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July 7, 2012
The European Debt Crisis: A Beginner's Guide
The Huffington Post Alexander Eichler First Posted: 12/21/11 05:25 PM ET Updated: 12/27/11 10:19 AM ET The European sovereign debt crisis! It -- wait, come back. This is interesting, we promise. The debt crisis is one of the biggest stories of the year, maybe of the decade. If you're American, how can you tell whether the situation across the pond affects you? Take our quiz to find out: 1) Do you like money? 2) Would you rather have money than not have any money? If you answered "yes" to either of the above, then the Europe situation probably has bearing on your life. Here's a quick explanation of what's happened. (More of a picture person? Scroll down for graphics that help to explain the crisis) WHAT IS THE EUROPEAN DEBT CRISIS? In its most basic form, it's just this: Some countries in Europe have way too much debt, and now they risk not being able to pay it all back. Simple!
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There's more to it than that, of course, but when people talk about the "crisis," what they're worried about is that a big, scary, flashpoint event will happen -- like one or more of the eurozone countries defaulting on its debts -- causing investors to panic and triggering a massive banking shock. The possibility also looms that one or more countries will pull out of the eurozone -- the 17-nation bloc that use the euro currency, which has been around since 1999. Should any of the eurozone nations drop out of this group, it could lead to a rash of bank failures in Europe, and possibly in the United States as well. Under these circumstances, people and businesses who need money might not be able to get any. We'd be looking at depression for Europe and recession for the rest of the world. Some people argue that an orderly, controlled eurozone break-up would be a good thing for certain struggling debtor nations. Still, even this relatively benign scenario carries economic fallout for Europe and maybe beyond. HOW DID THIS HAPPEN?
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However. Greece might still be shouldering huge debts if not for the euro. American banks have billions of dollars at risk in European banks.and it's not clear how they're going to correct this.gathered under the unfortunate acronym PIIGS -.and the ones that aren't in debt look like they might have to assume responsibility for the ones that are. 2 of 10 07-07-2012 16:49 .S. triggered by some event that sends investors running for cover. FROM THE OLD WORLD TO THE NEW The crisis in Europe could end up affecting the U.S.arguing that the idea that a single currency could meet the needs of 17 different economies was inherently flawed. That's certainly a reason default by Italy or a departure of the eurozone by a fed-up Germany -. also experienced a huge housing bubble. But when 17 nations use the same currency. Greece. the nations yoked together under the euro frequently haven't had that option. and by the time you read this. eurozone authorities drew up a tentative proposal to enforce stricter consequences on countries that borrow beyond an agreed-upon limit. a downturn in Europe is the last thing the U. The U. A financial emergency in Europe.S.could reverberate around the world. but maybe it wouldn't be in a position to take down the rest of Europe with it. and aims to bring members of the currency bloc into greater sync from a fiscal standpoint. which now has a 22 percent unemployment rate. underwent a massive real estate bubble. exports go to the eurozone. circumstances may have already changed. they might be able to export their way out of the mess they're in -. they can't. and one that made more sense for Berlin than for Madrid. Further. then they wouldn't have been able to borrow at the same low interest rates -.S. other countries are way over-leveraged.it feels like things are as bad as ever. At the moment.S. And if the PIIGS all still had their own individual currencies. Typically. Now that the size of the PIIGS' debt has become clear. The PIIGS took different paths to this scenario. However. Countries with strong economies like Germany and