Question

1) Is Europe facing a new crisis ? if yes

a. what caused the crisis to happen?

b. how did the crisis happen?

c. what are the damages to the economies of countries experienced this crisis?

d. what are lessons that we can learn from this crisis to avoid it from happening again?

Answer 1

Yes the Europe is facing debt crisis and it began as the global economy experienced low growth since the U.S. financial crisis of 2008-2009, which has described the unsustainable fiscal policies of countries in Europe and over the globe. Greece a country which almost pent heartily for years and failed to undertake fiscal reforms was one of the first to feel the pain of weaker growth. When growth decreases or just go slow, so do tax revenues – making high budget deficits unsustainable. The result was that the new Prime Minister George Papandreou, in late 2009, was very forced to announce that earlier governments had failed to reveal the size of the nation’s deficits.

In exact words, the truth is that Greece’s debts were so large in numbers that they actually exceed the size of the nation’s entire economy, and the country can no longer hide the problem.

Investors replied by demanding higher yields on Greece’s bonds, which put a rise in the cost of the country’s debt burden and necessitated a series of bailouts by the European Union and European Central Bank and the markets also began riding up bond yields in the other heavily indebted countries in the region, anticipating problems similar to what occurred in Greece.