Got a tricky question? Receive an answer from students like you! Try us!

The European sovereign debt crisis during 2010-2011 - Essay Example

Only on StudentShare
Masters
Essay
Finance & Accounting
Pages 8 (2008 words)

Summary

The European Sovereign Debt crisis during 2010-2011 Name: Class: Date: Table of Contents Table of Contents 1 Introduction 2 Political Dynamics of the Eurozone Economy 3 Financial Threat to Banks from Sovereign Debt Holdings 4 The PIGS – Portugal, Italy, Greece, and Spain 6 The Greek Sovereign Debt Crisis and Effect on the Stock Markets 7 Correlation of Global Financial Markets & Hedging Risk 9 Conclusion 10 Sources Cited 11 Introduction The European Sovereign Debt Crisis has been a main factor in stock market performance in the years 2010 – 2011, primarily because of the large potential exposure that global banks may have to capital losses if the sovereign debt that they hold in governmen…

Extract of sample
The European sovereign debt crisis during 2010-2011

Historically, when a sovereign nation’s governmental debt exceeds the annual GDP of the country, the risk increases proportionately that the country will default on all or a portion of the debt requirements, particularly in the circumstances where the debt instruments are held by foreigners or in another currency than the national coin. The ability of sovereign nations to generally print money without formal external control is well established and the example of Zimbabwe is an extreme example of this, but the United States has also reached a debt level that is over $15.5 trillion USD or near 100% of the annual GDP outlook, while the economy is also declining and recessionary,. The U.S. Federal Reserve may also print money to bailout banks in the U.S. and abroad, as it has done following the Lehman bankruptcy, but the Eurozone situation is more complex. ...
Download paper
Not exactly what you need?

Related Essays

The European sovereign debt crisis during 2010-2011
Matters involving liability crisis have in the recent years being reported globally, as the level of the sovereign arrears of some of the financial scheme of the world have risen, giving them a threat of failure to pay. A Financial network is thought to be in an obligation crisis once its government has failed to pay its debt. However, not any of the nations that are at present in debt disaster has defaulted, but they involve extremely high government debt balances, and their bond output spreads in the securities of the government have gone up, as a result, there is relegation of their…
8 pages (2008 words)
European sovereign debt crisis DURING 2010-2011
This was recorded to spread to Greece, Portugal and Ireland at the wake of 2009. This led to the business and the economies’ collapsing and the investors lacking confidence in these economies and this led to the further increase of the public sector debt. The public fiscal balances have faced substantial collateral damages since the 2007 global debt crisis. (Mitsopoulos, M. and Pelagidis, T. (2010) II. Background of the Crisis The crisis majorly erupted in the 2009 autumn season when there was bad governance in the euro zone as well as Greece. The roots of this had come in the previous…
8 pages (2008 words)
What Were The Main Causes of The Eurozone Debt Crisis of 2010/2011, and What Have Been The Significant Policy Responses To That Crisis?
It has been apparent from the working paper of International Monetary Fund (IMF) that since early 2010, the Eurozone had faced significant effects from the recent debt crisis. The countries belonging to Eurozone that have subsequently faced the major debt crisis included Greece, Portugal as well as Ireland. Among these three Eurozone countries, particularly Greece has been viewed to be the main sufferer of the resulting debt crisis that took place in the Eurozone. It has been reported that Greece possessed the highest level of public debt along with significant budget deficits in the year…
9 pages (2259 words)
European Sovereign-debt Crisis
Attempts by international monetary fund (IMF) to avail 750 billion Euros to financially support countries with high debt situation did not mitigate the situation. The paper will, therefore, explore on the causes and evolution of the debt crisis, its impact on the US market, and some interventions undertaken by the US to mitigate the impact. Causes of the Crisis Many factors can be attributed to the crisis that has seen the credit ratings of countries decline and caused shock in the global financial markets. The European Union has been accused of failing to take timely actions and of lingering…
European Debt Crisis
According to Investopedia (2012) the crisis led to the reduction of the confidence of the market for European businesses and economies. In contrast, according to the version of Constancio (2012), the European sovereign debt crisis emerged only in spring 2010. The European sovereign debt crisis is the climax of the banking crisis resulting from the demise of the Lehman Brothers and the resulting bailout extended by governments to their banking system (Constancio 2012). In other words, it is held that the European debt crisis started out as a financial crisis from the Lehman Brothers. In the…
6 pages (1506 words)
Examine the new policies proposed to solve the financial and sovereign debt crisis in Europe. Your report should include a brief
Understanding complex economic relationship in layman’s view point will be the crux of this essay. In the third part, the study will analyze proposed solution for resolving sovereign debt crisis in terms of advantages and disadvantages for countries with high credit ratings. In the last section, the essay will summarize the personal view of the researcher on sovereign debt crisis. Table of Contents Table of Contents 3 Introduction 4 Sovereign Debt Crisis 4 Banking System and Sovereign Debt Crisis 5 Analysis of Proposed Solution for Solving Sovereign Debt Crisis 9 Reference 11 Appendices 13…
4 pages (1004 words)
The European sovereign debt crisis
Consequently, the euro debt crisis is crucial as one intends to study its spillover effects. This is because the crisis was characterized by decisions and events at a political level (Acharya and Steffen, 2012, p. 12). In this case, the Euro debt crisis will be viewed as a financial phenomenon that affected the European region. Historical events associated with the Euro sovereign debt crisis will investigate the negative watches and downgrades on European governments, financial markets, stock, and bond markets. The Euro sovereign debt crisis reached its peak in March 2012 after Greece…
8 pages (2008 words)