Most of these outcomes are as a result of the stimulus packages that were passed by the European governments in an aim to stop the economic crisis that is taking place in Europe1. Most the European governments have spent a lot of resources on the stimulus packages in an attempt of preventing themselves from great collapse but have in turn created a debt crisis2. i. Thesis Statement With reference to the discussion question given, this paper will analyze if the world can afford to ignore the European debt crisis and leave it to the Europeans. It will also analyze the causes of the crisis and what the European governments are doing to try and solve the impending crisis which is threatening to destroy the prosperity of the European countries which have been economically stable as compared to the rest of the continent. ii. Discussion The world cannot ignore the European debt crisis because the European countries came into these debts as a result of trying to solve the financial crisis that many countries were facing at the time. This debt crisis has made so difficult for most of the European countries to finance the debts that are owed by their governments without any assistance from the outside world. By the end of 2010, over 90 of the biggest banks in Europe had lent over 760 Euros to countries like Ireland, Portugal, Italy, Greece and Spain. Due to this, the bank system in Europe is on the verge of recession. Every attempt at being made to save a bank system that is struggling with that, the same banking system had lent a lot of money to governments. Despite the financial crisis that is being faced by European governments that Euro has managed to remain stable on the financial market although many financial analysts have predicted of its loosing of strength against all the other market currencies3. In November 2011, it was seen that the Euro was trading slightly higher in the financial market than it was at the beginning of the financial crisis. Three countries that were most affected by the financial crisis were Greece, Ireland and Portugal. These three countries account for 6% of the Eurozone’s gross domestic products (GDP) collectively4. iii. Causes The European debt crisis was caused by the financial markets and other financial institutions which were greedy and blind in terms of the eurozone. In addition to that, there was the adoption of the Euro which led to the biggest drop in the interest rates and a lack of confidence from financial institutions to the European governments5. The domestic demand for finance also went very high which in turn cause a surge in the financial sector and in turn caused the a crisis. The growth of the Eurozone countries which was driven by the services offered domestically and construction was accelerated while the export industry in these countries remained in the same position thereby causing abundance in the foreign capital invested in the Eurozone countries. When European countries went to save the globe from a financial crisis, the European countries ended up with debts that the governments cannot afford to pay for. In the meantime as this looming crisis was at hand, Germany was transformed in a historic transformation to become one of the world’s largest exporters6. There was also excessive lending by financial institutions which led to a loss of competitiveness due to the unsound economic developments in several Eurozone countries
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Name Professor Course Date Title Outline 1. Introduction i. Thesis Statement ii. Discussion iii. Causes iv. Solutions v. Effects of the European Debt Crisis 2. Conclusion 3. Works Cited The European debt crisis, can the world ignore it and keep it European?…
In the current scenario of the global economy, most of the developed countries, including the member states of European Union can be witnessed to struggle in their recovery stage. The growth prospects of the world economy has been quite evident but is remarked to be weak and uneven by various market analysts.
However, some peripheral European states accrued enormous unjustifiable losses and increased public debts, risking the entire European financial system and the viability of the euro. The weak implementation of financial regulation created a sovereign debt crisis.
The crisis threatened to spill over to other major economies in the trading block, which would cause a major issue for other global economies. The Eurozone crisis was mainly centered on Greece, which had the biggest levels of public debt and the highest budget deficits in the Euro region.
Governments prepare deficit budgets and, therefore, have to borrow resources from either internal or external sources in order to finance the deficit. This situation, if not well controlled and monitored, increases the total government debt. The credit ratings of most European countries like Spain, France, and Italy significantly declined as revealed by the moody and S&P during the year 2010 and 2011 (Mora, 2006).
According to Schafer (1), the causes of such a crisis varied from country to country. The crisis brought about serious economic and political effects on most countries. The debt crisis affected a number of countries like Portugal, Greece, Spain, Italy and Ireland among others.
The war involved all the continents apart from South America and Antarctica. It was fought in every ocean. Although the whole world was the theatre of the war, Europe was its primary place of action1. The war also originated in the same continent. The continent suffered the highest amount of loss in death and destruction.
The main industries-tourism and shipping were particularly vulnerable in the business cycle. The state made efforts to keep the economy going by spending a lot which consequently increased the country’s debt level in the eurozone. Further efforts were made to
The debt crisis affected a number of countries like Portugal, Greece, Spain, Italy and Ireland among others. In the year 2001, Greece joined the EU (Schäfer, 1). Greece had to pay a return rate that was higher than the fiscal market.
It is suggested that European illegal immigrant problem together with the armed conflict in Syria has become the focus on the United Nations Organization which means that the forces of the global community will be directed to solve it. Also it should be mentioned is that the European countries are now able to reflect on the experience that they had.
6 pages (1500 words)Research Paper
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