Essays on The Eurozone Debt Crisis Report

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The paper "The Eurozone Debt Crisis" is a great example of a report on macro and microeconomics. The Eurozone debt crisis is a financial crisis that has made it rather difficult or impossible for some European countries in the euro area to refund their government debts, maybe by the aid of third parties for example other money lending institutions, banks, or nations. By late 2009, fears of debt crisis crept among investors due to the steadily increasing government debts. In 2010, the debt crisis had raised up public debt in the euro, Europe’ s common currency, zone to such levels that many investors feared that the euro would collapse.

The countries which were affected by the crisis included Greece, Ireland, Portugal, Spain, and Italy. The bonds between these countries (Greece, Ireland, Portugal, Spain, and Italy) and the European Union members, most considerably Germany, had drastically widened. On May 2nd, the European countries and the International Monetary Fund (IMF) gave a € 110 billion loan to Greece. In return, Greece agreed to Eurozone measures and conditions. By May 2010, Europe’ s Finance Ministers approved a rescue package totaling 750 billion Euros.

In July 2011, Greece was struggling for another bailout and the problems threatened to spread over into Italy and even Spain. By August the same year, the European Central Bank (ECB) signaled it was ready to begin buying the Spanish and even Italian securities to counter the debt problem. However, the European Central Bank (ECB) would potentially have to buy up to half the Italian and Spanish trading debt, which was the largest risk-pulling support ever engineered in the whole of Europe. Background information and causes Before the debt crisis of 2010- 2011, numerous governments of Europe most notably were those of Greece, Ireland, Portugal, Spain, and Italy, were able to service their deficits at low-interest rates.

Some had ended up accumulating unsustainable levels of public loans. Such reckless financial behavior was only made possible as the markets assumed that if the national financial situations worsened, the governments would be in a position to be bailed out by other European nations of the Eurozone in order to prevent a breakup of the Euro. The Euro came with a hidden bailout guarantee allowing governments to borrow excess loans.

References

"European Markets Surge". The Wall Street Journal. 10 May 2010. Retrieved 30th April 2012.

"European fiscal union: what the experts say". The Guardian (2nd December 2011), London.

George Matlock (16th February 2010). "Peripheral euro zone government bond spreads widen. Reuters. Retrieved 30th April 2012.

"Leaders agree euro zone debt deal after late-night talks". BBC News. 27th October 2011. Retrieved 29th April 2012.

Paul Krugman (25th February 2012). "European Crisis Realities". The New York Times. Retrieved 30 April 2012.

Pidd, Helen (2nd December 2011). "Angela Merkel vows to create 'fiscal union' across eurozone" The Guardian, London. Retrieved 30th April 2012.

Spiegel, D., 2011. "How the Euro Became Europe's Greatest Threat"

Wearden, Graeme (20th September 2011). "EU debt crisis: Italy hit with rating downgrade". The Guardian, United Kingdom. Retrieved on 30th April, 2012.

Willem Sels (27th February 2012). "Greek rescue package is no long term solution, says HSBC's Willem Sels" Investment Europe.

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