France were keeping their output high and their debt at a manageable level. investors are getting more and more reluctant to buy bonds from European countries. and it's already hard enough for small businesses in the States to get credit from banks. As of this writing. The country didn't indulge in excessive borrowing -. for example. The Irish government wound up rescuing its banks.The European Debt Crisis: A Beginner's Guide http://www. Others say the euro currency itself is to blame -. Italy's debt is 121 percent the size of its economy.S. many argue that it's not right in all cases to blame indebted governments for their own situation. it ended up with high deficits because it couldn't collect enough tax revenue to cover its expenses. For Ireland.an interest rate set by the European Central Bank. business owners could be facing a credit crunch if overseas banks topple. it's 165 percent. and its banks sustained giant losses. since many of those countries are heavily in debt -. for example. and many countries are using inventive asset-juggling tricks to get capital into their banks without officially bailing anyone out. Earlier this month. Spain. taking advantage of the low interest rates available to all euro member nations. WHOSE FAULT IS IT? Blame often gets cast on the "irresponsible" countries who borrowed too much. Portugal.. WHAT HAPPENS NEXT? This is a fast-moving story.rather. Alternatively. little economic production to make up the difference. yoked together under one currency for the last decade -even though their economies functioned according to different habits and enjoyed very different degrees of financial health. and most people think that if a disaster happens. in some very direct ways.selling goods on the international market until their respective situations were a little less dire.are some of the most highly leveraged eurozone countries. The Great Recession technically ended in 2009. a country's central bank can adjust a nation's money supply to encourage or inhibit growth as a way of dealing with economic turmoil. Investors don't want to put their money into bonds if they think they might not eventually get that money back. stands to suffer huge trade losses if Europe slips into a recession. European Union authorities have put together a funding package of 150 billion euro for the International Monetary Fund to disperse to debt-stricken eurozone nations. The deal would also require eurozone nations to balance their budgets. the indirect damage could be greater: U. that figure is 109 percent. The deficits weren't piling up everywhere. And governments in Europe have a lot of debt and not much money -. Italy.people in poverty. trouble spreads quickly. In Greece. so weak consumption in Europe spells trouble in the States.to name two examples -. since not every country with high deficits actually engaged in reckless borrowing. Growth is slow in America. And the troubles of a few countries could end up affecting everyone. and now the country is burdened under a huge debt load. And while that's actually a relatively small fraction of U. Greece and Spain -. people working long hours for low wages -.S. If Spain and Germany hadn't both spent the last several years on the euro. though.. could take all of America's problems and make them bigger. you could say the interconnectedness of the modern financial industry is to blame. but for a lot of people -. people who can't afford food.huffingtonpost. But as it is. all of Europe is basically trying to do damage control. the U. not only borrowed beyond its means. Ireland. if you like.com/2011/12/21/european-debt-crisis_n_11. banks' holdings. meaning they have too much debt relative to the size of their economies. Fourteen percent of all U. on the other hand. Ireland. it will start with one of them. not less. and millions of people aren't working who'd like to be. and some creative bookkeeping to prevent eurozone authorities from realizing the true extent of the situation. The reason everyone is freaking out now is that while some eurozone countries are relatively sound from an economic standpoint. but exacerbated the problem with lots of overspending. needs to be producing and exporting more. needs.
