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European Debt Crisis for Dummies: Impact to Other Parts of The World

by admin on February 8, 2013

Euro debt crisis for dummies

European debt crisis is struggle of Europe for their debts that they have failed to settle recently. Britain may be the front line in this crisis, but this country is not the only one that is affected. The economy of Europe is a huge market for businesses from Asia, United States, Russia, Japan, India, China, and some countries that have a big part in the global economy. China, as one of the biggest countries across the globe, considered lending money because they are concerned that Euro may not survive the crisis. In the meantime, IMF or International Monetary Fund set aside the hundreds of millions of dollars as a bailout to the European countries involved in European debt crisis.

Majority of the countries concerned with the crisis were eager that the Euro will survive even if the country is not large like those in Asia because of some reasons:

To Maintain the Massive Consumer Market of Eurozone

Many Europeans use Euro every day. It is the currency of a total of seventeen nations. Aside from the hundred millions of people who are using Euro, some Europeans buy services and products from overseas. If the value will collapse, then, they won’t be able to buy some imports.

To Prevent Global Recession

One cannot hide the fact that Europe has a big part to the global economy. If there would be a collapse on Euros, there would be inability to repay debts. This shall bring a negative impact to the world’s economy, thus, making the situation worse. In addition to that, the number of investors will decrease as they see future with the status of economy. Businesses will also cut jobs and would lessen the number of the operations which could result to a global recession.

To Protect and Keep World Financial System

Banks from all over the world that have invested in the Europe’s government debts will not survive if they would just support the countries affected. However, there are some banks that offer support to European countries and the effects are improving.

European debt crisis may not be an issue for millions of people across the globe, but this crisis could have an effect to anyone’s own country. No matter what race you come from, you should be aware of this big problem because once its currency collapse, it could also lead to chaos in the global market. So, you have to pay attention with the latest trend or current updates so that whenever you will hear European debt crisis, you will have idea what it is all about.

European debt crisis will continue to hit the market. But, some experts predict that this will still continue to rise if some countries will not do their part to improve their financial market. So, this only means that the global economy will still continue on its condition. However, if other European organizations will take action on everything and will continue to support the market of some affected countries, the crisis will improve which will lead other countries to recover and get back to the flow of the market.

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