This website uses cookies to ensure you have the best experience. Learn more

European Financial Crisis Essay

1931 words - 8 pages

As Reforms Flag in Greece, Europe Aims to Limit Damage
Published: January 15, 2012

ATHENS — As Greece and its lenders prepare for another week of tense negotiations, European officials now say that the task is less to help the country through its troubles than to avoid the sort of uncontrolled default that many experts fear could threaten the global financial system.
Officials from the so-called troika of foreign lenders to Greece — the European Central Bank, European Union and International Monetary Fund — have come to believe that the country has neither the ability nor the will to carry out the broad economic reforms it has promised in exchange ...view middle of the document...

As recently as November, Greece and its lenders were optimistic that the country’s newly installed prime minister, Lucas Papademos, a well-respected financial technocrat, would stabilize Greece’s soaring debt and help nurse the country back to health.
But since then, his interim government — stocked not with technocrats but with politicians gunning for national elections as soon as March — has been paralyzed. Although it passed the 2012 national budget, it has failed to put into effect most of the unpopular changes mandated by the loan agreement that the previous government made back in 2010, when the country first admitted it was broke.
“The prime minister is a fine personality — he’s educated, he’s honest, he’s the best you can get around. But no one is helping him,” said George Kirtsos, the owner of a weekly newspaper, The Athens City Press. “Those that take the decisions at a national level believe that Greece will not make it.”
There is considerable posturing in these sorts of negotiations, and the troika has threatened to withdraw aid in the past, only to approve the next loan installment. It may do so again despite its misgivings, because the alternative of an uncontrolled default is too risky. But it will do so only if negotiations with private bondholders can be completed successfully.
But, amid a stream of gloomy news from Europe, including the downgrade of the debt of France and eight other countries, the sense that default is inevitable is growing. “When you simply go over the bare figures I can’t really imagine another scenario,” said Michael Fuchs, a leading member of Chancellor Angela Merkel’s Christian Democratic Union in the German Parliament.
“Mathematics is mathematics, and one plus one has to equal two and not five,” he said, describing how, even with a significant restructuring of its debt, the Greek government’s deficit would still be too large and its economy not competitive enough to put the country back on a sound footing.
That sense can be self-reinforcing as well, making it even harder for Mr. Papademos to push through the changes Greece needs to survive the current crisis.
Greece’s dire economic condition can hardly be overstated. After two years of tax increases and wage cuts, Greek civil servants have seen their income shrink by 40 percent since 2010, and private-sector workers have suffered as well. More than $75 billion has left the country as people move their savings abroad. Some 68,000 businesses closed in 2010, and another 53,000 — out of 300,000 still active — are said to be close to bankruptcy, according to a report issued in the fall by the Greek Co-Federation of Chambers of Commerce.
“It’s an implosion — it’s an endless sequence of implosions from bad to worse, to worse, to worse,” said Yanis Varoufakis, an economics professor at the University of Athens and commentator on the Greek economy. “There’s nothing to stop the Greek economy losing 60 percent of its G.D.P., given the path it is at.”

Other Papers Like European Financial Crisis

Debt Crisis Essay

3107 words - 13 pages July‐December 2011               SR/GFC/11‐9  SESRIC REPORTS ON GLOBAL FINANCIAL CRISIS – 9 SESRIC REPORTS   ON THE GLOBAL FINANCIAL  CRISIS                                         European Debt Crisis and Impacts on  Developing Countries    STATISTICAL ECONOMIC AND SOCIAL RESEARCH AND  TRAINING CENTRE FOR ISLAMIC COUNTRIES (SESRIC)  1  SESRIC REPORTS ON GLOBAL FINANCIAL CRISIS – 9     2011‐2 Issue

Ec301 Term Paper

1315 words - 6 pages can be avoided in the future. First let’s take a look at the reason for the financial crises in Europe. According to one of my sources, “The financial crisis that erupted in 2007 originated in massive bank losses on US mortgage loans. It spread rapidly to the Euro Area and other parts of the world, and led to the worst global recession since the Great Depression” (European Economy 3). The result of these events caused a increase in

Causes of the Sovereign Debt Crisis

2475 words - 10 pages In the immediate aftermath of the financial meltdown in 2008, the global crisis has made an important shift. By then not the private banking sector, from where the financial crisis originally emerged from, but sovereign states face the risk of default. In order to analyse the multifaceted character of the European sovereign debt crisis, this essay focuses on its systemic causes. Contrary to the argument of popular Northern European politicians

To What Extent Has the Financial Crisis Challenged the Notion Economic and Monetary Union Has Been a Success in Economic and Political Terms?

