Wake Up Folks! The Eurozone Mess May Be a Time Bomb
Original article published at www.investmentcontrarians.com
I hate that “R” word, but here we go—recession.
Don’t worry too much about the economic recovery in the U.S.; the real threat, as I have said on many occasions, will be the inevitable deterioration of the eurozone. What happens in the eurozone will have a domino effect on the rest of the industrialized and emerging markets worldwide.
Credit ratings agency Standard & Poor’s lowered its growth forecasts for the eurozone and suggested that the findings “paint a bleak picture” for the region. This shouldn’t be a surprise to you; I have long been bearish on the eurozone despite the bailouts and bond buying.
Standard & Poor’s estimates the eurozone will see its GDP growth contract by 0.8% this year, down from the previous -0.7%, followed by no growth in 2013, versus the previous estimate of 0.3% growth.
Spain and Italy were highlighted as the trouble regions. Spain will see its economy contract 1.4% in 2013. The country is working on austerity measures that are expected to be introduced this week, as the country may be looking at resolving its own debt issues and recession before requesting money from the ECB and other lenders.