The Yomiuri Shimbun (Nov. 28, 2011)
Measures to contain crises in U.S., EU too slow
欧米経済混乱 余りにも遅い危機封じ込め策(11月27日付・読売社説)

There is no resolution in sight for Europe's debt crisis, while in the United States, talks between Republicans and Democrats collapsed over the issue of slashing the U.S. federal deficit.

This is a serious situation in which the economic turmoil in the United States and European countries may spread to other economies.

European countries and the United States need to act quickly to contain the crisis.

Indexes of major stock markets around the world, including those in Western economies and Asia, declined across the board last week.

Tokyo stocks fell below 8,200 for the first time in about 32 months.

On foreign exchange markets, the euro fell as low as the 102 yen level against the yen.

The major factor that roiled the markets is that eurozone countries have been slow to work out measures to deal with the sovereign debt crisis, and Germany and France have failed to coordinate their efforts to tackle the crisis.

In Italy, the country most affected by the debt crisis triggered by Greece, there was a change of administration.  ギリシャ危機が飛び火したイタリアでは、政権が交代したが、

But the market apparently remains skeptical about whether the new government can effectively carry out fiscal reconstruction.


Italian bond yields hit 7%

For this reason, the yield on 10-year Italian government bonds rose to the 7-percent level again, bringing into question the country's ability to put its fiscal house in order on its own.

The yields on government bonds of other European countries, including Spain and France, have also risen.

One shocking development is that Germany failed to raise as much money as it hoped in a recent auction of 10-year bonds, reckoned to be the most creditworthy bonds in Europe.

Institutional investors have apparently shied away from buying.

Germany is considered to be the "final fortress" in the battle to resolve the debt crisis.

Precautions are needed to prevent the credit uncertainty from spreading further.

The government bonds of Portugal and Hungary were also downgraded recently.

European countries must, first of all, implement measures to assist Greece, the epicenter of the crisis, and stem the crisis from spreading beyond Italy.

Decisions have been made too slowly on concrete steps to expand the European Financial Stability Facility, the entity tasked with supporting crisis-hit eurozone countries.

To stabilize the market, it is essential for both Germany and France to join forces and deal with the issue promptly.

The European Union has proposed the 17-member eurozone countries issue "euro bonds" to tide over the crisis.


EU looks to common bonds

The EU has a common currency in the euro.

However, as the fiscal conditions differ among the member countries, the EU has concluded it would be better to monitor the fiscal conditions of member countries as a precondition for issuing common bonds.

We can understand the purpose of the common bond, but these reforms cannot deal with the currently raging crisis.

The EU nations should prioritize their policies.

On the other hand, it is also worrisome that in the United States, the talks between Republicans and Democrats collapsed over concrete steps to slash U.S. deficit spending by at least 1.2 trillion dollars over the next 10 years.

The collapse came as the sides failed to iron out their differences, with Democrats calling for increasing taxes on the rich and cutting government spending, and Republicans opposing tax increases.

The road to the country's fiscal reconstruction remains uncertain.

If the turmoil over fiscal management and in politics continues in conjunction with political jockeying with an eye to next year's presidential election, credit-rating agencies may again downgrade U.S. government bonds, as they did this summer.

The global economy remains on a tight-rope.

It needs to be stabilized as quickly as possible.

(From The Yomiuri Shimbun, Nov. 27, 2011)
(2011年11月27日01時22分  読売新聞)