Monday, January 30, 2012

Is Europe bringing out the bazooka yet?

Davos, Switzerland (CNN) – “Bazooka” is competing for word of the year so far. As in, Europe needs to bring out its big bazooka to deal with the debt crisis in which it has been embroiled for nearly two years now.

Mexican President Felipe Calderon, head of the G20 group of countries, brandished the word with gusto at the World Economic Forum in Davos, declaring “we need to take out the bazooka immediately before the powder gets wet.”

Calderon compared the European situation to the economic crisis in Mexico in 1995. That crisis – referred to as “the first financial crisis of the twenty-first century” – exploded after a boom time and the influx of capital. The country was then bailed by the International Monetary Fund, and another country’s money – in this case the U.S. So far, so familiar.

Calderon pointed to the return of confidence that followed the international aid package, noting the same needed to occur in Europe. “The problem is not the money, the problem is the confidence,” he said. Read More