International Economy Policy

International Economy Policy

Introduction

The Euro crisis is an ongoing debt crisis that has made it difficult for some of the nations of the European Union to finance their debt without the help and financial assistance from the third party. Since 2009, the fear of debt crisis has been rising among the investors. Many investors and economists raised concerns about the financial instability of the European nations. The worst country to have suffered from the Euro crisis is Greece and now the political parties have to decide whether to leave Euro or not.

Discussion

Greece has been under political and economic pressure since the Euro crisis has started. Greece has always been dependant on the international monetary fund and its European partners to pay its debts. Voters, all over Greece, have protested against the budget cutting strategy, which has also increased unemployment in the country. For many years, Greece has been living beyond its means. After the European nations agreed to adopt the single currency, Greece was one of the few nations, which made Euro as their currency. After the adoption of Euro as single currency, the public spending increased dramatically (BBC News, 2012)

The public sector wages increased faster as compared to other members of the European nations. Money flowed out of the government offices and therefore, budget deficit increases. When the Euro crisis started, Greece was unable to face and cope up with the challenge. The debt levels increases and the country was unable to pay its debt.

There has been a long and controversial debate about Greece leaving the Euro zone. Greece has recently asked help from the international Monterey fund to repay their debts, but they refused. If this continues, then Greece will be forced to leave the rue zone (BBC News, 2012)

Greece should not leave the Euro zone

Many researchers and economists have supported the fact that Greece should leave the euro zone, in order to repay its debt. On the other hand, there are many economists, who oppose this idea and feel that Greece should remain in the Euro zone, because the exit of Greece will have a negative impact on the entire economy of the European nations. Many economists also believe that Greek aid deal is far much better than its exit from the Euro zone. If Greece exits or leaves the Euro zone, it will have adverse affects on the economy of Greece and the Euro zone (Chibber, ...