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The European Debt Crisis in 2013-What is in Store for It?

by admin on February 12, 2013

The economic crisis in Europe is an issue that concerns the leaders of the different countries around the world. The worsening of the recession in the European countries, especially in Greece, has been one of the top concerns of all the economic leaders around the world. This dilemma has started in the year of 2002 where the European countries concerned can no longer control their spiraling debt.

This fiscal problem started when the Eurozone was established which made Euro their monetary unit. The sharing of Euro among these European countries has lowered the interest rates which were not in proportion with the rising value of real estate in these countries. Home buyers has been borrowing big loans from banks in acquiring homes which in turn failed to comply in with the amortizations and this greatly affects the banking system in these countries. This is a reality that financial experts and leaders have to face and to do action about it because the financial institutions will not be able to function well once the mortgages have not been paid. Weakening of the banking system in the European countries result to massive layoffs and slowing the growth of many businesses. Greece as well as the Spain are the countries in Eurozone that will is expected to experience bankruptcy. If it cannot control its economic decline this 2013 this will be removed from the Eurozone. This will cause more chaos will arise; unemployment rate has been increasing which can be more detrimental to its economic condition. Spain is also in the same position with Greece in terms with economic crisis. The IMF predicted that Madrid will need more funds just to prevent the country from being bankrupt. It has also been foreseen that this 2013 unemployment in Spain will rise by 26 percent. Because of this worst economic crisis happening in the European countries this serious economic issue has been included in the agenda. They have made a plan on how they are going to solve this dilemma by providing more assistance and less austerity on its condition. The issues that may emerge from this economic weakening are as follows. This can weaken the capacity of government in dealing with other crisis. Currency devaluation cannot be avoided.

European debt crisis into 2013

Politics also play an important role in maintaining the economy in its stable condiition. It is a challenge for the leader in this country to solve and overcome the shyness and make it as clean as it should be. The summit that happened in Lisbon has come to an agreement that financial institutions including the IMF will participate in providing assistance to those who can afford to pay it back. But some of the economist has high hopes that these countries will be able to survive the situation that they are presently into. Greece has been striving to stay in Euro and looking for a solution on how to avoid cuts and stop the tax raise. Spain still hasn’t asked for the full bailout.

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