Leadership and Decision Making in the Eurozone 1. Decision Making 1.1 The concept of a “perfect” UNION United Europe was at its birth and remains at its heart an economic idea. Its purpose was peace, but the means were economics. The purpose of the UE was to avoid another World War by binding together the nations, economically and financially so that is no longer in their self interest to go to war. In 1957 the European Economic Community took birth. In 1979 was the first experiment with a currency union by linking European currencies which led to the European monetary system, the precursor of the euro. Once the euro was established it seemed like the big steps to get those next levels of cohesion never actually …show more content…
There was a real worry that Spain would be following the Greeks, and there were also worries about Portugal. The next phase of the crisis really intensified when it became apparent that Ireland’s housing boom had turned to bust. People thought Greece is the problem as long as we insulate it, we’re fine. And it suddenly said, well actually this can move to Ireland, Portugal, Spain, Italy because suddenly any country with bad debt dynamics we have to think that that’s a possible loss, so we have to be very careful about buying those bonds. By the time Greece, and then Spain and Portugal were also in trouble, there were questions starting to arise about Italy. It is a much bigger country, it has the third largest bond market in the world. The first time that the European debt crisis washed up on Italy’s shores was in November 2010. That was the first time when we really saw the spreads between Italian bonds and their German equivalents soar. There were lots of meetings in 2010, a lot of summits that were supposed to solve the issue, there were a lot of rescue plans announced but unfortunately none of it was acted decisively so that the markets could finally put their fears to rest. There was a key moment in 2010 that if you talked to senior officials around Europe now, that they see being one of the biggest mistakes in the handling of the crisis, and that was the agreement made between the German
First with western Europe, and after the collapse of the Soviet Union, with the east as well. Many of these attempts were successful. One of the first of these attempts was the Marshall Plan which was used as an instrument to restore the economies of western Europe and to establish democracies. The plan would provide economic aid to fight the post war affects of poverty and in return expected cooperation for mutual benefit. The plan strengthened western Europe not as allies with each other and not against anyone. Another internal cooperation efforts was the formation of the European Economic Community(or Common Market) in 1957. The six original members were very successful and managed to eliminate all tariffs within their countries. After seeing this success, other nations applied for membership and EEC became what is presently know as the European Union. The European Union has been very successful in its endeavors to mutually help the member economies. One of these successful endeavours was the implementation of a common currency. As of 2002, seventeen countries now share the euro as their currency. This unifies where language and culture are barriers but money is not. Another major success in unification was the addition of ten members of the European union in 2004. Most of these additions were former Soviet bloc countries who had just a little over a decade free from Soviet influence. While this was a
The poster shows a man in a car with a shadowy presence of Hitler in the passenger seat with the caption, “When you ride alone, you ride with Hitler. Join a car-sharing club today.” In photo number 3, the type of propaganda being used is transfer. Transfer employs the images of famous people to convey a message not necessarily associated with them. Photo 3 utilizes Hitler and his wrongs to persuade people to not ride alone, to not show they are with Hitler, and join a car club when in reality, Hitler does not have any sort of association with riding alone or a car club. Another type of propaganda used in photo 3 is fear. Fear is a technique very popular among political parties and PACs in the United States. It is shown in the photo because
The European Union was initially set up as a means to terminate the conflict that occurred within Europe throughout the 20th century, culminating with the end of The Second World War (WWII) and The Cold War that followed. The EU ultimately aimed to bring the member countries together in order to form an ‘ever closer union’ between the countries of Europe, thus preventing a future battle. The Union started as the European Economic Community (EEC), which was established in 1957, and over the years endured numerous adjustments to form the politico-economic union that we know of today.
The Eurozone is facing a serious sovereign debt crisis. Several Eurozone member countries have high, potentially unsustainable levels of public debt. Three—Greece, Ireland, and Portugal—have borrowed money from other European countries and the International Monetary Fund (IMF) in order to avoid default. With the largest public debt and one of the largest budget deficits in the Eurozone, Greece is at the centre of the crisis. The crisis is a continuing interest to Congress due to the strong economic and political ties between the United States and Europe.
The global economic recession of 2008 shook economies all around the world. Some of the largest countries saw a massive reduction in their GDP, and Italy saw its economy shrink 3%. Italy still hasn’t recovered from the hit it took in 2008, and it is still causing problems for the country. Italy’s debt actually isn’t their problem, but it is the root problem. Italy has carried debt to GDP ratios well above 100% for over 20 years, but only now are they having serious economic issues.
