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What Europe thinks of the super committee’s inaction

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Steve Chiotakis: Debt problems continue to plague folks on both sides of the Atlantic. In Spain over the weekend, voters elected conservative Mariano Rajoy as the country’s new leader. And he’s promising to make tough budget cuts to get a grip on the country’s debt problems.

Here in the U.S. there are only a few days left before a deadline to tackle big budget deficits here. And Congressional super committee members, not able to find common ground, will probably throw in the towel.

Marketplace’s Stephen Beard is with us live and has the latest on how the rest of the world
is looking at another missed debt deadline here in the U.S. Hey Stephen.

Stephen Beard: Hello Steve.

Chiotakis: Are Europeans really paying attention to all this? This super committee and its possible failure?

Beard: They certainly are. There is one more bit of bad news. The fear of course is that if there’s further political gridlock in Washington, there’ll be further downgrades of the U.S. credit rating.

By the way, Steve, this does give the Europeans a small fleeting moment of grim satisfaction, because it was only last week that President Obama was chiding the Europeans for failing to get their debt crisis under control.

Chiotakis: Grim satisfaction. But the U.S. debt problem isn’t anywhere near Greece or Europe, right?

Beard: No. The eurozone debt crisis is much worse and apparently deteriorating. As you said, we’ve just had a new government elected in Spain with a mandate to cut the deficit, and yet Spanish borrowing costs went up this morning. There’s much more pressure on Europe than in the U.S.

Here’s Stephen Lewis, a bond expert with Monument Securities.

Stephen Lewis: The U.S. doesn’t need to act as swiftly as the Europeans authorities, because the consequences of failure for the U.S. administration are not as dire as they probably will be for the Europeans.

After all, he says, there’s the possibility that one or more eurozone governments could go bust, and that the euro itself could break up. No one seriously believes that the U.S. is going to default, or that the dollar would disappear.

Chiotakis: All right, Marketplace’s Stephen Beard joining us from London. Stephen, thanks.

Beard: OK, Steve.

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