European Union International Monetary Fund Rescue Package

In 2008, the world experienced a tremendous financial crisis which rooted from the U.S housing market; moreover, it is considered by many economists as one of the worst recession since the Great Depression in 1930s. After posing a huge effect on the U.S economy, the financial crisis expanded to Europe and the rest of the world. It brought governments down, ruined economies, crumble financial corporations and impoverish individual lives. For example, the financial crisis has resulted in the collapse of massive financial institutions such as Fannie Mae, Freddie Mac, Lehman Brother and AIG. These collapses not only influence own countries but also international area. Hence, the intervention of governments by changing and

During this essay I will compare the difference of economic and policy development of Ireland, north or south in relation to the United Kingdom. As of today Ireland themselves are bit more advanced, exchange secondary economy. Ireland was among the starting gathering of 12 EU countries that started streaming the euro on 1 January 2002 “Although Ireland had aspirations to become a member of the Community as far back as 1961 it was not until 1972 when a referendum confirmed Ireland’s entry into the European Community with 83 per cent of voters supporting membership. Ireland formally acceded to the then EEC in 1973”. (Loughran, 2015).

The financial crisis in America had spread to Europe. Banks in the UK bear the greatest impact from the credit crisis sub-prime housing loans in the U.S. For example, Northern Rock Bank had a bad debt account of up to 191.6 billion U.S. dollars in July 2008 and the Bank of England had to pump 27 billion pounds to rescue Northern Rock Bank. At the end of September 2008, there were some other big banks in Europe such as Dexia and Hypo Real Estate falling in the crisis and these banks were rescured by the governements throught financial bailout. (Alexander, 2008)

The lack of money became so bad in the US, UK, and Ireland, that the government had to bail them out. the realization of all this by the public lead to a complete loss of confidence by consumers and investors all around, this lead to less spending and investing. all this lead up to something called a credit crunch. a credit crunch is a sudden shortage of funds for lending. the credit crunch was driven by the bad handling of loans on mortgages that led to a rise in defaults and sub prime mortgages. these mortgages were in america, but the downturn was able to spread throughout the entire globe. people with poor income and poor credit were getting huge loans for mortgages that they werent able to pay back. a cause for this was probably due to the huge incentive for mortgage brokers to sell mortgages at high prices because that's how they got paid, and that played a huge roll in the rise of mortgage defaults. mortgage broker borrowed money to be able to lend mortgage, the lending was not financed out of savings accounts. for many of these mortgages, there was a 1 to 2 year period of low interest rates, at the end of these periods, interest rates rose dramatically, not allowing people to afford the mortgage

“Since 2007 to mid 2009, global financial markets and systems have been in the grip of the worst financial crisis since the depression era of the late 1920s. Major Banks in the U.S., the U.K. and Europe have collapsed and been bailed out by state aid”. (Valdez and Molyneux, 2010) Identify the main macroeconomic and microeconomic causes that resulted in the above-mentioned crisis and make an assessment of the success or otherwise of the actions taken by the U.K government to resolve the problem.

Economy is a big part of a country, especially for the people. Unemployment, homeless, and debt are all impacting things on people involving the economy. As of April in 2018 the unemployment rate is 3.9% in America (“United States Unemployment Rate”). With a population of about 325 million people, that’s over 12,000,000 people without a job. Use a transition here The unemployment rate in Ireland is 5.9% as of April this year, that’s 280,000 people (Trading Economics Ireland). While the unemployment rate is higher in Ireland, the amount of people is much higher in America. For pPeople without jobs , since

The bursting of the United States housing bubble during the period of 2006-2007 had triggered the 2008 financial crisis which also spread to the European Union zone. Many major European banks, many of which had significant holdings in the American market, started to crumble, followed by bailout requests, initiating a subsequent crisis that led to the Eurozone crisis. The combination of government debt crisis, a banking crisis, and further worsen by a growth and competitiveness crisis had thrown what could probably the biggest challenge faced by the enlarged Union at the dawn of the twenty-first century. In light of the crisis, the European Council has initiated three relief institutions: the European Financial Stabilisation Mechanism

The “Great Recession” is commonly used to explain the massive economic contraction that occurred in the United States during the fourth quarter of 2007. However, the actions of the United States spanned to other nations, leaving massive effect on the global economy. One nation that took on serious financial burden during this recession was the United Kingdom. This nation first faced the effects of the Great Recession beginning in the first quarter of 2008. Overall, the initial mass effects on the nation can be attributed to the nation’s reliance on the financial sector. In fact, after partially stabilizing in 2009, the country struggled with a double-dip recession between 2010-12, and continues to struggle with some of these effects.

