The contagion from the European economic crisis continues to spread. Because the East Asian economies continue to rely on exports, the looming recession in Europe will reduce economic activity in Asia. Many of the Asian countries have made half-hearted efforts to shift their economic activity away from export promotion to domestic consumption. Their failure to do so means that they cannot escape a slowdown either. So the US will slowdown because of the increased credit risk affecting US banks, and Asia will slow down because of a lack of demand. Unless something changes these dynamics, a global slowdown is inevitable.
The US and other nations have intensified their sanctions against Iran. Sanctions have a spotty record of effectiveness, and they often tend to punish the country as a whole and not the decision-makers of the offending country. The move could simply be an attempt to exhaust all peaceful alternatives to persuade Iran to change course on its nuclear program. Or it could be a sincere attempt to persuade the decision-makers in Iran that the costs of pursuing nuclear weapons is too high. Or it could be an attempt to divide the Iranian leadership which is know to be at loggerheads with each other. We’ll have to watch the next moves before we can decide which is which.
The “German problem” resurfaces. We’ll see how far the resentment goes. It’s likely, however, to increase over the next few months unless the Germans alter their position concerning the lending policies of the European Central Bank.
World Politics News 
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