Week Nine Article

Central Banker Calls Euro Zone Structure ‘Unsustainable’

New York Times http://www.nytimes.com/2012/06/01/business/global/greek-banks-regain-access-to-european-central-bank-loans.html?_r=1&ref=global-home 

The European Central Bank president, Mario Draghi, said that the survival of the Euro is at stake.  Draghi warned political leaders that the Central Bank was at the limits of its powers and that it is now up to political leaders to take action.  Draghi stated that the structure of the euro is “unsustainable unless further steps are undertaken.” The article reports that Europe is in need of a similar bailout that was implemented in the 2008 crisis, but this time Europe faces more obstacles than the US because of all the different European economies. Draghi made comments that put blame on political leaders for delaying action.

With Greece in danger of falling out of the euro zone and Spain in danger of a banking crisis, Turkey may also be in position for negative affects.   If the euro zone fails, the economic affects will be felt throughout Europe and probably the rest of the world.  Turkey is very close to the Euro zone and would definitely be affected by an economic crisis in Europe.  My research on the financial stability of Turkey showed that their economy is very sensitive to foreign demand. If Greece and Spain fail, certainly foreign demand for Turkey will fall and they will see huge affects on GDP.