INTRODUCTION On May 1998, Belgium, Germany, Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Austria, Portugal and Finland established the eurozone by fulfilling the necessary conditions for the adoption of the euro as their single currency. During the same period, the members of the Executive Board of the ECB were appointed. Our story begins two years later, when Greece becomes accepted as the 12th member of the eurozone countries. In the recent past, a number of EU members, including Greece, Ireland, Portugal, Spain and Belgium, shook the global financial markets with their sovereign debt crisis. In this paper, we will primarily focus on financial crisis in Greece, discussing the current situation and exploring the root If Greece were a company, there would be no question of debt restructuring, because it would be the only viable solution (Pasetti). Continuing with such a comparison, Greece’s main issue would be the “operating losses” they have incurred. The average multinational corporation could solve this problem by boosting revenues and cutting expenses, both very feasible actions and goals for a company. However, the size of Greece’s deficit, and the fact that it is actually a country, make this usually realistic goal nearly impossible. Consider the idea that “in the business of running a nation, as you cut spending, you take a short-term hit to GDP growth, and therefore revenues (tax receipts),” and this is something Greece cannot afford to do (Pasetti). Greece also has the increasingly difficult task of producing enough money to begin to pay down their debt principle. There are many suggestions as to what Greece can, but unfortunately many of these solutions only present new issues. Continuing with the corporation analogy, the current situation in Greece can be considered a dramatic result of the agency problem. If this is the case, we would consider the government to be the managers and the citizens of the country to be the shareholders. Although all parties, citizens included, took part in the corruption that has resulted in the country’s crisis, the Greek government clearly acted without the long-term well being of the country in mind. In more of an
Financial Crisis On The European Economy 12/08/2014 The Impact of the Global Financial Crisis On The European Economy 1. Introduction In the second half of 2007, the Wall Street crisis triggered by the United States subprime mortgage crisis triggered a world financial crisis. In the process financial crisis spread out the globalization, the European financial was the first to be affected. In this project, I will focus on the impact of the European economy and the European debt crisis. The…
Sovereign Debt Crisis Sovereign debt refers to a sovereign country guarantee as their own sovereign to issue bonds or through other ways to borrow the money from the foreign countries and international organizations. Because of most of sovereign debt evaluate by foreign currency and borrow from international agencies, foreign governments or international financial institutions. Therefore, once debt credit rating of the country is reduced, it will lead to a sovereign debt crisis. Debt crisis refers…
What role does the IMF play in the European Debt Crisis? Causes and Implications A number of economic misfortunes that started in 2002 created a European fiscal dilemma, including increasing debt experienced by the banks and governments of several European countries. It is believed that the uncontrolled debt led to the fiscal predicament that extended to grave proportions. Currently, at least 16 European countries are in debt. Among the countries most affected are Greece, Spain, Ireland, and…
Control Abstract This paper is concerned with the concepts of accountability; representation and control explain the euro debt crisis in detail. The author takes a deeper journey into the meaning of occurs of Euro sovereign debt crisis by use of definition of ARC to in-depth explain this issue. We propose further examination of the ARC relating to the Euro sovereign debt crisis in order to propose a prosperous and harmonious of Euro zone. Table of Content Abstract 1 1. Introduction 4 2. Summary…
economy is quite a broad topic, I’ll just focus on the main points of interest in France, such as unemployment rates, the Euro crisis, and finally on a more positive note, the perceived strengths of the economy. 2. As the French economy is quite a broad topic, I’ll just focus on the main points of interest in France, such as unemployment rates, the Euro crisis, and finally on a more positive note, the perceived strengths of the economy. 2. The French Economy There is a popular…
The Italian Bank Scandal and its Involvement in the Current Financial Crisis Introduction When you borrow or invest money, research should always be done in order to insure safe movements of your hard-earned paycheck. Looking at the debt crisis Italy is currently in caused by issuing bad loans, one can see reasons for smart investment. When loans are given our banks don’t always have money to supply the investor therefore causing them to use other investor’s money. Even though this sounds detrimental…
in Euro Crisis Introduction Compared with the worldwide financial crisis happened since 2008, the European sovereign debt crisis has been the most serious problem for the ECM. This crisis, also called “the Euro Crisis”, has been regarded as the most serious financial crisis at least since 1930s. This crisis began with the Greek fiscal crisis in the autumn of 2009, and then it evolved into the “PIIGS Crisis”—five main European countries…
* Introduction Economic crisis in Greece affected to all EU countries. In this argument paper, I will define the economic crisis. Then, I will present a brief background about economic crisis in Greece. After that, I will give the two sides of this argument about whether European Union and Greece win or lose in this crisis. Finally, my opinion. * What’s economic crisis Economic crisis is the sudden disruption occurs to the economic balance in a country or several countries. It calls in particular…
Abstract The global financial crisis that began in 2007 continues to evolve and spread, it affects every country in the world. A dangerous economic instability has settled in Europe that threatens to melt down the single currency. The purpose of this research is to identify what is the future if the current crisis continues and if the Euro disappears. After examining the current situation of the crisis and its effects on each country, many questions can be asked and assumptions can be made on…
International financial markets have been beset by the European sovereign debt crisis during 2010-2012, leading to high volatility of financial market and recession of the economies as well. The reason why the extensive impacts on financial markets could be triggered by the government debt problems from a few relatively small economies causes a heated discuss. In this essay, we intend to discuss the contagion effect of sovereign debt crisis among financial markets by analyzing the prior studies on…
