Obama warns European leaders on Greece amid recession fears
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CHARLOTTE -- President Barack Obama said Europe's leaders need to take decisive action to head off a recession.
“The challenges they face are solvable," the president said at a White House news conference Friday.
At their core the challenges are about government debt held by the 17 countries in the eurozone. Some, like Greece, have a lot -- up to 150 percent of its gross domestic product. They want help from their better-off neighbors, countries like Germany.
Although they share a common currency, each government sets its own monetary policy. That's complicated to say the least.
"There is no ability for the monetary authority to independently address one nation's problem without hurting another nation's problem,” said Harry Bowen, a professor of economics and international business at Queens University.
Bowen compares the European dilemma to a really difficult game of archery.
"The central bank has only one arrow, we'll call it, but it has multiple targets that it needs to hit. It has to hit the Greek target and it has to hit the German target," he said.
The European Union is America's biggest trading partner, so the fear is that a slowdown in European economies will mean a slowdown here.
"If Europe goes into a recession, that means we're selling fewer goods, fewer services," Obama said.
But some economists said the threat isn't that dramatic.
"It's not going to fester, if you will, in the U.S.," said UNC Charlotte economist John Connaughton.
Still, the uncertainty is part of what's spooking U.S. investors.
"So right now we're in this period of sort of optimism-pessimism, optimism-pessimism," Bowen said.
And that's why the White House is pushing for some sort of resolution.
"The sooner that they act and the more decisive and concrete their actions, the sooner people and markets will regain some confidence," Obama said.