Europe’s debt problem is a headwind for what remains a disappointing U.S. economic recovery.
There is now broad-based recognition of America’s persistent economic weakness. The Federal Reserve has been forced again to revise downwards its growth projections for both 2011 and 2012.
In order to avoid a repeat of the total Lehman paralysis in the face of an external shock to the U.S. economy three conditions must be met: a banking system that remains robust, no disruptions to money market funds and limited blockage to the plumbing of the country’s payments and settlement system.
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