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How European Debt Will Affect World

by admin on February 14, 2013

European debt affecting the world

European’s struggle to pay debt that it has built since the recent decades had paved way to the so-called European debt crisis. It had happened when the five region countries had failed to generate enough economic growth, with varying degrees, resulting to their incapability to pay back bondholders. These five countries that belong to the Eurozone are the Portugal, Greece, Italy, Ireland and Spain.  These countries are seen to be the countries in immediate danger of default. However, as the crisis has en-depth consequences, it has been extended beyond the borders of these countries up to the world as a whole. To state a fact, European crisis had been said to be the most serious and alarming financial crisis since the year of 1930s.

European crisis is hardest to understand as it is the most vital problems that the world economy faces. As many countries in the in the Eurozone are on the edge of financial bankruptcy, the larger global European bank is threatened to fail. The Eurozone which is composed of 17 European countries then could possibly break up and will be surely felt beyond the Europe’s border.

To give more light to the problem, the European crisis’ frontline is said to be the Britain. However, this is not only the country that has been affected. As a matter of fact, the Eurozone is known to be a colossal market for businesses starting from the United States, India, China, Russia, Japan, and other major economic supremacies. A Chine lends money to Europe; they have more worries that Europe may collapse taking their money to downfall. The world, in general, is so ardent to watch the Euro survive because of so numerous reasons even if it has only fewer members left. In fact, the International Monetary Fund had already helped countries in Eurozone that has economic difficulty. It had set aside hundred billion dollars for bailout of some Euro-countries to prevent the further consequence that may arise for their economic downfall.

To state a fact, there are 322 million Europeans that use Euro every day. The seventeen countries that belong to the Eurozone use this currency. Euro is generally used to buy services and goods from other countries overseas. Hence, when the European economy collapses, there will be a decrease in its value; thus, these countries would have the difficulty in buying imports. Therefore, countries overseas cannot have gains from their exports.  When the European government would also encounter difficulty in paying their debts, it would also bring a turmoil and negative impact in the world economy as a whole. Looking back to the history, this problem may resemble the financial crisis that happened during the year 2007-2008 where the global recession had occurred or it could be worse than that. This would result into businesses that would cut off their investment s and not hire new staff. Hence, businesses all over the world could also trim down their operation and cut jobs. People all over the world may likely be affected by this and poverty may arise.

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