Europe's Austerity Madness

[Name of the Instructor]

Europe's Austerity Measure

Introduction

The article by Krugman, (2012) was regarding the current financial situations faced by the European Countries especially Spain and Greece. The main focus of the article was to comment mainly on the current scenario of Spain's economic crisis situation which has recently drawn attention of the world. According to Bongiovanni, (2012) in early 2012 the Europe zone saw some serious financial crisis in many countries, starting with Greece. Many economists believe that the reason for the Greece's financial crisis was due to its government spending, increasing the debts of the country. According to Krugman, (2012) the major reason for the Spain's economic downturn was not due to its government performance but it was the budget surplus with a low debt. Similar situations were faced in these countries and many people thought that austerity was the solution to the problem.

Discussion

According to Whyman, (2012) many countries in the Euro zone were taking austerity measures to control or improve the financial environments in their countries. The countries had applied austerity measures to reduce the deficit and public debt these countries were cutting the public sending's on the pensions, unemployment, healthcare, childcare, incapacity allowances and increasing the taxes. So the people of these countries were paying more to receive less of the welfare services. Greece had already taken the austerity measures by cutting the sending's, facing high unemployment and increase in the value added tax by the governments to pay their debts. Spain had faced financial crisis because of the artificial economic boom and rise in the inflation of the country. When this artificial economic boom saw the reality, the Spain's economy faced some serious consequences when they were unable to borrow loan to pay their deficit. The increasing unemployment was the similarity between Greece and Spain which ...