Eurozone Crisis

ESSAY

Europe finds itself involved in an alarming financial crisis. Right now, the Eurozone has a threatening issue in its hands, there is a large amount of external and internal debt across the whole Eurozone. Countries like Spain or Italy, that have a very important part in the economy of the European Union, find themselves on the edge of the economy due to a large amount of debt andapparently no clear way to pay it. Greece is another main player on this crisis, they seem to be the ones with the biggest problem a no way out of it. We cant keep delaying the problem, or else it would keep getting worse by day. Europe is on verge of falling into a recession because of the crisis, and it will do if nothing is done quickly to get back to their feet. This crisis is affecting the Euronoticeably, hence also all the countries around Europe that use it. Solutions are to be created and decisions have to be taken as fast as possible. What we fail to understand is that this whole crisis is an opinion based issue. No obvious solutions can be made that will fix all our problems, and all we can do is make a decision based on what seems to be the clearer solution.

The problem goes asback as the year 2000, when an introduction to the Euro was made. Bad management of its use started to affect Greece at first, but since they paid for others not to know, nothing was done to fix the problem. This made the internal debts of Greece keep increasing slowly up until 2009, when others started to realize that Greece was already in a financial crisis and needed bailout money to get out ofit. The European Union had created a fund with money from all European governments, called the Troika. Its was basically the International Monetary Fund, which received money from the United States, and mainly Germany and France, which were two financially strong countries. Greece needed bailout money to start paying their debts in order to reanimate their economy, it was then when the Troika lent240 billion euros in total, expecting budget cuts, privatization and a decreasing of the government expenditures. Still, Greece was not out of the crisis, and more indebted than before. Meanwhile, Spain and Italy were also suffering a financial crisis, very similar to the one that happened in the United States. The euro had appreciated its value immensely, so no money was moving into Europe, norout of it since many were indebted, and couldn´t move the economy internally. It was by this time that only two solutions seemed to be on the table. Wether a default was made, reesctructuring the debt, or countries could inflate their way out by printing high amounts of money. A default would affect the integrity of the union, and the debt that was not paid would still have to be paid by someoneelse. Also, the country that defaults would have to face some rough times trying to get back to their feet with their own currency. Printing high amounts of money to inflate their way out would create a short term solution, but long term the inflation would affect the country. We need to understand that a short term solution always creates a long term problem.

Starting to analyze the crisis andbased on the facts, we come to learn that the real reason for it was that Europe started to give the Euro as currency, but with no fiscal nor financial nor credit policy on how should it be managed. This was what began the crisis, we take the example of the US dollar as a currency in the United States. The US dollar is a strong currency, and we can link its success to their unified policies, UnitedStates counts with 50 states using the same currency and they all answer to the same policies, thats what makes them have such a strong economy. What countries want is to reanimate their economy, so they can start to cover all their external debts, but they don't seem to find a way to do it. Three scenarios can be faced at the end. One being that, the European Union will state that sovereign...