February 4, 2010 -
While the U.S. is working toward revitalizing its economy, recent financial troubles in Europe are causing worries that may add to the global economic crisis and slow down recovery. Amidst findings that the U.S. labor market is not doing as well as expected, and the mounting debt held by some governments in Europe, European stock markets have taken a turn for the worse, causing U.S. stocks to fall, too.

The recent European debt crisis was instrumental in stock activity last week, where the financial struggle of such countries as Portugal and Greece rocked stock markets around the world, even decreasing the value of the euro.

According to the New York Times, the Labor Department reported 25,000 more first-time claims for unemployment benefits than expected by economists. It was hoped that the report would bring optimism, and show how unemployment was improving in the U.S., but the report instead brought disappointment, as well as distress. This is seen in the fall of stock prices after the release of the report.

Economists are cautious about these events, waiting to see the full effect of this bad week in the markets before attempting to solve everything. “The question now is, how big is this fire going to be?” said Uri D. Landesman, head of global growth at ING, to the New York Times. “What is panic, and what is legitimate? We don’t know at this point.”

Discussion is occurring among economists about which road to take in attempting to fix the problems. Some are looking to the richer European countries of France, Germany, and the Netherlands to bailout their fledgling neighbors. Without such a bailout, the troubling financial news may have a drastic effect on the impending global economy.

As reported in Reuters, John Praveen said, "They're looking at this as the spreading of a contagion. It's not clear at this point whether this will stop at Europe or whether the correction has run its course." Praveen is the chief investment strategist at Prudential International Investments Advisers LLC in Newark, New Jersey.