16) What impact could Greece, Italy, Spain, Portugal, or all have on the EURO and the...

16) What impact could Greece, Italy, Spain, Portugal, or all have on the EURO and the European Union if they stop using the common currency?

18) Explain what happened from 2007-2010 to the home mortgage market.

Expert Solution

Answer 16: If Greece, Spain and Portugal have the similar financial conditions while Italy has the different. If Greece, Italy, Spain, Portugal leave common currency that is Euro then it will be a disaster for Euro as well as these countries. This move will affect Euro. Euro will not have its existence and its value will come down drastically. If these countries stop using Euro, Euro will just collapse and it will bring down the economy of these countries. If new currency will be introduced, it will take time to get stable.

This will have a great negative impact on European Union also. Some countries may leave European Union because of these uncertainties.

Answer 17: In 2007-08, Financial crisis started in USA and hit the whole world. Subprime crisis started when there was heavy demand of houses in USA, banks were financing for housing loan with the help of Mortgage backed securities (MBD). Banks lent so much money for buying properties without taking and checking the proper documents. Banks did not do proper documentation and provided loan. Slowly the demand or properties came down and properties got unsold. People who took loan, were not able to repay it as their properties got unsold. Banks could not get the money back and some banks collapsed and got bankrupt. Lehman brothers and Merrill Lynch got bankrupt. This was the time during 2007-2010 when the Subprime mortgage crisis hit not only USA but almost the whole world.

jeff jeffy answered 2 years ago

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