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European sovereign debt crisis DURING 2010-2011 - Essay Example
Author : keaganrutherfor
Finance & Accounting
Pages 8 (2008 words)
Name: Tutor: Course: Date: University: Contents I. Introduction II. Background of the crisis III. Reasons behind the Financial Crisis IV. Body -Portfolio Theory and CAPM -Woes to the Economy V. Central Bank Measures VI. Conclusion I. Introduction There was a European sovereign debt crisis that raged this region in 2010 and 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 decade where there was major borrowing in the international capital markets to fund the government budget and the current account deficit. The structural rigidities, weak revenue collection policies, strategies and the profligacy of the Greece government led to this heightened debt crisis. The newly elected government revised the budget to almost double in October. The investors were not pleased by this but the government tried to sell its bonds to the international market which fared well until the euro stat and the European union statistical agency had to go back at it and downgraded its bonds again. The nation then had a great debt in relation to its GDP. ...