By the end of 2008, the European Union began experiencing rippling effects of the United States financial crisis. Several member countries, most notably on the southern end of the continent, faced high levels of debt and unemployment. Portugal, Iceland, Ireland, Greece, and Spain, derogatively referred to as “PIIGS,” required extensive economic support from the EU in order to repay government debts and bail-out private banks. Disbursal of aid in 2010 proved successful in promoting economic recovery in some countries; however, the vast majority observed only slight economic improvement which led to doubts regarding the effectiveness of the harsh austerity measures implemented. Ireland has most clearly benefited from the financial support of the European Union as the country’s unemployment rate has dropped below ten percent and is expected to witness 4.5% GDP growth in 2016. Portugal, on the other hand, shows little fiscal improvement as evident in an unemployment rate of 13% and an expected GDP growth of only 1.6% in 2016. Although both countries faced tough financial crises in 2010, Ireland has notably outperformed Portugal in resolving the situation. The weak economy in Portugal, as well as continued fiscal hardship in the remaining “PIGS” countries, threaten the preservation of the European Union as financial inequality between the members persists.

As a result of the financial crisis of 2007/8 Iceland experienced greater economic destruction than most countries, and it was forced to deal with the problem by allowing their economy to collapse and changing it’s approach to the economy.

Economic analysis 2006 and 2011. The five year benchmarks selected for this analysis do not well represent the fluctuations in the economy in the interim years, which have been substantial. Naturally, the fiscal crisis of 2008 to 2010 had deep and enduring impact on the national and global economies, but the "bookend" years of this analysis effectively obfuscate the volatility resident in those years. Fiscal year 2008, for instance, the inflation rate reached nearly 5%, the unemployment rate peaked in 2009, and the interest rate reached 5% in 2007. What this analysis does provide is a look at the stabilization of the economy without the noise of the intervening fiscal crisis. Through the monetary policy by The Fed during the fiscal crisis, efforts have been directed at maximizing employment and price stability. As a result, the interest rate will remain low with no changes anticipated until 2014. Inflation has stabilized, interest investments are low but gradually increasing, and the unemployment rate is slowly dropping but is not expected to accelerate.

The terrible internal economies control. The countries in euro area, especially Portugal, Ireland, Italy, Greece, and Spain lost their control over the domestic financial situation. Specifically, Greece had long standing financial problems. The government spent largely on the social welfare, and had a great number of public servants who had extremely generous wage and pension benefits. Besides, the government had little control over its budget deficit, leading a long standing financial budget overrun. In Ireland, the estate bubble greatly destroyed government tax income and consumption power of public. Portugal’s lasting recruitment policies led to a great number of redundant public servants. The Italian economy suffered from the high unemployment rate and high tax rate, and had a slow growth in recent years.

The global financial crisis which began in 2007-2008 in the USA had a negative effect on the economy of the European Union, mainly in the Euro area. The falling budget revenues during the recession were coupled with an increase in public expenditure resulting from the implementation of anti-crisis programs, which led to an increase in the budget deficit and public debt. Anti-crisis packages have been used to the greatest extent in countries such as United Kingdom, Germany, France, Austria, Denmark, Sweden, Belgium, and also in Spain, while the countries that have proven to be the weakest links in the Euro area, i.e., Greece, Ireland, and Portugal, almost did not use them at all (Owsiak 2011, pp. 71-75, Mering 2011, pp.209-215). As a result, they began seeking higher yields to compensate for the higher risk of default. This led to higher interest rates for troubled governments.

An earlier version of this paper circulated under the title “The Irish Credit Bubble.” I would like to thank Colm McCarthy for useful discussions. All errors and interpretations are mine. 1 Ireland is one case where the classroom distinction between GNP and GDP really matters: largely because of transfer pricing by foreign corporations taking advantage of its 12 per cent rate of corporation tax, GDP is 25 per cent higher than GNP, and has fallen only 12.5 per cent. In what follows we shall present most Irish numbers as a percentage of GNP, because this is the relevant figure for employment and discretionary taxation, and present numbers for other countries in the usual percentage of GDP form.

I decided to read the book, ‘Austerity: The History of a Dangerous Idea’ by Mark Blyth, which is about the turn to austerity in economic policy. The author argues that austerity is a dangerous idea for three main reasons: Austerity cannot work in practice. It imposes a disproportionate burden on poorer households. And, it ignores the fallacy of composition that says that all countries cannot be austere simultaneously. This book is among the best descriptions of our path to crisis and it is highly recommended to anyone who wants to understand the current economic situation in Ireland. The author explains that the main reason he wrote this book is that he was fed up of people who were very wealthy telling people who were not so wealthy that they