CFR.org - Return of the Eurozone Crisis

CFR.org - Return of the Eurozone Crisis
September 7, 2011

Author:	Christopher Alessi, Associate Staff Writer

Flags are reflected in a window at the European Council building. (Thierry Roge/Courtesy Reuters)

The eurozone sovereign debt crisis is again feeding European market volatility. After a steep drop Monday and Tuesday, stocks recovered somewhat Wednesday following a ruling by the German high court (Guardian) upholding the constitutionality of the country's participation in recent eurozone bailouts.

But political considerations (Reuters) continue to compound the continent's economic uncertainty. Italy is facing rising government bond yields--raising the amount it must pay to borrow in markets--as it struggles to push through strict austerity measures to tackle its mounting public debt. The so-called troika--the European Union, European Central Bank (ECB), and International Monetary Fund (IMF)--signaled that Greece has been stalling on the implementation of its austerity program, while investors worried once again about an imminent Greek default. At the same time, German Chancellor Angela Merkel is facing resistance (WSJ) from within her own party over a recent EU decision to enlarge the temporary eurozone bailout mechanism, the European Financial Stability Fund (EFSF).

http://www.cfr.org/financial-crises/return-eurozone-crisis/p25769

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