since the countries have a poor track record of working together on financial matters.7 trillion. according to The Financial Times. --Bonnie Kavoussi Share this: 12:38 AM – 12/31/2011 Subsidy Cut Threatens Italy's Newspapers Up to 100 Italian newspapers will be forced to close after the Italian government slashes subsidies to newspapers in the name of shoring up its finances. In 2011 Investors in global stock markets lost $6. it's not clear whether any of the curative measures in the works will allow Europe to avoid a major financial downturn. Meanwhile. In the meantime.even though this results in financial misery for the people in those countries.except keep an eye on it. and will in all likelihood make it harder for Europe's economy to gain any momentum in the months to come. Disaster isn't a foregone conclusion at this point. when that agency lowered the United States' sovereign credit rating one notch and caused markets to spaz out. as all this is going on. Is there anything you can do about the situation in Europe? Not really -. according 3 of 10 07-07-2012 16:49 .huffingtonpost. EU leaders will meet again on January 30 to further discuss this deal. and even the perception of a crisis could quickly become self-fulfilling.5 per cent. Some onlookers are skeptical that the eurozone nations can reach a workable deal. which have all downgraded or threatened to downgrade numerous countries and financial institutions in the eurozone and elsewhere. troubled eurozone countries are pledging to cut back government spending to show they can be trusted -. From the FT: The S&P 500 is flat this year while the FTSE 100 has only dropped 5.com/2011/12/21/european-debt-crisis_n_11.) At the moment. European governments are doing all they can to soothe investors -. Hong Kong’s Hang Seng index 20 per cent and the Shanghai Composite 22 per cent. The value of global stock markets fell 12 percent to $45. The MSCI Emerging Markets index has shed a fifth of its value despite strong growth in China and other emerging markets.. But the Eurofirst 300 gauge of blue-chip European companies has lost 11 per cent. Asian equity markets were hit particularly hard with Japan’s Nikkei index losing 17.a task made harder by ominous rumblings from credit rating agencies like Moody's. (You may remember Standard & Poor's from the fun downgrade debacle of this past summer. The subsidy cut amounts to a 69 percent cut in funding for newspapers. since bank-to-bank relationships rely on trust and credibility. And things are likely to remain on a hair trigger even if a deal progresses.3 per cent this year. led by the French and Italian exchanges.3 Trillion. the business climate in America will likely get worse before it gets better.3 trillion in wealth in 2011 largely because of fears of a eurozone breakup. but if things do go south on the Continent.. Or $6. according to The Financial Times. You'll want to be able to see that coming if it does.The European Debt Crisis: A Beginner's Guide http://www. Fitch and Standard & Poor's. Below are graphics featuring a country-by-country break down of some of the most important indicators of the crisis : Debt As A Percentage Of GDP The Unemployment Rate Projected Gross Domestic Product ALSO ON HUFFPOST: Eurozone crisis live updates: live blog Oldest Newest 3:59 AM – 12/31/2011 Global Stock Markets Lost 12 Percent Of Value.
Again The European sovereign debt crisis is turning into a banking crisis. highlighting the rising level of banks' distrust in any risky lending as banks seek to shore up capital to meet new regulatory requirements. according to the FT. will worsen job prospects for young people. Bloomberg News reported. The deposits attract an interest rate of just 0. and approved by the new government of Mario Monti. caused in part by a contraction in government spending. Staffers at the communist daily Liberazione. --Bonnie Kavoussi Share this: 8:58 PM – 12/28/2011 Investors Unmoved By Lower Borrowing Costs For Italy Investors were unmoved by the steep fall in Italy's short-term borrowing costs on Wednesday. according to The Wall Street Journal. The DAX in Germany plunged 1. the amount of overnight deposits parked at the European Central Bank's overnight deposit facility reached another record high on Tuesday: $591 billion. The interest rate on Italy's ten-year government bonds remained unsustainable at 6. according to The Wall Street Journal.04 percent on Wednesday. the CAC in France fell 0. and "young people remain the hardest hit by the crisis and its aftermath.huffingtonpost. After breaking a record just a day earlier.25 percent at an auction on Wednesday: a vote of confidence in Italy's ability to pay off its debts for half a year.000 readers..25 percent and could translate into a loss for banks. which has 5..80 percent. according to the Italian consumer group Codacons. 4 of 10 07-07-2012 16:49 . But investors remained skeptical about Europe's long-term economic prospects. that the imminent economic slowdown in Europe. --Bonnie Kavoussi Share this: 8:38 PM – 12/28/2011 EU Admits That Austerity Will Lead To Higher Youth Unemployment The European Commission admitted in a report in mid-December that its medicine for the sovereign debt crisis may be poison for Europe's long-term economic outlook. It was ordered by the government of the previous prime minister. The interest rate on Italy's six-month government bonds fell by half to 3. Though the newspaper industry is in decline. and Italy's FTSE Italia All-Share neither gained nor lost ground. --Bonnie Kavoussi Share this: 8:35 PM – 12/28/2011 European Safe Haven Deposits Reach All-Time High. with a high of 48 percent in Spain. according to the WSJ. a 10 percent increase from $538 billion the day before. media magnate Silvio Berlusconi.The European Debt Crisis: A Beginner's Guide http://www." The youth unemployment rate in the European Union is disastrously high at 20 percent. some say that these local and sometimes partisan newspapers give voice to stories that the mainstream media ignores.38 percent. are staging an occupation of the newsroom this weekend to prevent the owners from shutting down the paper after its possible last issue is released on Saturday. to the FT.com/2011/12/21/european-debt-crisis_n_11. the FT reports." The report added that "income shocks may prove permanent. The report said. as Italy's long-term borrowing costs stayed elevated and European stocks fell. --Bonnie Kavoussi Share this: 1:57 AM – 12/28/2011 Italy Suffers From Worst Christmas Shopping In Ten Years Italy suffered from the worst Christmas shopping season in ten years.
