Davos Urges Europe To Stay The Course On Austerity And Fiscal Reform
At the recent annual meeting of the World Economic Forum in Davos, financial policies around the world were addressed by the world’s most prominent economic, politician and business leaders. Most of them encouraged across the board fiscal reform and spending cuts. Europe was commended for their tightening fiscal policies and then urged to stay the course and to continue forward with their plan to slash budget deficits.
Is Austerity And Fiscal Reform Conducive To Economic Growth In Europe?
In spite of the encouragement to tighten up fiscal reform, the Eurozone is anticipating still another year of contraction. Many are concerned that austerity actually causes greater economic problems. South Africa’s National Planning Minister, Trevor Manuel made the comment in a recent CNN interview “Deficits are going to continue to grow in the absence of growth.” George Soros concurs that austerity is a giant economic trap.
The Eurozone’s Economy Is Much Improved After Fiscal Reform
In spite of the many concerns over austerity, the Eurozone today, is much improved from last year at this time. Much of the improvement can be credited to Mario Draghi, President of the ECB who committed to doing what it takes to save the struggling European nations and to keep the Eurozone together. Both Draghi and German Chancellor Angela Merkel feel that long-term sustainable growth can only be accomplished through reform. In other words, debt is not conducive to long-term growth. Austerity may hurt in the short-term, but in the long run it may protect you from major problems down the road.
As an investor, how do you think the improving European markets will impact your investments? The world-wide economy and the challenges we are facing are vastly different from a year ago. If you have not reconsidered your investment position in light of today’s economic situation, it may be time to do so. For more information contact a Redhawk Advisor near you.