European Financial Crisis- a Ireland Greece Comparison
The European Sovereign Debt Crisis- A Comparison between Greece and Ireland
Jeremy Hutton
34738331
Econ326 European Debt Crisis- A comparison between Greece and Ireland.
The European Sovereign Debt Crisis is an ongoing financial problem that has hindered the ability of many European Nations to re-finance their government debt without the assistance of Third Parties. Investors developed fear at the rising debt levels of European governments and this escalated in late 2009/early 2010. The Crisis has had severe Macroeconomic consequences for the most affected nations, rising unemployment, deflation, declining economic growth. External Parties have had to step in to stop the problem spreading and calm financial markets. Struggling nations have looked to the European Central Bank (ECB) and their implementation of Monetary Policy to help solve the problem, but are their intentions making the crisis worse? We will have a focus on Ireland’s and Greece’s problems and potential solutions to see what method is best to tackle their rising debt problem.
The Crisis in Ireland started with a Banking Crisis after the Property Bubble burst during the start of the global financial crisis in 2008. Between 2000 and 2006, the average house price in Ireland went on to more than double during this period. At this time there was a massive increase in speculative construction and mortgage lending to potential buyers. Within a couple of years the value of people’s houses had fallen by 35% with them still repaying the full amount of their mortgage, and the number of approved housing loans fell by 73%. In September 2008, the Irish state guaranteed the six main Irish banks, which had financed this unaffordable property bubble. It guaranteed the banks depositors and bondholders. After the property bubble burst the Irish banks had lost an estimated 100 billion Euros, where much of it was related to defaulted payments on the speculative mortgages. The economy then collapsed,
Jeremy Hutton
34738331
Econ326 European Debt Crisis- A comparison between Greece and Ireland.
The European Sovereign Debt Crisis is an ongoing financial problem that has hindered the ability of many European Nations to re-finance their government debt without the assistance of Third Parties. Investors developed fear at the rising debt levels of European governments and this escalated in late 2009/early 2010. The Crisis has had severe Macroeconomic consequences for the most affected nations, rising unemployment, deflation, declining economic growth. External Parties have had to step in to stop the problem spreading and calm financial markets. Struggling nations have looked to the European Central Bank (ECB) and their implementation of Monetary Policy to help solve the problem, but are their intentions making the crisis worse? We will have a focus on Ireland’s and Greece’s problems and potential solutions to see what method is best to tackle their rising debt problem.
The Crisis in Ireland started with a Banking Crisis after the Property Bubble burst during the start of the global financial crisis in 2008. Between 2000 and 2006, the average house price in Ireland went on to more than double during this period. At this time there was a massive increase in speculative construction and mortgage lending to potential buyers. Within a couple of years the value of people’s houses had fallen by 35% with them still repaying the full amount of their mortgage, and the number of approved housing loans fell by 73%. In September 2008, the Irish state guaranteed the six main Irish banks, which had financed this unaffordable property bubble. It guaranteed the banks depositors and bondholders. After the property bubble burst the Irish banks had lost an estimated 100 billion Euros, where much of it was related to defaulted payments on the speculative mortgages. The economy then collapsed,