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Finance & Accounting
Pages 6 (1506 words)
Name Professor’s name Course Date The Euro The debt crisis that has rocked a significant province of Europe has resulted in the intervention from economists, traders, politicians, and investors regarding the need to rescue the euro from potential collapse.
For instance, Germany has been accused to have benefited from the economic integration at the expense of other states like Greece and Italy, which have experienced enormous economic turbulence (Arestis 23). Many parties have argued that the absence of action by the euro leaders could worsen the euro crisis. There are, however, diverse arguments on whether the euro should be maintained or not. It is imperative to note that the genesis of the euro problem is from both the government and the private sector. In Greece, for instance, the government mismanaged their finances despite the large amount of borrowings that it had made (Lynn 123). The loans were thus misappropriated instead of being placed in productive areas. The debt problem in Ireland, on the other hand, arises from the private sector – for instance, from the banks, which continue to lend to unproductive investments. Those who were granted loans from the financial institutions were, therefore, unable to finance their loans, and this led to a financial contagion within the sector. From both cases, it is crystal clear that the contribution of the financial sector to preventing currencies from collapsing or to controlling the economic performance is enormous. ...
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