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World Economies

May 2, 2012 – 5:06 pm

As Brazil and Australia join India and China, and for that matter the U.S. in monetary easing to spur their economies Europe becomes less of a worry. To be sure Europe is still in the news and that ongoing brutal crisis will cause volatility but it won’t stop the rest of the world from growing. The worry will cause stock markets to stutter but that is about it. That stutter will give those still out of the market an opportunity to get in for the next leg up.

Elections in France and Greece this week will likely see weaker governments in control. The new governments will be reluctant if not downright resistant to implementing any more austerity controls. What that might mean for Greece is that they may leave the EU. That is not likely an option for France. It will mean higher interest rates for their debt, something neither country can afford. At the same time maybe the new governments will attempt some type of growth policies. The problem with that is that they can’t do it by offering cheap money. They do not control the Euro so they can’t print and inflate their way out of their problems. Therefore, what will result is confusion and fear which will push interest rates on their debt higher and that only adds to the problem.

Still, while the rest of the world is easing their monetary policies because they have room to do so, the world economy is not in jeopardy of shrinking into recession, but the economies are not robust either. Maybe that will change when Europe regains its footing but then again there is no telling when that might happen.

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