America to Face Another Shutdown, Europe to be Governed by 1 Political Union and the UK on The Road To Recovery – The Greenspan Interview
In an interview recorded last night former US Federal Reserve Bank of America Chairman Alan Greenspan has stated that he believes it is very possible that the US will face another partial shutdown of the Government similar to the on just witnessed. The partial shutdown has been well publicised and while they managed to avoid defaulting on their debt the US Government has only raised its debt ceiling as a stop gap and they will face the same situation in January if they do not get their act together and come up with a new plan to tackle their ever growing debt levels.
At the same time as talking about the issues America are likely to face he also had strong words for the Eurozone stating that their economic woes are likely to continue until the single currency economy becomes one politically. Effectively Mr Greenspan stated that due to the differences between countries such as Greece and Germany they will continue to struggle with a one size fits all economic policy. As a result Mr Greenspan believes that the as well as one currency the bloc should have one political union. While the idea makes sense I would be surprised to see any country being willing to be politically governed by politicians from another country; could you see the French be happy to be governed by the Germans or the Spanish be ruled by the Portuguese? So, if Mr Greenspan is correct, and this is the man who ran the US FED for 19 years, then the economic difficulties in Europe could well continue for the forseeable future.
Finally, Mr Greenspan commented on how well the austerity measures in the UK have been working, although he admitted he was surprised at this.
The currency markets are made up of many different opinions and views, while some people are buying Euros there will be others that think it is time to sell Euros and it is this that creates the volatile movement. However, when someone with the authority of Mr Greenspan speaks many people will listen. I agree that the US is likely to face another difficult situation with the debt ceiling in January and it would not surprise me to see the US Government fall into partial shutdown again. This is part of the reason the USD has actually weakened as many believe the problems in the States has not gone away. I also agree that Europe is a long way from having seen the end of its economic woes but I do think they can still move away from the threat of recession as they currently stand however smaller economies will still need financial support.
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