Saturday, May 16, 2009

The EU Bearing Brunt of Global Downturn

The Economist discusses how the EU is weathering the global financial storm (the ship is sinking).

The article hints at two theories as to why this is so:

1) Mercanitlism. If you rely on exports, a positive trade balance, then you get the worst of it when the consumer nations cut back to essentials.

2) Rigid labor markets. If a country does not allow employers to fire workers in a downturn, then its companies will just take on huge losses until they go under.

Anyone have an opinion on which cause is more significant?