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The great danger of any economic slowdown is that it feeds on itself. We already see signs of this in the United States. Weaker consumer spending and business investment hurt corporate profits, depressing stock prices and confidence, which then harm consumer spending and business investment. The same thing can happen on a global scale. When things go bad, countries that were muddling along, despite huge problems, discover that they can no longer cope. Their budget, debt or trade troubles worsen, and the fallout spreads to other countries through lower imports or loan defaults.
The potential for a chain reaction is why Argentina matters. It could trigger the next global financial crisis. Since late 1998 it has endured a stubborn recession. Unemployment is up from 13 to 15 percent, according to the International Monetary Fund (IMF). The government of President Fernando de la Rua is wildly unpopular.…
Source: HighBeam Research, Is Argentina A Time Bomb? Its debt problems could trigger a new...