The European Economic and Monetary Union

Only available on StudyMode
  • Download(s) : 97
  • Published : March 17, 2013
Open Document
Text Preview
The European Economic and Monetary Union (EMU) is an agreement between participating European nations to share a single currency, the euro, and a single economic policy with set conditions of fiscal responsibility. Since the euro entered in circulation in 2002, the European Union has become more and more powerful. However, in 2008 when the economic crisis dramatically started with a huge bank investment from the bank in the United states of America “Lehman Brothers », “Lehman Brothers Holdings Inc was a global financial services firm. Before declaring bankruptcy in 2008, Lehman was the fourth largest investment bank in the USA, doing business in investment banking, equity and fixed-income sales and trading (especially U.S. Treasury securities), market research, investment management, private equity, and private banking. On September 15, 2008, the firm filed for Chapter 11 bankruptcy protection following the massive exodus of most of its clients, drastic losses in its stock, and devaluation of its assets by credit rating agencies. The filing marked the largest bankruptcy in U.S. history, and is thought to have played a major role in the unfolding of the late-2000s global financial crisis.” http://en.wikipedia.org/wiki/Lehman_Brothers. Unfortunately the European Union had to face complex conflict. In this essay, we will pinpoint the benefits and the challenges of the EMU in the light of the current economic crisis. “The financial crisis that hit the global economy since the summer of 2007 is without precedent in post-war economic history. At present, governments and central banks are well aware of the need to avoid the policy mistakes that were common at the time, both in the EU and elsewhere. Large-scale bank runs have been avoided, monetary policy has been eased aggressively, and governments have released substantial fiscal stimulus. Large-scale bank runs have been avoided, monetary policy has been eased aggressively, and governments have released substantial fiscal stimulus. This perception dramatically changed when a major US investment bank (Lehman Brothers) defaulted in September 2008. But first steps have also been taken to redesign financial regulation and supervision – both in Europe and elsewhere – with a view to crisis prevention.Aware of the risk of financial and economic meltdown central banks and governments in the European Union embarked on massive and coordinated policy action.” http://ec.europa.eu/economy_finance/publications/publication15887_en.pdf. In the Greek economy, the crisis manifested with a slight delay compared to the rest of the Eurozone. The country has come in a recession phase in 2009, whereas in 2008, the expansion of the GDP had slowed. The more significant element, whether to believe the bourgeois statistics, it is the industrial sector, entered in a recession phase in 2005, had dropped of 4% in 2007-2008. In 2008, all of the manufacturing industrial frameworks were in recession, except the food industry (1, 2% of improvement). The crisis of the manufacturing sector is reflected in the important decrease of industrial products (about 7 %). The construction’ sector underwent an important decline (-9, 4%). From 2002 to 2008, the trend was lower from the production of agricultural product made out of soft wheat, corn and peaches. According to data given by Eurostat, the agricultural income has increased of 7, 1% in 2008, because of a slackness of the sales prices of producers and of a very important growth of industrial products prices. An accordance with Eurostat, The income of the agricultural outright as correlation of the added net value compared to the costs that have been dropped 2008 of 80,1%, compare to 2000 (=100). In 2008, there has been an important fall of prices in the Athens Stock exchange. Its total market value was estimated, end of 2008, at about a third of its value end of 2007. An important part of this fall is due to a massive withdrawal of foreign investors in October...
tracking img