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Higher Euro Zone Current Account Surplus -
A higher Euro Zone current account surplus is good news for those concerned about a possible downward direction of the Euro. According to press reports, the higher Euro Zone current account surplus is largely because of increased exports or goods and services. This indicates a stronger economy that many anticipated in light of austerity measures being put in place across the continent. The Euro Zone’s current difficulties started with the 2008 market crash which ushered in the worst global recession in three quarters of a century. Many Euro Zone budgets were dependent upon continued strong growth as debt levels were high throughout the Euro Zone.
A couple of years ago it came to light that five members of the European Union, Portugal, Ireland, Italy, Greece, and Spain were, to varying degrees, at risk to default on their national debts. They were nicknamed the “PIIGS” group. Greece became the focus of international attention as the worst case scenario. After receiving more than $100 Billion in funds two years ago the country was at risk for being unable to pay for expiring government bonds in March of 2012. The drama leading up to this date drove the Euro up and down depending on if the news for a successful bailout was positive or negative. In general the order of the day was how to short the Euro.
Along the way to a successful bailout by other members of the Euro Zone, the European Central Bank, and the International Monetary Fund, there were riots in Greece over lost pension and health care benefits. Countries across the Euro Zone agreed to reduce their national budgets and abide by austerity measures in order to avoid a spread of the Euro Zone debt dilemma from the Southern tier of nation to the more prosperous economic core of the Euro Zone. The austerity measures are likely to cause a recession in the European Union, according to many economic forecasters. The recently higher Euro Zone current account surplus, therefore, is excellent news for an economy wracked by doubt and debt as it tries to claw its way out of what has come to be called the “Great Recession.” The issue of the day may well become how invest in Euro.