The Economic Crisis Within The Eurozone

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The economic crisis within the Eurozone has grown rapidly for the past five years, and members of the European Union struggle to enact any effective measures to halt or reverse its effects. Perceived booms in the housing markets were really only bubbles which popped and sent entire national economies spiraling downward into recession. Nations of the Eurozone have accumulated massive public debts, far larger than the 60% of GDP maximum specified in the Stability and Growth Pact. In 2011, Greece’s debt reached an unbelievable 170.3% of its GDP. Economic punishments are the specified consequences for violating this regulation, but the pact has not been adequately or consistently enforced. So many states have fallen past the debt limit that…show more content…
Greece has received over 240 billion euro alone across two large bailout donations. Both Ireland and Portugal have also received substantial bailouts, and it is likely that Spanish banks and Cyprus may also receive bailouts in the near future if immediate action is not taken. Though the recipient nations have complied with all mandatory austerity measures issued with their bailouts, these measures have hardly even slowed the rate of debt growth. Billions of dollars are going to waste through inefficient bailout attempts, and that number will soon reach the trillions if meaningful reform is not enacted. The first steps toward these changes have already been made. In 2011, the EU convened to reform the Stability and Growth Pact and devised provisions so that it is enforced automatically and does not cause more damage to the unstable European economy. There are three provisions to reform the Eurozone which are agreed upon internationally. The first is a single supervisory mechanism to oversee and regulate the zone so that multiple parties do not contradict each other on whether intervention is necessary in a case of excessive debt. Next is a single resolution mechanism would serve as a fund that would cover loans for bailing nations out of debt. The last is an integrated deposit guarantee scheme would protect deposits and encourage investors to invest with decreased risk, leveling the
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