The Current Economic Situation Of The Euro Area

An international financial crisis occurred when the U.S. stock market crashed and U.S. investors withdrew money from Germany.

Although they were trying to survive from this bad financial hit, at that time the world also faced a financial crisis due to sudden economic recession.

The European sovereign debt crisis started in 2008, with the collapse of Iceland's banking system, and spread primarily to Greece, Ireland and Portugal during 2009. The debt crisis led to a crisis of confidence for European

bailout funding and with no recourse to private investors, suspend their debt repayments and also

In the United States in 2007-2008, was not caused by a single but a sequence of crisis that rippled through the financial system and the economy. In the financial system there was a contagion spread due to imprudent mortgage lending and subprime loans were disbursed; at the same time, during the house bubble and this cause vulnerability to the financial systems.

It all started in the summer of 2007 when a crisis hit the U.S., and because of the huge government interventions that were made, the U.S. and most European countries got into a recession. The EU crisis was also caused by big debts made mostly in Spain and Italy, before 2008. The private sectors (companies and mortgage borrowers) who were taking out loans were the main reason for this crisis. There was a decrease in the interests rates in southern European countries when they joined the euro and that resulted and caused the countries to go into a huge debt. This had negative effects on the financial markets, a slowing down of the economic growth in the industrialized countries, and impacted the European labor markets. After the Second

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 Eurozone economic crisis began at the end of 2009. Essentially, the failure of the Euro caused huge problems in southern European countries (such as Spain, Portugal, Greece, and Italy). After the introduction of the Euro, these countries suddenly had the credit to borrow money like they hadn’t had before. They extravagantly increased spending with this borrowed money, which at first boosted the economy but eventually led to massive debts. Since every economy was intertwined, the rest of the Eurozone was effected as well. Because everyone had been borrowing and lending money to each other, a problem in one country could reverberate across the continent, creating a chain reaction of defaults. Germany agreed to bailout these smaller countries, effectively picking up the tab, as long as they agreed to very strict austerity measures. The contrasting expectations between a financially responsible country like Germany and one that doesn’t pay taxes such as Greece amplified tensions. Cultural differences such as this are surprisingly relevant to the economic crisis, as the disparities in immigration policy demonstrate.

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.

Europe's debt crisis is a continuation of the global financial crisis and also the result of how Europe attempted to solve the global financial crisis that brought an end to a decade of prosperity and unrestricted debt. European attempts at defending itself against a deep recession, has now created a new crisis of unsustainable and un-serviceable sovereign debt. In early 2010 fears of a sovereign debt crisis, the 2010 Euro Crisis developed concerning some European states including European Union members Portugal, Ireland, Italy, Greece,  Spain,(affectionately known as the PIIGS) and Belgium. This led to a crisis of confidence as well as the widening of bond yield spreads and risk insurance on credit default swaps between

Once the euro was established it seemed like the big steps to get those next levels of cohesion never actually

In 1999 seventeen countries in the European Union adopted the Euro forming a Euro Area. With the adoption of the Euro these seventeen countries discontinued their old currencies and monetary policies. Monetary Policies

Due to the economic recession which started in 2008, several members of the European Union became historically known as PIIGS. These states include Portugal, Italy, Ireland, Greece and Spain. The reason why these countries were grouped together is the substantial instability of their economies, which was an evident problem in 2009. The reason why the five countries gained popularity is a serious concern within the EU, with regard to their national debts, especially for Greece. The latter country was involved in a controversial affair after allegedly falsifying its public financial data. In the year 2010, it was evident that the five states were in need of corrective action in order to regain their former financial stability.

These were complex crises, resulting from an interaction of shortcomings in national policy and the international financial system. Individual governments and the international community as a whole are taking steps to reduce the risk of such crises in

A chronological sequence of events was pre-announced for the changeover to the euro. This scenario was mainly based on detailed proposals elaborated by the EMI