Global Economy, Europe Debt Crisis | featured news

Greece's economy shrank further in the first three months of 2012, shriveling at a yearly rate of 6.5 percent against a backdrop of painful wage cuts, tax hikes and record unemployment.

The European Commission will propose far-reaching powers for regulators to deal with failing banks on Wednesday, a step towards the banking union the European Central Bank has demanded to secure the euro's future.

When Jean-Claude Trichet called last June for the creation of a European finance ministry with power over national budgets, the idea seemed fanciful, a distant dream that would take years or even decades to realize, if it ever came to be.

Spain, the latest combat zone in Europe's long-running debt wars, urged the euro zone to set up a new fiscal authority to manage the bloc's finances and send a clear signal to markets that the single currency project is irreversible.

Spanish 10-year borrowing costs neared the 7 percent danger level and Bankia shares hit record lows on Monday after the government, struggling to sort out its finances, proposed putting sovereign debt into the struggling lender.

Germany dismissed a French-led call for euro zone nations to issue common bonds, a day before a European Union leaders' summit which investors are looking to for new measures to counter the bloc's debt crisis.

President Obama and leaders of the world’s other leading economies Saturday embraced a policy of growth over austerity in Europe as they met on the cloistered grounds of Camp David to talk about fending off a spread of the Eurozone crisis.

The anti-austerity backlash - as seen at the polls in France and Greece - is already shaping a new debate in Europe... Europe's leaders will address a conundrum that divides economists: can you have austerity and growth at the same time?

There has been a great deal of austerity-bashing -- that is to say Germany-bashing -- this French election season. Buoyed by his success in the first round, Socialist candidate Francois Hollande declared last Thursday: "It is not for Germany to decide for the rest of Europe." Vowing to reset Europe on a growth path, he said, "we're not just any country, we can change the situation."