Reuters reported. 5 of 10 07-07-2012 16:49 . France's Carrefour rose 0. According to the European Commission. according to Codacons.23 percent. or 48 euros. At the moment. less per person during the holidays this year than the average of the past five years. while the CAC 40 in France fell just 0. --Bonnie Kavoussi Share this: 8:09 PM – 12/27/2011 Post-Christmas Shopping Boosts European Stocks The stock prices of European retailers rose after reports of shoppers flooding stores both in Europe and the United States on Monday. The unemployment rate in France rose in the third quarter to 9. the EU has a youth unemployment rate of about 21 percent.03 percent.1 percent in the second quarter. The lack of opportunities for Europe's young people has inspired protests and riots in some countries and mass migrations in others. the WSJ noted. in conjunction with continued liquidity in the eurozone markets as the ECB lends more to banks. according to Reuters. according to the Italian consumer group Federconsumatori. or if the EU's many heavily indebted countries impose austerity measures to rein in deficits. the program will allocate 4 million euro toward getting young people into employment. The FTSE Italia All-Share.476. Bloomberg News reported. the day after Christmas. fell 0. Shoe and clothing stores suffered the most. The DAX stock index in Germany rose 0. which is considered to be a safe haven. education or training within four months of leaving school. placing pressure on French President Nicolas Sarkozy's reelection campaign. meaning that 5 million young people are out of work.1 percent more than in October and 5. Italians spent $62. and Swiss watchmakers Swatch and Richemont rose 0.85 million.129 euros.appears to be considering an auction of six digital frequencies. Italy's main stock index.whose debts currently exceed 1. overnight at the ECB on Monday. or 347 billion euros.5 million people age 15 to 24 are not employed.75.Alexander Eichler Share this: 11:06 PM – 12/20/2011 Cash-Strapped Italy Weighs Sale Of Its Digital Frequencies Italy -. Banks deposited $538 billion. a program aimed at getting more of the continent's young people into the workforce. up 19 percent from $453 billion. according to ECB data cited by the WSJ.85 percent on Tuesday. -. a total of 7.. or more than 120 percent of the size of its economy -. The problem is expected to grow worse if Europe tips into a recession.3 percent from 9.8 trillion euro. --Bonnie Kavoussi Share this: 12:41 AM – 12/21/2011 EU Rolls Out Plan To Combat Youth Unemployment In the face of growing youth unemployment across Europe. according to Bloomberg. on the Thursday before Christmas..6 percent. with sales in that sector plunging 30 percent compared to previous years. --Bonnie Kavoussi Share this: 8:25 PM – 12/27/2011 French Unemployment At 12-Year High The number of people without jobs in France reached a 12-year high in November. according to the FT.com/2011/12/21/european-debt-crisis_n_11. Italians are cutting back in their spending. the European Commission has launched what it calls the Youth Opportunities Initiative. according to The Financial Times. according to France's national statistics office. or 412 billion euros.2 percent more than during the same period last year. according to Reuters. which will continue to hurt the economy. Italy's latest austerity plan will cost every Italian family about $1. As the Italian government seeks to rein in its debt by slashing spending and collecting more in taxes. according to The Wall Street Journal. The high level of overnight deposits reflects the rising level of distrust in inter-bank lending. Per a press release from the European Commission. The stock price of German retailer Metro rose 1 percent on Tuesday. 1.huffingtonpost. or 1. attending school or involved in work training.The European Debt Crisis: A Beginner's Guide http://www. France's labor ministry reported that the number of registered jobseekers in France rose to 2. --Bonnie Kavoussi Share this: 8:48 PM – 12/27/2011 European Safe Haven Deposits Reach All-Time High Banks parked a record high number of deposits in the European Central Bank's overnight deposit facility. according to Codacons.7 percent.
