European debt crisis

Introduction

The European debt crisis poses a severe challenge to the European and global economies. The crisis has spread from its original epicenter in Greece to Ireland and Portugal and, most recently, to Spain and Italy.

The sovereign debt crisis in the eurozone, also called crisis of the euro or euro zone crisis, is a series of events that have affected negatively from the beginning of 2010, the 16 EU Member States that make up the Eurozone. Eurozone or the euro, that is, that have adopted the euro as single currency and make each other a monetary union multinational within the European Union. During this period the states of the Eurozone have been facing an unprecedented crisis of confidence, with speculative attacks on government bonds of several of its members, turbulent financial and stock markets and a falling exchange value of the single currency, in a context of uncertainty and difficulty to reach a collective agreement that still persists (Jeromin , Pp. 48).

Discussion

The crisis began with the spread of rumors about the level of debt of Greece and the risk of default on its government. It was revealed that for years the Greek government had taken deep debt, uncontrolled spending, which contravened European economic agreements. When he reached the global financial crisis , the budget deficit rose and investors demanded much higher rates to lend to Greece.

All eurozone countries were affected by the impact of the crisis on the common European currency. There were fears that Greek problems in international financial markets triggered a contagion that did shake the countries with less stable economies in the eurozone as Portugal , Ireland , Italy and Spain , as Greece had to take measures to adjust their accounts .

Since March 2010, the eurozone and the International Monetary Fund (IMF) discussed together a package of measures to rescue the Greek economy, blocked for weeks due in particular to the differences between Germany's leading economy in the area, and other member countries. During these negotiations and to the inability of the eurozone to reach an agreement, the increased confidence in financial markets as the euro experienced a regular decline and falling stock markets (Porzecanski, Pp. 311).

Finally, on 2 May, the European Union (EU) and the IMF agreed a rescue plan of 750,000 million euros, to try to prevent the crisis from spreading the eurozone. This measure was added as announced on 10 May of a collective stabilization fund for the eurozone. At the same time, all major European countries had to adopt their own plans to adjust their public finances, inaugurating an era of austerity.

The global crisis in Europe

In order to get out of the global economic crisis that erupted in 2008, the European Commission presented a stimulus plan at European level for which to be invested 200 billion euros. This plan included various economic stimulus measures launched by each country in the region between 2008 and 2009 to boost demand and production. For its part, the European Central Bank (ECB) dropped its restrictive ...