Economic safety in numbers

Europe’s debt crisis deepened as the sovereign credit ratings of Spain, Portugal and Greece were downgraded in succession, threatening to push the fragile global economy off its recovery track. Standard & Poor’s downgraded Spain’s longer-term currency rating by one notch, Greece’s by three notches (to below investment grade) and Portugal’s by two notches, citing their serious debt problems.

As a result, the euro took a beating and stock markets around the globe tumbled.

With fiscal debt emerging as a key factor in the credit evaluations of countries, the vulnerabilities of debt-ridden economies are affecting financial markets around the world and creating renewed global anxiety.

Many observers fear that the recent downgrades in Europe, in particular, will spread to other European countries saddled with heavy debt and spur another worldwide financial crisis.

The global economy - which is still extremely fragile after the 2008 subprime mortgage debacle in the United States - could be facing yet another crisis.

The Korean market, naturally, will not be immune. Fortunately, however, the local economy won’t likely be immediately affected by the growing global jitters from Europe’s debt problems, as Korean companies in general have little business and financial links with the problematic countries.

The European Union and the International Monetary Fund are also responding quickly with emergency funds to stomp out the fire. Other European countries are also trying their best to contain the damage.

But we need to be fully alert and ready for any result, as we cannot afford another heavy blow.

We should also look inward to fix our own debt problems. The government has already veered toward fiscal tightening. But for such a move to be effective, the government, together with the political front, must first join efforts to cut unnecessary spending.

We must fill up our coffers and strengthen our financial state so that we can be resilient when another crisis comes knocking.