Word: european
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...years since, capitalism has transformed the former Soviet vassals. The transition was not always easy. "Shock therapy," slashed budgets and the privatization of state factories and firms stoked corruption and left millions temporarily worse off. But with political stability and reforms (most of them tied to European Union membership), the region went on to enjoy more than a decade of rollicking growth, massive foreign direct investment and steady employment...
...past few months, though, Kapitalizm's jaws have snapped shut. The global credit crunch has hit the economies of Eastern Europe hard. In Hungary and Latvia the International Monetary Fund has stepped in with emergency aid. (Latvia's government collapsed anyway.) Currencies have crashed, leading the European Central Bank to help Hungarians and Poles keep paying their foreign currency-denominated mortgages by pumping in euros. The fear now is that the region's banks could collapse, especially if Western banks yank credit lines to eastern subsidiaries. Such a move would be counterproductive. Western banks, particularly in places such as Austria...
...opened up their capital accounts and sold off their banks to Western Europe at the E.U.'s urging. Financial liberalization and free trade were mantras recited by the E.U. (and others) as the Eastern states readied to join. The policies work. But as Katinka Barysch of the Centre for European Reform in London wrote recently, they have also "left the region exceptionally vulnerable in the downturn." Populist Eastern politicians may now use the crisis, and the perceived lack of Western help, to roll back reforms...
...past weeks and months, governments around the world have been attempting to fight the economic crisis with monetary and fiscal measures. On the monetary side, even prudish authorities like the European Central Bank have joined the U.S. Federal Reserve and the Bank of England in slashing interest rates to create incentives for lending and borrowing. Amidst what started as a credit crunch, this was an essential step toward keeping economies afloat when trust suddenly evaporated not only for risky assets, but also for credit-worthy corporations...
...turns out, America is not the only country turning to protectionist barriers. In a similar vein, French policymakers have included protectionist measures in their stimulus bill, though European Union complaints have made them temper their proposals. Furthermore, for all his talk of avoiding economic nationalism in his speech to the U.S. Congress on Wednesday, British Prime Minister Gordon Brown has called for “British jobs for British workers.” Though the rhetoric of short-term political gain is attractive, it is definitely detrimental for everyone playing the game. Economic nationalism gives rise to a prisoner?...