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Geography 3422A/B Study Guide - European Debt Crisis


Department
Geography
Course Code
GEOG 3422A/B
Professor
Milford Green

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How the Globe Can Grind to a Halt 2/25/2013 1:29:00 PM
How the Globe Can Grind to a Halt
Both developed and emerging nations are living in the shadow of
the globe’s greatest economic threat, the Eurozone crisis
The Eurozone was expected to fall into recession in 2012, dragging
down global economic growth with it
The emerging regions most exposed to the Eurozone crisis is
eastern Europe many have economies integrated with western
Europe and those countries depend of western European bank
finance
Risk and reward:
o Channel 1 trade
Trade ties are the oldest, most visible and generally the
most resilient channel
Recent declines in metal prices signal slowing economic
growth in Europe and elsewhere
Exports to the Eurozone have grown
o Channel 2 capital flows
Flows from the developed to the developing world
multiplied in the boom years before 2008
They still remain nervous and erratic with investors
wary of bad news (like the Eurozone)
Inflows are less predictable which contributes to
increased vulnerability for financing
o Channel 3 bank flows
European banks, which dominate international credit
flows, are cutting back
Borrowers in Asia and Latin America will find other
lenders including fast growing local banks
Europeans could struggle to find alternatives
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