Compounding the problem is the ubiquity of low-paying temporary job contracts in Germany. the Italian government walked back plans to assign the frequencies for free.that are not part of the currency union. It now seems to be weighing a proposal to auction the frequencies to the highest bidder. Bloomberg reports. One such method. according to a professor at University of Rome La Sapienza.The European Debt Crisis: A Beginner's Guide http://www.Alexander Eichler Share this: 10:12 PM – 12/20/2011 European Governments Work Out Some Non-Bailout Ways To Fund Banks Mindful of the stigma associated with bank bailouts. a rescue package that incorporates commitments from eurozone and non-eurozone countries alike. for example. a 0. as well as four countries -.Poland. as quoted in Bloomberg. Europe's economy is widely expected to shrink in the coming months. which bodes ill for the prospect of a labor market recovery. Spain has raised about €11 billions. Portugal and Spain are moving assets around to help ease the debt burden on their major banks. according to a report issued Friday by the European Commission. The €150 billion will consist of contributions from 13 eurozone nations. the euro stood at $1. whose refusal to pledge money to the IMF means that the architects of the deal will fall short of their €200 billion goal. Nations including Germany. Analysts have warned that these solutions are only a temporary fix and that more comprehensive action will be needed to guarantee the safety of European banks.4 billion euro. -. and runs significantly higher for some individual countries. in debt auctions an unexpectedly good performance aided by falling interest rates. In the past week. There were a number of reasons investors may have been wary during Monday's trading.com/2011/12/21/european-debt-crisis_n_11.. the WSJ reports. some European governments are using workaround methods to generate quick cash for their countries' financial institutions.K. Also not participating in the deal are Greece. Spain will auction a series of three. Report Finds With recession looking more and more likely in Europe. Low-Paying Jobs Likely To Remain Widespread In Europe. according to The Wall Street Journal. including a rescue package deal for the International Monetary Fund that fell short of expectations. Notably absent is the United Kingdom. involves the government selling its unwanted property to banks.. -. especially in light of the financial troubles Italy’s in.and six-month securities. and tumbles for Asian currencies like the won and the yen as the international community assessed the death of North Korean leader Kim Jong Il. The U. Overall. On Tuesday. Italy.huffingtonpost. Alexander Eichler Share this: 12:49 AM – 12/20/2011 Unemployment. Sweden and other 6 of 10 07-07-2012 16:49 . At the end of trading Monday. Denmark. Youth unemployment in the European Union is at 20 percent. Ireland and Portugal." according to a statement from EU finance ministers. head of the telecommunications company Assoprovider. yet may not be far-reaching enough to reassure nervous investors.Alexander Eichler Share this: 4:52 AM – 12/20/2011 Euro Falls Against The Dollar Ahead Of Spanish Debt Auction The euro dipped below the $1. In Spain. according to the Wall Street Journal.99 at the closing bell. then leasing the property back. in use in Italy.4 percent decline on the day and close to an 11-month low versus the dollar. Alexander Eichler Share this: 1:57 AM – 12/20/2011 Eurozone Countries Pledge €150 Billion To International Monetary Fund Several nations agreed Monday to provide €150 billion ($195 billion) to the International Monetary Fund. will "define its contribution early in the new year. The hope is that by eschewing any measure that can be characterized as a full-on bailout. the Dow ended the day 100 points down. France. Sweden and the Czech Repoublic -.30 mark Monday afternoon as markets closed out a day of disappointing news and developments of uncertain import.” said Dino Bortolotto. 48 percent of young people are unemployed. Such a sale could net the government about 2.2997. the problem of high youth unemployment is unlikely to diminish any time soon. Monday also saw a sell-off for Bank of America stock that left the company trading at just $4. Earlier this week. the countries can avoid spooking investors with the appearance of vulnerability. according to Bloomberg. three heavily indebted eurozone countries that have received international bailout funds. "It doesn’t make any sense to give away for free scarce resources such as frequencies. Banks can bundle the properties as asset-backed securities and use them as collateral to get loans from the European Central Bank.
