Will the Euro Survive? the Euro Zone Fights for Its Life

Case Study2

Will the Euro Survive? The Euro Zone Fights for Its Life

Introduction

        The global economies are really broken from a long ago to until now. Especially, the Euro Zone has several financial problems and unstable economic condition seriously happened. How do we solve these problems in Euro Zone to be normal? During the boom years, many countries had faced with huge current account deficits which had become the central point of the problem. That’s why Governments got involved and handle these problems by borrowing the money to recover the deficits. Lehman Brothers failed from the bankruptcy in 2010. After failing of Lehman, European countries had the banking crisis problems. Due to the governments intervention to control the banks not to fail, they piled up lots of debts. Therefore, international investors were afraid that what if not to receive their money owing because governments would absence on their liabilities commitment. Government leaders used devaluation in order to manage exchange rates during each European country had its own currency in the twentieth century. A weaker currency can cause the competitiveness in the global economy. There were 24 nations-18 EU members and 6 non-EU states which have approved the Euro and they don’t have option for devaluation. Germany is the largest economy in the North Europe and more competitive In the global market by comparing Southern European companies are less competitive. This paper illustrated that Germany has a reputation for thriftiness compared to Greece, and its Southern European countries were famous for being big spenders. In this article, it mentioned that Greece, Italy, Portugal, Spain, and Ireland were facing troubles in the global financial markets.

Problems in Greece, Italy, Portugal, Spain, and Ireland

The first problem was that the global fiscal crisis started from Greece first in 2008 and obvious across the southern Eurozone and Ireland. Prime ministers in Greece and Italy couldn’t control and they were incapable to assure to monitor the economic reform program. Second, Spain’s unemployment rate increased in the Europe and it make  people motivation decrease for searching  and maintain jobs. It has strict government labor regulations. Third, Portugal is the poorest country in Western Europe and its budget deficit was 9.3 percent of GDP. Portugal doesn’t has lots of money to invest so its lead to be removed from the Eurozone. Fourth, the banking crisis happened in the 21st century in Ireland, current ranking is 29th in the global competitiveness but it has side effect on the real estate bursting, and the global demand of several iconic brands.