Jeremy Hobson: To Europe, where economic sentiment is at a three year low, according to new figures out today. Though global markets seem to be putting that aside and focusing instead on a statement that came last week from the head of the European Central Bank. Mario Draghi said he’d do whatever it takes to keep the euro together.
Julia Coronado is chief economist with the investment bank BNP Paribas and she’s with us live now, as she is each Monday. Good morning.
Julia Coronado: Good morning.
Hobson: Well Julia what can the European Central Bank do now to live up to those expectations?
Coronado: Well of course, as we’ve seen time and again the danger is they overpromise and underdeliver. But they are having their policy meeting this week. And we think what we heard from President Draghi last week suggests that they are going to reinitiate their bond buying program to lower the borrowing costs for Spain and Italy in an attempt to ease the pressure on those two countries.
Hobson: And that’s gotten everyone really excited?
Coronado: Yes, well it doesn’t fix a lot of the problems but it does indicate that resolve to not let things escalate any further, and to hopefully tackle the root of the problem. It does basically just buy a little time.
Hobson: Now, U.S. Treasury Secretary Tim Geithner is in Europe today for meetings. How much of an impact is the slowdown over there having on our economy right now?
Coronado: We are starting to see the market turbulence take its toll on the European economy. So before, it was just a market crisis. Now, it’s a real economic reality in Europe. They’re in recession, they’re feeling the pain and then the global economy has slowed down. And we’re starting to feel that in the U.S. on the ground — we’re starting to see hiring slow; we’re starting to see exports slow; growth slow. So, these are the things that have been supporting the recovery, and it is a worry that this crisis is beginning to effect the real people in the real economy.
Hobson: Julia Coronado, chief economist with the investment bank BNP Paribas, thanks as always.
Coronado: It’s a pleasure.
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