The state of the US and European economies throws light on transatlantic contrasts—the US seems to be gradually recovering from the financial crisis its banks unleashed on the world while Europe is imploding at its peripheries.
Look at the recent news flow. The US government said on Friday that the world’s largest economy expanded 3.2% in the first quarter of 2010 on the back of robust consumer spending. There are also early signs that the job market is bottoming out and household savings are inching up after years of wanton profligacy.
Meanwhile, the virus of financial panic is spreading in Europe. Greece is close to default and Hungary on Friday joined the PIIGS (Portugal, Ireland, Iceland, Greece and Spain) on the casualty list, as its currency came under attack. There is already talk of the contagion spreading to the UK, with large budget deficits, public debt and the prospect of a hung House of Commons.
The Asian recovery was a V, the US seems ready for a U while Europe looks like an L.