European Sovereign-Debt Crisis
SUMMARY: European sovereign-debt crisis is still going on in some countries in eurozone, such as Greece, Spain, Ireland, Portugal. The origins of these crises started from Greece when the government borrowed a huge amount of money from foreign investors and was unable to repay. As a result, a financial crisis started to hit Greece as the starting point of the crisis over countries in Eurozone. While the old deutschmark (DM) bloc – Germany, France, etc. experience lower than average growth and inflation, the Eurozone experienced the contrary. In general, instead of global factors as the causes of the crisis, the Eurozone itself should hold responsible for the start and spread of the crisis.
I. INTRODUCTION
European sovereign-debt crisis is still happening within Europe, which gave some of the countries in the euro area a hard time to re-finance their government debt unless they are supported by third parties. There are many factors that cause the ongoing European financial crisis. Many countries within Eurozone have been affected by sovereign debt crisis due to the raise of government debt level or private debt sector. Although this ongoing crisis has happened in some of Eurozone countries, it gave a huge impact for the area as whole in general. This paper will be analyzed whether global factors or domestic factors are to be responsible for the origins and the spread of the ongoing crisis. II. The origins of European sovereign-debt crisis and causes: In 2008, the world hit crisis due to bad banking practices. Both Eurozone bank and American bank faced the same problems as they gave many people loans even they were not able to repay. However, the crisis in Eurozone happened as a result of the system European Union deals and does their trade policies. During the period of 2002-2007, a major increase in savings was available for investment, which became one of the factors that caused the crisis. There are four main issues that we need to consider to
I. INTRODUCTION
European sovereign-debt crisis is still happening within Europe, which gave some of the countries in the euro area a hard time to re-finance their government debt unless they are supported by third parties. There are many factors that cause the ongoing European financial crisis. Many countries within Eurozone have been affected by sovereign debt crisis due to the raise of government debt level or private debt sector. Although this ongoing crisis has happened in some of Eurozone countries, it gave a huge impact for the area as whole in general. This paper will be analyzed whether global factors or domestic factors are to be responsible for the origins and the spread of the ongoing crisis. II. The origins of European sovereign-debt crisis and causes: In 2008, the world hit crisis due to bad banking practices. Both Eurozone bank and American bank faced the same problems as they gave many people loans even they were not able to repay. However, the crisis in Eurozone happened as a result of the system European Union deals and does their trade policies. During the period of 2002-2007, a major increase in savings was available for investment, which became one of the factors that caused the crisis. There are four main issues that we need to consider to