But banks are likely to use the money to pay down their own debts rather than save European governments from higher borrowing costs and the threat of default. the FT reports. Rajoy told Parliament that measures to reform the labor market would be devised by the end of March. who will be sworn in as prime minister of Spain on Wednesday. It's counterintuitive. the U. From the article: Burned by Greek losses. longer-term ECB loans to buy government debt as part of an officially-sanctioned carry trade. the highest of any developed economy. It would be digging a deeper hole for yourself. dollar -. 7 of 10 07-07-2012 16:49 ." and that "[b]ehind the growth crisis is a leadership crisis. an accusation that was ultimately dropped. according to the WSJ.S. -. Many young people are employed under temporary contract arrangements. according to the Financial Times.not gold -. Senior bankers say they will cut further. Dollar Usurps Gold's Status As Safe Haven The U.S. "I can't think for a moment why anyone would want to [buy eurozone government debt].S. according to The Financial Times. Moody's attributed the downgrade to the increased risk that the Belgian government took on by bailing out the bank Dexia. according to the Financial Times.Alexander Eichler Share this: 10:57 PM – 12/19/2011 Spain's Incoming Prime Minister Offers Details On Economic Reform Mariano Rajoy. but these positions offer relatively little chance of moving into a full-time job. Spain has an unemployment rate of nearly 23 percent. Alexander Eichler Share this: 10:28 PM – 12/19/2011 Dominique Strauss-Kahn Scolds European Heads Of State Dominique Strauss-Kahn. Strauss-Kahn said that European debt crisis was in fact "a growth crisis. told the FT.now is the ultimate safe haven. Under Rajoy's plan.huffingtonpost. --Bonnie Kavoussi Share this: 3:54 AM – 12/17/2011 European Banks Unlikely To Bail Out Struggling European Governments The European Central Bank has given banks a weapon that could serve as a backdoor bailout for troubled European governments: cheap money. Speaking at a conference in Beijing.The European Debt Crisis: A Beginner's Guide http://www. The proposed budget aims to reduce Spain's deficit by €16.com/2011/12/21/european-debt-crisis_n_11. banks have slashed their exposure to weaker European sovereigns over recent months. and under the scrutiny of shareholders. and can create a lasting wage gap between temporary and permanent employees.5 billion." Ross Norman of Sharps Pixley. according to Thomson Reuters' International Financing Review. saying he doubted whether they "clearly understand each other." Strauss-Kahn cited German Chancellor Angela Merkel and French President Nicolas Sarkozy as two leaders who were not cooperating as effectively as they could.Alexander Eichler Share this: 4:32 AM – 12/17/2011 U." said the head of capital markets at one European bank that is also reducing its exposure to eurozone sovereign bonds. countries. "Everyone is trying to protect capital. -.." --Bonnie Kavoussi Share this: 3:34 AM – 12/17/2011 Moody's Downgrades Belgium's Credit Rating Credit rating firm Moody's Investors Service downgraded Belgium's credit rating two notches on Friday: from Aa1 to Aa3. a retail bullion brokerage. "Gold evidently failed to uphold its primary role as a safe haven asset. Rajoy told members of Parliament Monday that his government will pass a provisional 2012 budget by the end of December. public sector hiring is expected to drop off sharply. the former managing director of the International Monetary Fund. While gold prices fell to their lowest level since September. had harsh words for eurozone leaders Monday. and all forms of public spending except pensions will be vulnerable to cuts." Monday marked Strauss-Kahn's first formal address since being charged with the sexual assault of a hotel housekeeper in May. dollar index rose to its highest level since January as investors fled risky investments after the unsuccessful European Union summit last week. according to BBC News. has lain out some of the measures his government intends to take to address Spain's looming budget deficit. despite pressure to use newly available..