2853 words - 12 pages To What Extent has the Financial Crisis Challenged the Notion Economic and Monetary Union Has Been a Success in Economic and Political Terms? Name: Course: Tutor: College: Date: Introduction Many countries and the world in general have been experiencing financial crisis in one time or another starting from the famous 1930s great depression in USA, 2008/2009 US economic crisis to the most recent one, European economic crisis. This is

The World Is Flat

622 words - 3 pages encompassed in the “world is flat” concept. Due to technological advances, the global financial market has been refined with electronic exchanges, networks, institutions, and communications. Each country may have its own financial market, but the world is so closely tied together, causing global affects when one market is prospering or suffering. Currently all eyes are on Europe and the “Euro Crisis” stemming from their uncontrollable debt

Eurozone Crisis

2582 words - 11 pages tell the tale of eurozone debt crisis, which has created a global hysteria in the current world economy. In the research that follows, I will start with a brief history of the eurozone, how did eurozone face the debt crisis, and what might be ahead for the global economy, amid the ongoing European financial crisis. Eurozone is a term designated for all the countries that share a common single monetary policy managed by the Euro-system

Financial Crisis

740 words - 3 pages will happen again.” (New York Times, 2009). In contrast the BBC article is only a few months old and attempts to draw parallels to a previous financial crisis. The BBC article is titled " World War One's financial crisis - parallel with 2008" (BBC, 2014). "In the final days of July 1914, financial markets woke up to the alarming reality that a European war was inevitable. Queues built up at the Bank of England, as investors scrambled to change


2584 words - 11 pages maintenance of fiscal deficits under 3% of GDP, and government debt below 60% of GDP (Roscini & Schlefer, 2012, p.1). However, during the years preceding Greece’s financial woes, 6 out of the 11 members of the European Union failed to meet at least one of these standards on numerous occasions. In particular, Germany, one of Greece’s biggest critics for failing to manage the crisis correctly, “flouted the rules for four years from 2003 (and avoided

Views on the World Financial Crisis Will It Continue to Deepen

3300 words - 14 pages to analyze the impact each of these factors carries individually has on the global economy. The Euro-zone has undoubtedly been one of the crisis’ biggest victims, which is more than evident from the sheer number of states which are overwhelmingly indebted. It is only natural that the state of the European financial system has caused great concerned and has made analysts fear the consequences of this situation. Nonetheless, despite the fact


1392 words - 6 pages European bank up to 300 billion euros debt (Stijin, & Mayhan, 2013). European countries need to adjust the capital structure, and ensure they can afford losses. If Europe's debt crisis has appeared double negative effect, the industry will face cash flow associated with the risk of emerging markets (Stijin, & Mayhan, 2013). The financial crisis is a result that is generated by accumulating contradictions between production department and financial

‘German Aggression Was Responsible for the Outbreak of a General European War in August 1914.’ How Far Do You Agree with This Judgement?

1246 words - 5 pages indeed caused general war through continuous aggression, whereas Turner argues that as well as Germany, other nation contributed to the outbreak of war. An example of German aggression that inevitably contributed to the outbreak of war was the Agadir Crisis in 1911. The crisis demonstrated European tensions between the UK and France against Germany for using naval power to invade Agadir Port. As a result, this led to Britain and France

Related Essays

Debt Crisis Essay

2404 words - 10 pages since there were doubts about its ability to offset the huge sovereign debt it owed as well as government deficits. This crisis of confidence in Greece resulted in the significant downgrade of the Greek bonds into a junk status as well as the Greek bond yield spreads notably rose (Brutti and Sauré, 2016). The financial unrest gradually spread to the entire European Union zone and the European stocks tumbled, and the euro currency reached 2-year lows

Financial Crisis Essay

682 words - 3 pages Financial crisis:- Financial crisis are those crisis which related to the economy of the country. In the scenario of financial crisis the value of assets going down gradually and the GDP’s of the country are going downward in negative zone. How financial crisis held? Financial crisis are held when the banks face the shortage of money. In this way investors sell of their assets and withdraw money from their accounts because they think the

How The American Mortgage Crisis Spread To Europe

1727 words - 7 pages investment vehicles for the largest banks in these countries. When the securities lost their value, it affected everyone who had invested in them and for a period of twelve months the sub-prime mortgage crisis in the US had spread across the developed world (Fligstein, 2012). The reason for why the crisis has been so slow in resolving itself lies within the financial condition that some countries in the European Union was in before the crisis

Editorial On The European Crisis Essay

1004 words - 5 pages . Greece had help from the EU as well as the European Central Bank (ECB), which caused the markets to rise in other heavily indebted countries of the area which have had similar results to those of Greece. Unfortunately, this financial crisis is having and is going to continue having long-lasting effects on the euro-zone and global economy. Obviously, there is a present threat to the value of the euro, which was by far the most important project