Euro Virus

   With a couple of exceptions, a fiscal virus is spreading through the nations of the European Union. And since the financial market is a worldwide bourse, the virus may spread to America.
   Recent economic statistics show a recovery under way in the U.S., but many nations across the pond are still struggling.
   Third quarter GDP in America grew by 2.7 percent, according to the number crunchers, with the unemployment rate dropping. In Europe, meanwhile, the recession continues and the jobless rate rises.
   During the same period, Gross Domestic Product (GDP), a generally accepted gauge of economic performance, and adjusted for seasonal variations, fell by about half a percentage point in both the 17 countries that use the euro as their national currency, as well as in all 27 countries of the European Union.
   The unemployment rate throughout Europe during October reached an all time high of 11.7 percent, up from 11.6 percent the month before and 10.4 percent a year ago. In the U.S., the jobless rate has dropped below 10 percent.
   And while Democrats in America luxuriate in the warmth of improving statistics, the chief of the European Central Bank warns that the euro won't recover from crisis until late next year. Moreover, government austerity will stunt economic growth.
   The exceptions to the European economic malaise are Germany and Austria, where the unemployment rate is steady or falling. In Germany, the rate is steady at 5.4 percent, and in Austria, the jobless rate dropped a notch to just 4.3 percent, according to published data. Unemployment in Spain, meanwhile, rose to 26.2 percent, and in Italy to 11.1 percent.
   The obvious consequence of the differing rates is that those in the south of Europe without jobs will migrate to the areas where workers are needed. It's the same phenomenon that has brought workers to America. People go where the jobs are.
   The lesson for America is to avoid the fear factor, and not let the financial specter haunting Europe emigrate to the U.S.
   This fear factor has pushed governments to reduce spending to bring down borrowing rates, and bankers have been reluctant to lend, making less cash available for private sector investment, which leads to less hiring and more unemployment, which leads to less consumer spending, which aggravates a recessionary trend.
   The borrowing cost (interest rate) for the Spanish government is above 5 percent, compared to less than 2 percent for Germany. The American government's borrowing cost also remains extremely low, a market indication of fiscal health. Investor yields for two-year and five-year notes have fallen below 1 percent, and for ten-year Treasury securities below 2 percent.
   This means that the U.S. government -- and that of Germany -- can easily borrow in the world financial market to finance its spending plans, while the government of Spain cannot.
   But fear can carry a fiscal virus, leading to calls for austerity here, even as such calls are heard in Spain and other European nations. And if the money flow is blocked, a national economy suffers a painful stroke.
   Yet there are some who say a nation must endure the pain and patiently wait for the private sector to rescue itself.
   This, too, shall pass, they say. Such an attitude works well for those who have the wherewithal to endure. As for those who are not as fortunate . . .