Portugal 's International Financial Crisis

In Europe, the single currency created additional problems because of overvalued exchange rates, and high bond yields.” (Pettinger, 2013).

The weekend of May 5-6 opened a new chapter in the Eurozone debt crisis as voters in France and Greece voiced their disproval over current leadership. With news of France's Sarkozy losing the presidency, and "a dismal election result for Greece's pro-bailout parties" (Reuters.com. May 7, 2012. PP. 1); the future of the Eurozone continues to be shrouded in uncertainty. Debt yields for Greece, Ireland, and Portugal spiked as bond investors ruminated over fiscal and monetary policies. Likewise in Spain, the ten year bond pushed closer to the "psychologically important 6 percent" (Reuters.com. May 7, 2012. PP. 1) threshold. These events highlight the troubling issues of austerity, growth, and debt service which are weighing down the European economy, and as a result imperil the global economic growth story.

Along with the most significant outcomes of the current crisis has been a sharp increase in the concern concerning national debt. Certainly, what nourishes debt accumulation is deficit expenditure. The 1996 era, and throughout 2001, show up as "golden years" from the time where distinct development was done in reducing accumulated debt2. Stuck between 2001 and 2007 that development was obliterated. Consequently, at the period of the crisis years 2007-2010, declining federal returns and attempts to fix the economy and financial system radically enlarged the debt to GDP ratio.

From the Financial crisis that struck the United States in 2008, to the world economic crisis and currently the European debt and sovereign crisis, the snowball is growing each day as the whole world's economy is heading towards the rock bottom. This project tackles the issue and the causes of the European debt crisis and its consequences on the euro currency and on the international financial markets. It also focuses on examining the austerity measures and policies taken by European governments to bail their countries out of the turmoil, and finally it tenders solutions that could be undertaken by governments to face or unravel such

In early 2000s, most private and public budgets in the U.S. were funded through local and sovereign debts. In this regard, staggering mortgage industry, weak fiscal policies, and unscrupulous financial investors principally contributed to the 2008-2009 financial crises. Due to surging inflation and accumulated interests, most borrowers failed to payback their loans due to continued bankruptcy. Consequently, interest rates in various countries were adjusted to balance the demand and supply of the circulating money. In economics, any increase in the price levels concurrently increases demand for money, which means that supply and demand for money did not balance in various economies during the 2008-9 crises.

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.

A similar proposed, but not enacted, solution was suggested called the European Stability Mechanism, a permanent system put in place to replace the fleeting EFSF and EFSM.10 Another proposed solution, popularized by Jakob von Weizsäcker and Jacques Delpla, are what are called “Eurobonds”.11 A so-called Eurobond is where investors loan some money to the European Union at a certain interest rate (among the notable opponents, Germany starkly disagreed with this policy, remarking that it is frivolous to make borrowing easier for countries in which the very cause of the problem was too much borrowing)12. Additionally, the European Central Bank (“ECB”) has also intervened in various ways.13 The aforementioned methods include, most prominently, a pledge to pursue all avenues necessary to help the debt-ridden countries meet their fiscal objectives for this year and the years to come. What these solutions are all lacking is a collective power to enforce fiscal responsibility. If PIGS are all bailed out utilizing the EFSF and the EFSM, along with the process of sucking dry the ECB, is there any telling whether or not they can use the money productively, or, if the governments do, can they maintain their path along

The CIA World Factbook has indicated that Portugal generally exports agricultural products, wine, oil products, chemical products, plastics and rubber, hides, leather, wood and cork, wood pulp and paper, textile materials, clothing, footwear, machinery and tools, base metals; materials typically needed to live in

With the impending Presidential election consuming the American news cycle, major media outlets and the general public alike have neglected a growing crisis within one of the world's most important centers of commerce and culture. Despite the domestic rancor over stimulus packages, runaway debt and rampant unemployment which has inspired fierce political debate here in America, the fact remains that many European countries have borne the brunt of the global recession currently decimating national economies. The so called Euro Zone, a consortium of 17 neighboring nations which belong to the European Union (EU) and have adopted the Euro as their common currency, has experienced unimaginable financial disarray during the last decade. In the modern age of globalized economic structures, the increasing instability emanating from European markets is now threatening to spread to Asia, America and around the world.

The second week of October in 2008 was the worst week for stock market during 75 years, Buckley (2011) state that the worst record was the Dow Jones Industrial Averages dropped 22.1%, but it fell 44.3% then. In general, a financial crisis is not an accident; it may take several years and has complex and interlaced causes (Claessens and Kodres, 2014). The 2007-08 global financial crisis is a typical case due to long-term non-intervention policy and loose regulation for financial market from government. Moreover, it involved the complex relationship between government and financial institutions. In order to look at this issue in particular, this essay first goes though the timeline of the 2007-08 financial crisis, particularly in U.S. and

The 2007-2008 financial crisis is seen as one of the biggest failure of risk management. This is the reason why it has been described it as a credit tsunami.

This essay will address the question “The sovereign debt crisis shows that any solution to the financial crisis needs to put greater emphasis on the market solutions and less regulation.” It will contain arguments as to why the sovereign debt crisis shows that greater emphasis on market solutions should be made rather than more emphasis on regulations. It will begin with addressing the situation in Europe that is named the sovereign debt crisis. Then it will be followed on by examples of countries that have had hardships with the levels of debts they have accumulated within the euro zone. The flaws and faults in the formation of the European Union via the Maastricht Treaty agreement that where shown in the financial crisis that began in

Over the 15 years the German has been widely viewed as the economic catalyst and stabilizer for its fellow European Union states. Even following the Financial Crisis in 2008, the German economy was able to bounce back quicker than neighboring Eurozone states the source of German success points to a high export led growth economy with a competitive manufacturing sector, lower unemployment, balanced budget, and low costs to borrow. With most economic indicators pointing to strong future growth, it remains to be seen whether a spillover effect occurs to the rest of the EU. Despite a number of reforms, EU countries continue to suffer due to lack of global competitiveness. In dire straits, Greece continues to leverage the support of the European Central Bank and Eurozone states to avoid another financial collapse. In support of Greece, Germany itself lent the country €56 billion, however Germany has begun to lose patience over Greece’s attempts to renegotiate terms of its bailout. As the German economy has persevered through economic turmoil, while Eurozone has struggled, Germany continues to be a shining light of prosperity in the European Union.

After reading the three main articles, it is evident that different authors have different opinions regarding the European sovereign debt crisis but all of which agree that fundamentally it is due to excessive government debt. This supporting material is no different as it also cites that excessive government debt is the main cause of the crisis. The supporting material below contains segments from a chapter of the book titled, The Real Causes of the Euro Crisis by Thomas Fazi, in the book, The Battle for Europe, published in 2014, pages 61 – 96. The author segments his chapter into different subtopics, which I have covered below and brings to light another cause of the Eurozone crisis that has not been discussed in the previous articles, which is the Eurozone as a tax haven.

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.