Fears that the debt crisis will spread to a big economy like Spain should compel Europe to come together to meet this challenge.
The debt crisis in Europe is severely testing European unity – with harmful repercussions for the global economy if solidarity fails.
So far, the European Union, with the help of the International Monetary Fund, has been able to “bail out” the debt-burdened countries of Greece and Ireland, saving them from default. The EU could probably handle unsteady Portugal as well.
But Spain? That economy is two times the size of the other three put together. Madrid has begun austerity measures to prove its creditworthiness, but so had Ireland – until it became clear that its banks were in bigger trouble than first thought.
Spreading economic turmoil in Europe could severely affect global recovery. The United States, for instance, sells 25 percent of its exports to Europe, whose economy represents about a fifth of the world’s.