Just a few weeks ago, Europe thought it could escape the worst of the global slowdown. Now it looks like the euro zone, the world's second-largest economy, is headed for a hard landing and perhaps recession, compounding growth troubles around the world.
On Tuesday, Spain suffered its largest-ever business failure as construction group Martinsa-Fadesa, a company with assets of â¬10.8bn ($17.2bn), filed for bankruptcy protection, making it the biggest victim so far of Europe's bursting real estate bubbles. That same day, the euro, boosted by the central bank's inflation-fighting efforts and fears of financial-sector fragility in the US, briefly reached a record high of over $1.60, posing a further threat to Europe's export sector. And an index of investor sentiment in Germany, Europe's biggest economy, fell to its lowest level since the recession of the early 1990s.
