Causes and Solutions of Eurocrisis

Topics: European Union, Euro, Eurozone Pages: 5 (1443 words) Published: April 11, 2013
European economic crisis: causes and solutions to the problem

The situation with the debt crisis in Europe continues to deteriorate. When single economic space was creating, the leaders of all countries have missed a few important factors. First, they failed to realize that the European market is developing unevenly. Some economies are in short supply, so the removal of tariff barriers and the common currency destroyed the domestic market of individual countries. Secondly, no one thought of flexible exchange rates, which played the role of the synchronizer economies. As a result, the strong euro zone benefits, and weak - were completely destroyed and can no longer cover the constant deficits. The situation was a way if the union of European states was not only economic but also political, but it did not. Rating agencies made situation even worse. Since the inception of the euro area are constantly lowered the credit rating of Spain, Greece and other countries. As a result, the financial sector peripheral economies was virtually destroyed. They could no longer rely on effective forms of cooperation, as borrowing additional funds become either too expensive, or even impossible. Adding to all the above, a number of military conflicts that were unleashed the U.S., but were mostly by European allies. Extra expenses were favorable to America, but for the weaker economies, they were destructive. Now in Europe are continuing mass demonstrations against the common economic space. In this case, the protesters do not understand the one simple fact: there is NO way back for Europeans no more! Out of the crisis must be sought not only in the division of the region, but also be represented in economic policies. Economy destroying should become subsidized, and there's no getting around it. This will determine the development of business in the country and a gradual return to previous positions. The second point is closer integration. European countries are required to establish a single pension, tax and political regime, and in the process they have to take into account regional and national characteristics of individual member states. Of course, there is another option: return to the national economy, forget about the Euro and reject further integration. But it’s the road to nowhere! Weak country ‘s just finally collapse! If all members of the currency union will fulfill its obligations, the debt crisis in the euro zone will run out in a couple of years. The main condition for going out with a crisis is to comply with the limit budget deficits and increasing competitiveness.

Portugal and Ireland have already left the eurozone, if not the intervention made by Stabilization Fund. It’s also recommended to replace the current stabilization mechanism established for emergencies, and all members should pay the same contributions,then the size of the fund will increase from 440 to 500 billion euros.

The launch of this fund was scheduled for July 1, but because of the opposition of German courts, it had to be postponed. Without German participation in such a fund, its creation does not make sense, but the fate of its occurrence in this project will solve the Constitutional Court of Germany Finance Ministry of Russia confident that countries need to unite. If states are experiencing difficulties in the economy, agree to tighten economic policy, they will come to the rescue of the ECB, but on certain conditions. Anton Siluanov Acting Finance Minister, believes that a default of one country will lead to a number of unpleasant situations across Europe. Of the possible consequences of the crisis calls Siluanov high inflation. "There must be a solution that will stabilizer problems in Europe" - with cautious optimism he said during a financial forum in Moscow. According to experts, the decision of the European problems will contribute to the centralization of fiscal policy in the EU. Necessary to create a single European Ministry of...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Eurocrisis Essay
  • Exploitation of Workers: Causes and Solutions Essay
  • The causes of poverty and solutions to this Essay
  • The Causes and Solutions to Ethnic Conflicts Essay
  • Obesity
  • Essay on Terrorism, Its Cause and Its Solution
  • Essay on Shoplifting: Causes and Solutions
  • Essay about Inflation, Causes and Solutions

Become a StudyMode Member

Sign Up - It's Free