The European Commission has urged European Union governments to fight the slowdown with a $256 billion plan to jump start economic growth, reports Robert Wielaard for the Associated Press. If the plan goes through, the 27 EU governments would spend 1.5% of the bloc’s entire gross domestic product (GDP) to stop the slowdown.
The cash would come from national governments in the form of tax breaks, credit guarantees for injured industries and soft loans. The remainder would be financed through the EU budget and the European Investment Bank.
SPDR DJ Euro STOXX 50 (FEZ), down 49.2% year-to-date
China is stepping up its own efforts to combat an economic crisis by slashing its interest rate by the largest amount in 11 years, reports Joe Mcdonald for the Associated Press. The rate cut totaled 1.08%, and it’s the fourth cut in three months.
The cut is in addition to a $586 billion stimulus package, which aims to protect the country from a global slowdown through increased spending on highways and other public facilities. The government is demonstrating urgency about increasing private consumption and investment in order to supplement state spending on the package.
While these big moves are a step in the right direction, it’s been shown recently that the damage runs far and deep. A recovery is likely to be slow and steady, rather than immediate.
iShares FTSE/Xinhua China 25 (FXI), down 56.5% year-to-date
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