As European leaders scramble to contain the euro zone debt crisis and make preparations for an orderly default for Greece, on e fund manager argues that Russia’s debt crisis in 1998 could hold an important lesson for the southern European nation.
As Greece edges ever close to a heavily anticipated default, the European Central Bank needs to step up measures to support growth if it wants to prevent the euro zone from slipping back into recession, Barry Eichengreen, Professor of Economics and Political Science at the University of California, Berkeley told CNBC.com.
Plans to force Europe’s banks to increase their equity capital to ensure they can withstand the worsening euro zone debt crisis and restore confidence in the sector have been met with criticism from analysts and business leaders, who fear the proposals will lead to dilution for shareholders and a further backlash.
Billionaire investor George Soros and 95 prominent politicians, business leaders and academics urged euro zone leaders to take swift action to resolve the crisis plaguing the region, calling for the creation of a euro zone treasury and stressing that the euro can only be saved if all 17 countries that share the currency act in unison.
Moody’s ratings agency on Monday put Franco-Belgian financial group Dexia’s three main businesses under review for a downgrade, prompting a sharp drop in the group’s shares and further speculation that the bank may see more government aid after a first bailout in 2008.
Fitch ratings agency on Monday revised down its growth forecasts for all major advanced economies, and said it expected growth in emerging economies to slow as well due to financial market volatility which has dented confidence and caused a drop in private consumption and business investment.
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