Make us your home page
Instagram

After 3 bumpy years, Europe turns corner on crisis

FRANKFURT, Germany — The worst of Europe's financial crisis appears to be over.

European leaders have taken steps to ease the panic that has plagued the region for three turbulent years. Financial markets are no longer in a state of emergency over Europe's high government debts and weak banks. And this gives politicians from the 17 countries that use the euro breathing room to fix their remaining problems.

Threats remain in Greece and Spain, and Europe's economy is forecast to get worse before it gets better. But an imminent breakup of the euro now seems unlikely, analysts say.

"We are probably well beyond the worst," says Holger Schmieding, chief economist at Berenberg Bank in London. He says occasional flare-ups in financial markets are likely, but "coming waves of turmoil will be less severe."

Evidence that Europe has turned a corner can be found in countries' falling borrowing costs, rising stock markets and a slow but steady stabilization of the region's banking system:

• The interest rates investors are demanding to lend to struggling countries such as Spain and Italy have plunged — a sign that investors are less fearful about defaults. Spain's two-year bonds carry an interest rate, or yield, of just under 3 percent — down from a July 24 peak of 6.6 percent. Italy's bond yields have dropped just as sharply.

• The Stoxx 50 index of leading European shares has surged 26 percent since June 1, while the euro has risen from $1.26 to $1.29 over the same period.

• After months of withdrawals, deposits are trickling back into Greek and Spanish banks, signaling that fears of their imminent financial collapse are abating. And U.S. money market mutual funds loaned 16 percent more to eurozone banks in September. That was the third straight monthly increase in short-term funding to European banks, and follows a 70 percent reduction since May 2011.

More proof the crisis is easing: Gatherings of European financial ministers no longer cause global stock and bond markets to gyrate with every sign of progress or a setback.

As financial-market panic recedes, euro leaders have more time to try to fix the flaws in their currency union. Among the challenges are reducing regulations and other costs for businesses in order to stimulate economic growth, and imposing more centralized authority over budgets to prevent countries from ever again spending beyond their means. That's important because a major cause of the crisis was Greece's overspending during the calm years after the euro's introduction in 1999, and Italy's failure to cut the high levels of debt it joined with.

Much of the credit for easing Europe's financial crisis goes to the European Central Bank, which has become more aggressive over the past year under the leadership of Mario Draghi.

"Financial market confidence has visibly improved," Draghi said Thursday.

After 3 bumpy years, Europe turns corner on crisis 11/09/12 [Last modified: Friday, November 9, 2012 8:37pm]
Photo reprints | Article reprints

    

Join the discussion: Click to view comments, add yours

Loading...
  1. New stores coming to Tyrone Square Mall, like Bath & Body Works

    Retail

    Tyrone Square Mall will welcome a half dozen new stores, like Bath & Body Works and MidiCi's The Neapolitan Pizza Company, this summer.

  2. Target Corp. reaches $18.5 million settlement with 47 states over data breach

    Retail

    Target Corp. has agreed to pay Florida $928,963 out of a newly-announced $18.5 million settlement over a huge data breach that occurred in late 2013.

    Forty-seven states and the District of Columbia have reached an $18.5 million settlement with Target Corp. to resolve the states' probe into the discounter's massive pre-Christmas data breach in 2013. 
[Associated Press]
  3. Gov. Rick Scott's family history of alcohol abuse could decide 'liquor wall' bill

    Legislature

    TALLAHASSEE — Gov. Rick Scott must decide Wednesday whether to let Walmart and other big-box stores sell liquor, and he says a factor in his decision is the history of alcohol abuse in his family.

    Florida Governor Rick Scott is considering a veto of a bill that would allow Walmart, Target and other big box retail stores to sell liquor. [Andres Leiva | Tampa Bay Times]
  4. Tampa lands Super Bowl in 2021

    Bucs

    TAMPA — Record rainfall in Los Angeles ultimately may end Tampa Bay's drought of hosting the Super Bowl.

    Mike Tomlin celebrates with LaMarr Woodley and Troy Polamalu after the Steelers beat the Cardinals in 


Super Bowl XLIII  on February 1, 2009 at Raymond James Stadium in Tampa. [Times files (2009)
  5. As St. Petersburg's Jabil Circuit broadens its business, it shrinks its name to Jabil

    Corporate

    St. Petersburg's Fortune 500 company, Jabil Circuit, informally tossed aside the "Circuit" in its name some time ago. That's because circuit board manufacturing, the company's core business for decades, has been squeezed out by a broader business agenda ranging from consumer packaging to supply chain management.

    Jabil Circuit informally dropped "Circuit" from its marketing material and signage, like at its St. Petersburg headquarters, years ago. Now it's official.
[Times file photo]