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A Summary of the European Debt Crisis

by admin on February 9, 2013

A summary of the European debt crisis

There are several countries in Europe which have gotten themselves in depth of debt within the recent years such as Portugal, Ireland and Greece. These countries are all required to have access to billions of dollars during the years 2010 to 2011. This borrowing has been required in order to remain their governments from functioning ad in order to produce payments for the interest. People within such continent should know about a summary of the European debt crisis in order to comprehend about all that is happening within the economy of their countries.

In order to qualify for those bailouts, the governments of each country have had to trim down their expenditures, which are primarily done by having layoffs on government workers and applying some reductions of pensions. Aside from these, reductions the governments are also forced to raise their revenues by means of raising people’s taxes. These rigor approaches however have not solved the issue. The economy of Greece is contracting, the country’s debts continue to grow and some of the economists even believe that it would eventually fail to pay for its loans.

In the meantime, Italy and Spain are also struggling with high levels of debt, without having any possibilities on economic recovery within the short period of time. Since the economies these two countries have are much larger as compared to Greece’s, their issues might threaten the constancy of the Euro, which is the currency utilized by 17 countries in Europe. When investors come to a decision that the fall down of Euro is inevitable, this might be a self fulfilling prophecy.

This crisis has created tensions politically within the countries that are bailed-out along with the states coming from European Union. In Germany, a method is provided in which there is the resistance to saving other countries which are observed from having the irresponsible behavior. However, in Greece, there is some feeling of anger to the government as well as the wealthier countries that require Greece on imposing some job cuts which have left over 16 percent of the unemployed workforce.

As the result from this debt crisis, the ruling parties politically within Portugal and Ireland have failed from power then at the same time 2 prime ministers, Berlusconi of Italy and Papandreou of Greece, have resigned on different position. A lot of European countries carry the debt of other countries in which they have bought other bonds from the governments. When Greece or other country fails to pay, these losses would provide great effect on the economies of all the countries.

There are many people who are wondering if Euro would survive, or if Greece would be expelled from the Euro zone. Well, by reading a summary of the Europe debt crisis you would be able to know the answer for this. Enabling the Greece’s economies together with other states’ to fall down will result to some severe consequences to all countries in Europe and possibly even the rest of the countries all over the world. Hence, the leaders will be doing everything they could in order to avoid such outcome. However, different events can easily encourage the economic catastrophe.

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