The World as One

Over the last few days Barack Obama has joined the fray on the great eurozone debate and agreed with David Cameron that an ‘immediate plan’ was needed to stabilise the single currency and restore market confidence. He has spoken to Angela Merkel and Italian Prime Minister Mario Monti on the need to strengthen the eurozone. Some may say what business is it of his. I say good for him.

This is despite the regular ‘Beige Book’ survey of the US economy showing a rise in growth over the past two months. For those who wonder what the Beige Book is, it’s a survey that canvasses opinion from business across the US for the Federal Reserve eight times a year and is hugely important to the central bank in helping them set their monetary policy.

Some could argue that the US has limited exposure from fallout of the eurozone crisis. In fact David Cameron has reported that the British economy is six times more exposed to the eurozone than the US economy. True but then again the US isn’t completely untouched by what happens in Europe as there is a huge risk of contagion to key oversees American markets and a euro break up could have a devastating effect on the US exposure to trade with emerging markets, in particular China. So they are right to be concerned. Warren Buffet, billionaire investor and respected commentator has acknowledged that the chance of the US slipping back into recession are ‘very low’ unless the eurozone crisis escalates further with ‘events in Europe developing in some way that spills over here big time’.

So world leaders have a right to have their say. We must be prepared to accept that the global economy has changed significantly and they all have a part to play in helping to stabilise world markets. Individual states cannot afford to operate as a silo unit. 

Nor would we want them to…