The Eurozone Crisis As A Multi Year Debt Struggle

As the rating agencies: Moody's, S&P, and Fitch continue to downgrade Eurozone debt from France to the PIIGS; the interest costs for government borrowing in Eurozone countries, with Germany excepted, continue to rise, as does the cost for the European Financial Stability Facility (EFSF), a creation of the European Central Bank to provide liquidity. The Eurozone has been under pressure since the global recovery began in 2009-2010 as investors began to see the troubling signs of government overspending and high GDP ratios across the 17 member group. First to this bond vigilante parade was Greece, a member nation

The European Debt Crisis often referred to as the Eurozone Crisis, struck the European Union at the end of 2009.

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.

In dealing with current EU hot button topics, solutions are as many and varied as there are countries in the European Union itself. There are many aspects to a countries point of view on such issues including location, history, economy, political outlook, and so on. Because of these influences countries sharing similar histories, locations, economic standings, and etc. band together to create voting blocs in order to get their agendas pushed forward. This paper will discuss the viewpoints of Albania, Bulgaria, and Romania with respect to the refugee crisis and the Eurozone crisis as related by several meetings of representatives from each country. After reading this briefing, Bulgaria citizens should be aware of our country’s feelings

The economic crisis of 2008 in New York had ripple effects around the world, causing deep structural problems within the European Union to crumble the economies of several countries. These countries, known as the PIGS, are made up of Portugal, Ireland, Greece, and Spain, and collectively hold most of the sovereign debt problems of the European Union. After fast growth early in the decade, these countries were spending too much money and not securing their own banking sectors with enough capital. Soon, the debt the PIGS owed caused massive problems throughout the EU, and Germany and France had to come to the rescue of these poorly managed countries. (Greek Crisis Timeline, 1) Now, in 2012, the issue has yet to be fully resolved. Greece is still sinking, and a massive bailout for Greece's banks is required. The debate is whether Germany should continue bailing out Greece and collecting interest on its loans, or whether Greece should try to separate itself from the broader European Union, in an attempt to manage its own finances and declare bankruptcy in order to save itself from crippling interest payments. Each path offers an escape from the present situation that Greece finds itself in, but only the path of bailout results in a harmonious European Union. If Greece fragments off from the EU, then the entire union is weakened as a result. I believe that Greece should accept the terms of the bailout that Germany has provided, and should undergo several years

Although a commonly accepted view is that the hidden budget deficit in Greece is the beginning of the European sovereign debt crisis, the real causes of this economic crisis can be various. To reveal the whole event, a comprehensive review of the background is

First and foremost, it is important to define the Maastricht criteria for convergence. The criteria was set by EU members, but not without a debate between two different groups with two different ideas. The monetarists, which included France and other Latin countries, argued that a monetary union was important for the success of economic integration and convergence would follow after the completion of the monetary union. This idea was too simplistic as it encouraged integration without any political or economic foundations which would ultimately lead to economic breakdown. The economists on the other hand, Germany for example, argued

The Eurozone, the economic and monetary union of 19 of the 27 member countries of the European Union, is far from excellent health. At the root of its multi-causal ailment is the Euro, one of the grander experiments in economics in modern history. The Euro sought to be the cornerstone of the multi decade campaign for the full unification of Europe in the ruble of World War II. Politicians conveyed magnificent ideals of full economic and

The sovereign Euro crisis inflicting the Euro zone nations have both internal integration significance and international economic. It rarely truncated the internal integration of economic crisis but also accentuate effects to immediate distant nations including Australia (Malcolm Edey, 2011). The Euro zone member states experienced sovereign debt crisis which largely affected international economic and European integration. Regional economic crisis had immediate and clear effects on the far off nations including Australia. The sovereign debt crisis emanated from Euro zone governments facing bond market rates and unsustainable to repayments. These culminated in low resolution measures and high public debt (Prideaux, 2000) This meant potential decline in the GDP and decreased levels of exports. The EU summit was seen as a hope to a resolution of the European crisis but the agreement by the European leaders lacked focus on resolving the immediate issues. Its great attention was guaranteeing the survival of the Euro zone in its current form. There is a real possibility of departure of one or more countries from the Euro zone. Financial markets geographically distant from Europe to face European crisis.

