Financial News

No quick fix to global financial crisis

Investors looking for a quick economic fix to the world’s financial problems are likely to be disappointed by the latest trading figures.

The issue for investors is globalisation has linked the world’s economies in a single chain – and when one wobbles or strengthens, the force is felt somewhere else.

So, while improving factory gate figures in China belay fears of shrinking growth, figures from Europe suggest the malaise of recession in some smaller eurozone economies is now infecting France and Germany.

Manufacturing across the eurozone fell back for the sixth month in a row – including in Europe’s star economy Germany.

The worry is the eurozone is trapped in the mire of a prolonged downturn and will struggle to break free in the coming months.

That worry knocks on to the US and China, as Europe is the biggest market for their exports.

Factories in the US posted the lowest growth figures for 19 months.

US corporations are already explaining to Wall Street that the strong dollar versus the weakening euro and decreasing demand in Europe is hitting profits.

Among the company’s citing these reasons are Whirlpool, the world’s largest white goods maker, and Texas Instruments.

Meanwhile, the euro crisis looks set to worsen as Murcia joins Valencia as the second Spanish region seeking a government bail out. Murcia is the location for the €1 billion Paramount Theme Park, where building is due to start imminently.

The hope for Murcia, one of Spain’s poorer regions, was that the park would trigger a massive infrastructure spend – a new international airport has already been built – followed by a boost in housing.

Although the foundation stone was laid in May, little news about future plans has leaked out of the theme park site since.

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