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7/5/06

Europe Suffers Worrying Wave of Financial Chaos: Matthew Lynn

Bloomberg.com: Opinion

"Europe Suffers Worrying Wave of Financial Chaos: Matthew Lynn

July 5 (Bloomberg) -- First Iceland. Now Turkey. And Hungary is looking wobbly.

Europe is increasingly encircled by financial woes. Its emerging markets are being hit by a wave of speculative selling, pushing currencies into freefall, and prompting big increases in interest rates.

The worrying questions now are: Will those crises turn out to be contagious, as they did in Asia in the last decade?

And, if that is a risk, is there anything the rest of Europe should be doing to support those economies?

After all, economic chaos has a nasty way of leading to political turmoil. And while nobody gets worked up about what happens in Iceland, neither the European Union nor the U.S. can afford political instability in Turkey or Hungary."

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