greece on a voluntary basis through a menu of options (bond exchange, rollover and buyback) at lending conditions comparable to public support with credit enhancement,” the draft document said.

Though no figures were specified in the draft agreement, the loss for private investors would be around 20 percent, according to a German official not authorized to speak publicly.

“Selective default” is used by rating agencies to describe when terms of a bond such as the repayment deadline or interest rate have been altered. It falls short of an outright default, which usually occurs when the borrower stops making payments.

One theory is that the rating agencies could be persuaded to wait before issuing any formal ruling on the plan.

But the draft statement offered a series of concessions for Greece under a new bailout, concessions designed “through lower interest rates and extended maturities, to decisively improve the debt sustainability and refinancing profile of Greece.”

According to the draft, the maturity of European loans to Greece would be extended to a minimum of 15 years from 7.5 years and at interest rates of around 3.5 percent.

Similar help through reduced borrowing costs would be extended to Portugal and Ireland. The Irish government would, in exchange, end a dispute with France by promising to “participate constructively” in talks on a common base for corporate tax in Europe. Officials said that means Ireland would not be required to raise its relatively low corporate tax rate — currently 12.5 percent — as had been sought by some countries, including France, which have higher tax rates.

The summit meeting was called after days of market turbulence in which borrowing costs spiked for Italy and Spain, raising fears that the euro zone debt crisis would spread to those much bigger countries, potentially setting off another global financial crisis. Germany, Finland and the Netherlands have insisted that private bondholders share the pain of a second bailout, putting them at odds with the E.C.B. and some other governments. Besides concerns over contagion, the central bank has said a selective default would make it impossible for it to accept Greek bonds as collateral.

Matthew Saltmarsh and Landon Thomas Jr. contributed reporting from London.

Article source: http://www.nytimes.com/2011/07/22/business/global/European-Union-Summit-Meeting-on-Greek-Debt.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: debt crisis, economic problems, potent threat