Auditing: European Union and Important Link Essay

Submitted By lisa2222
Words: 313
Pages: 2

The affect of European economy on US markets

The EU and the US economies account together for about half the entire world GDP and for nearly a third of word trade flows. The relationship defines the shape of global economy as a whole as either the EU or the US is also the largest trade and investment partner for almost all other countries in the global economy. The US depend on Europe for stability in our own markets. If European economy failed to make good on bonds and debts , it will affect on US export market and financial market. The first important link is export market. More than a quarter of U.S exports go to Europe . At multinational corporations from the U.S they get a large chunk of their sales from Europe . Those are developed markets. A lot of things that the United States produces that are more advanced , whether they’re high tech conductors or some higher end cars . They go to Europe and Europrean’s want them . That’s why it’s really important for an advanced market to be able to buy our products that we make , especially when we are importing from places like China that are making cheaper products. The other important link is through financial markets. If the European debt fails , US financial institutions that issued swaps or unfunded guarantees against the debt are on the hook for large sums that they do not have. The US financial system probably couldn’t survive its default on the swaps it has issued. Therefore , the failure of European…