U.S.- European Union Summit ~ Obama Says US Needs Stable Eurozone

Monday, November 28, 2011

Obama Says US Needs Stable Eurozone

U.S. President Barack Obama urged European leaders to act decisively to resolve Europe's burgeoning debt crisis, saying a solution is crucially important to the U.S. economy as well.

Speaking after a U.S.-European Union summit Monday at the White House, Mr. Obama said it will be much more difficult for the U.S. to create good jobs if Europe, one of its most important trading partners, is in trouble. The president said the U.S. is prepared to “do our part,” but he emphasized the problem was ultimately Europe's leaders to solve.

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European Council President Herman Van Rompuy said a “roadmap” spelling out a new eurozone economic plan would be presented in early December. He and European Commission President Jose Manuel Barroso called for uniform, binding controls over government spending in the countries that use the euro currency.

Debt-ridden Greece, Ireland and and Portugal have already been forced to secure international bailouts, while Italy, Spain and other countries are facing sharply increased borrowing costs.

The continent's economic leaders — Germany and France — are beginning to negotiate a new fiscal agreement that would enforce budget discipline across the eurozone. This is something individual countries have long resisted, fearing the loss of sovereign control.

News of these proposals prompted stock markets around the world to rally Monday after the meeting.

But a new report says the eurozone's economy is falling into a recession and a major credit rating agency warned in a statement Monday that the probability of multiple debt defaults in the eurozone is “no longer negligible.”

The Organization for Economic Cooperation and Development said it expects the eurozone economy will shrink by an annualized rate of one percent in the last three months of the year, and by another four-tenths of one percent in the first quarter of 2012. The OECD, a policy forum for 34 advanced economies, said the European Central Bank needs to intervene decisively to stabilize the continent's debt crisis.

White House spokesman Jay Carney said the European debt crisis has “created a headwind for much of the year” on the sluggish U.S. economy. He said the U.S. government believes it is “critical” for European leaders to “move forcefully” to resolve the debt issue and that the eurozone nations have the financial capacity to deal with it.

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