After the Lisbon treaty was signed, it became noticeable that the Eurozone (which started in Greece) was in a deep financial crisis. The EU has taken a number of different steps to deal with the financial debt crisis throughout the Eurozone. These are the European Financial Stability Facility (EFSF), the European Stability Mechanism (ESM) and the European Financial Stabilisation Mechanism (EFSM). Throughout this essay I will concentrate on the EFSF and the EFSM and if and how the provisions of the Unions treaty were violated by these. I will evaluate different case law throughout recent years to show us the illegality of these, which often violated the treaties of the European Union while also talking a little bit about the ESM, ECB and the IMF. I will also talk about the Greek Bailout and the bail out clause with a small reference to the Pringle case.

What is the European Debt Crisis? The European Debt Crisis is the failure of the Euro, a currency that ties seventeen European countries together. In this paper, I will be describing the cause and effect of the debt crisis along with what would happen if the European Union stayed with the economy they have. Then what I believe is the best solution to fixing the debt crisis.

To begin with, the countries initially joining the euro were too heterogeneous, showing broad differences not only regarding their economic structure but also considering their budget practices and civil approaches (Feldstein, 2011). Moreover, differences regarding production structure, qualifications of the labour force as well as capital stock are considerable (Fürrutter, 2012). However, in order to make a single currency work, adequate similarities between the countries adopting the currency are required. The more similar countries are, the more will a common interest and exchange rate suit all. For this reason, the convergence criteria were created and had to be fulfilled upon entry to the Eurozone. Providing general criterion for price and exchange rate stability, continuous and flawless public finances, the Maastricht criteria aimed at safeguarding the country’s ability to adopt the single currency (European Commission, 2015). However, exceptions were made and even countries that did not meet the admission standards of a budget deficit below three percent of GDP and a national debt below 60 percent of GDP – in particular, Italy and Spain –

Following United Kingdom membership to the European Union in 1973 alongside other European states, further economic integration of the states lead to the Maastricht agreement of 1992 . The central feature of the agreement was the incorporation of the European monetary union (EMU) the EMU was based on four financial principles of inflation, long-term interest rates, fiscal debt and deficit and exchange rate. The aim of the Union was to harmonise trade and economic relations across member states and as such the EMU imposed restriction on infrastructure investment through strict borrowing limits. As a member state Britain had to comply with the four criteria despite the pressure it placed on its public borrowing and financing of infrastructure. To meet its social responsibility the United Kingdom government started the private finance initiative.

Since 2007, 27 countries establish economic relations “without barriers”. The Rome treaty, then the Single European Act aspire to suppress all obstacles impeding employment, goods, services and capital market. The Maastricht treaty follows this process of economic integration with the establishment of an economic integration with the single currency, the Euro. The free competition between goods, services, capital and employment has to increase growth. This allows obtaining economies of scale resulting of the market opening, a downward convergence of prices, a new dimension of markets both volume and value in order to increase performance. The productivity gains benefit to businesses, households, States and external markets. Prices reduction stimulates the demand and provides competitiveness without inflation

The five main factors that participated and caused the debt crises in Europe are the Violation to EU rules, at the beginning of the whole story European nations were a little eager to form a monetary union that took them some several steps ending with the beginning of the euro 1999 as several participants violated and dishonored the circumstances required under the Maastricht Treaty in the year 1992. Well, there are countries such as Cyprus and Greece, these countries did not really give actual data or facts about economic and financial condition, whereas the EU completely knew about the fact that they didn’t give any real figures or facts, they just went on and ignored it but yet accepted and acknowledged the agreement of such regions to enlarge and widen the European union. The whole problem does not really position at that extend and the amount but it stands in where the EU also accepted the high budget deficit that has occurred and the debt stages /levels by some numerous countries through the crisis. Another factor that caused this collapse is the banking sector, the banking sector faced some problems that lead to debt crises, talking about the European banking sector here. It dramatically appeared to be vulnerable by showing an intense collapse since it got into the financial global chain that was unfortunately been dragged down during the financial crises in 2007. Basically there are some of the financial instruments involved that has high risk such as