Eurozone Essay
Autor: valentyna88 • April 6, 2015 • Research Paper • 498 Words (2 Pages) • 827 Views
5. The Eurozone can survive, but it will not become a dominant player in the world affairs and most definitely will not become a potential challenge for the USA and US dollar.
Economies can develop either because they have a lot of young people eager to work extended and hard hours, or develop because people are creative and innovate. China has chosen the path of working very hard. Americans continue to lead the world in innovation and technological advances. If Eurozone wants to survive then it must urgently consider radical reforms. There are nine macroeconomic variables which are required to take serious actions upon: rise of extreme political parties, Europe’s aging population, vulnerability to external shocks, labor mobility & capital mobility, asymmetric adjustment, great recession response, formation of fiscal union, banking union, political union. All of the nine macroeconomic variables distinguished above necessitate thoughtful action by policymakers.
It has been drastic decline of several Eurozone nations. Financial experts believe that below are three American sectors that would be severely affected if the Eurozone decides defaulting on their loans and intensify the European debt crisis.
TRADE
It would badly hurt the United States and its $ 280 million worth of exports to Eurozone. European exports would be drastically cut by Eurozone nations. As a result, United States would suffer the consequences, companies will be forced to cut jobs.
US Trade with Eurozone (2004-2013) 1
[pic 1]
INVESTMENT
U.S. Investment in European companies (2000-2013)2
It is estimated that American companies have more than $2 trillion worth of direct investment in the Eurozone. If the European debt crisis continues to develop, American investors will see a colossal decrease in their profit margin. Investments will take a huge hit as a forceful economic crisis will come to effect.[pic 2]
SOURCE: BEA /STATISTA 2015/” U.S DIRECT INVESTMENT IN EUROPE 2000-2013”
CENTRAL BANKING
US assets owned by Eurozone Banks3[pic 3]
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