The Greece debt crisis started in the year 2009 where one of the largest rating companies downgraded Greece bond to a low rate and mentioned that Greece has the opportunity to default their debt (Greece timeline 2012). Austerity measure has been reveal in the January 2010. During March 2010, Greece finance minister claim Greece has suffer
The European Economic Community was an organization started in 1957 by France, West Germany, the Netherlands, Belgium, Italy, and Luxembourg, in post War World II torn European. This organization was a union between the Steal and Coal Community and The European Atomic Energy Community. The goal of the organization, heavily influenced by John Monnet one of its founders and National Liberation Committee member at the time, was to build a stronger cohesive Europe through collaboration and economic ties to bring mutual prosperity. This organization and its ideals developed into the well know European Union of today, that currently sits with 28 members. However, one controversial possible membership has increased in importance over the years.
There are many causes for the debt crisis to start. Before world war II Europe had very strict trade barriers between countries examples being currency exchange fees and trade tariffs. Then World War II happened and was so detrimental to Europe they couldn’t continue to have such strict trade barriers. The barriers were then slowly removed with the first barrier removal being steel and coal. This worked well enough that it caused twenty-seven countries to sign the Maastricht Treaty thus forming the European Union (UN). This made trading throughout all Europe easier which caused more trade to occur within Europe.
Greek crisis I n recent times, the Subprime mortgage crisis in the US seems to have metamorphosed into the Euro crisis. Since early 201 0, the Eurozone has been facing a major debt crisis. Such countries as Greece, I reland and Portugal have accumulated unsustainable levels of government debt.
Greece government’s debt has been around since 2010. The countries surrounding Greece are now worried that it may affect them. The economy in Greece started getting worse after United Stated had its crisis in 2007. Since Greece entered the Eurozone changes in the economy, financial stability, and employment had caused Greece to go into more debt, but it could have been avoided if Greece would have not entered the Eurozone.
As Europe slipped into recession in 2009, a problem that started in the banks began to affect governments more and more, as markets worried that some countries could not afford to rescue banks in trouble. Investors began to look more closely at the finances of governments. Greece came under particular scrutiny because its economy was in and successive governments had racked up debts nearly twice the size of the economy. The threat of bank failures meant that the health of government finances became more important than ever. Governments that had grown accustomed to borrowing large amounts each year to finance their budgets and that had accumulated massive debts in the process suddenly found markets less willing to keep lending to them. Hence, what had once begun as a banking crisis became a sovereign debt crisis.
European sovereign-debt crisis is still going on in some countries in eurozone, such as Greece, Spain, Ireland, Portugal. The origins of these crises started from Greece when the government borrowed a huge amount of money from foreign investors and was unable to repay. As a result, a financial crisis started to hit Greece as the starting point of the crisis over countries in Eurozone. While the old deutschmark (DM) bloc – Germany, France, etc. experience lower than average growth and inflation, the Eurozone experienced the contrary. In general, instead of global factors as the causes of the crisis, the Eurozone itself should hold responsible for the start and spread of the crisis.
The European sovereign debt crisis, which made it difficult or impossible for some countries in the euro area to repay or re-finance their government debt without the assistance of third parties (Haidar, Jamal Ibrahim, 2012), had already badly hurt the economies in “PIIGS”, Portugal, Ireland, Italy, Greece and Spain. This financial contagion continues to spread throughout the euro area, and becomes a dangerous threat not only to European economy, but also to global economy.
With the lowest rating in the eurozone, Greek bonds are now viewed as a highly risky investment by foreign investors.9 Consequently, Greek bond yields increased in 2010. Greek 10-year bond yields used to be 10 to 40 basis points above German 10year bonds prior to the crisis. However, with the crisis, the spread increased to over 400 basis points in January 2010. This high bond spread further underscores investors’ loss of confidence in the Greek economy. 10 In April 2010, Eurostat, the Statistical Office of the European Communities, estimated Greece’s budget deficit to be 13.6% of GDP - almost a full percentage higher than the 12.7% estimate
The European Union is a political community constituted as an international organization whose aim is to promote integration and a common government of the European people and countries. According to the Article 3 of the European Union Treaty, Union’s aim is to promote peace, its values and the well-being of its peoples. It is based on the values of freedom, democracy, equality, law enforcement and respect for human rights and dignity.