--Bonnie Kavoussi Share this: 2:56 AM – 12/17/2011 French Presidential Candidate Promises To Focus On ECB For Rescue If Elected Francois Hollande.3019 at 1:49 p.Germany. Hollande said that he would like to work within the current legal framework. The Irish economy shrank largely because of a steep decline in corporate investment and consumer demand. the Socialist Party candidate for president of France. French President Nicolas Sarkozy's main election opponent. Belgium. Slovenia. according to the FT. according to Bloomberg News.7 percent this week: the largest such decline since early September.. --Bonnie Kavoussi Share this: 2:41 AM – 12/17/2011 S&P: Traditionally Strong Eurozone Countries May Suffer More Than Others From Recession Standard and Poor's released a report Friday saying that five of Europe's strongest economies may experience an even sharper contraction than other countries. according to S&P." according to the WSJ.. ET. he would seek a eurozone rescue from the only institution that he believes can save Europe. Christoph Franz. Belgium.9 percent between July and September. "increasing medium-term risks to economic growth" due to budget cuts in the eurozone. --Bonnie Kavoussi Share this: 2:30 AM – 12/17/2011 Irish Economy Shrinks 1. The value of the euro has fallen 2.32 percent as of Friday afternoon. Ireland. Consumption comprises 73 to 80 percent of those economies. according to Bloomberg News. when the Irish economy performed second best. "Everyone knows that without a powerful intervention by the ECB. and Finland -. Fitch Ratings revised its outlook to negative on Friday on the credit ratings of Spain. S&P wrote that the eurozone's five "net exporter" countries -. according to The Wall Street Journal: the European Central Bank. according to the WSJ. Air France also plans to announce cost-cutting measures in mid-January.9 Percent Ireland. the Netherlands. plans to detail a cost-cutting plan early next year as Europeans turn to cheap airlines and built-in expenses such as the cost of fuel rise. said that the ECB is the only institution with the funding and credibility to be able to provide a full backstop for troubled European governments. according to The Wall Street Journal. Ireland thus was the worst-performing economy in the eurozone: a steep turnaround from the previous three months. and that they may suffer even more since they are so dependent on external consumer demand. --Bonnie Kavoussi Share this: 3:21 AM – 12/17/2011 European Airlines To Slash Costs As Economy Deteriorates The German airline Lufthansa. After the announcement. according to the WSJ. which implemented austerity measures earlier than other European countries. --Bonnie Kavoussi Share this: 2:30 AM – 12/17/2011 Euro Weakens After Fitch Ratings Issues Downgrade Warning The euro fell in value on Friday after Fitch Ratings issued a warning that it may downgrade several countries in the eurozone. said that the company's operating profit this year will be "well below the figure we require in order to secure our company and our jobs in the future. Knowing that Germany would resist any change to the treaty preventing the ECB from buying bonds directly from governments. after gaining earlier in the day.com/2011/12/21/european-debt-crisis_n_11." he said. Italy. it will be impossible to restore calm on markets.huffingtonpost.The European Debt Crisis: A Beginner's Guide http://www. Europe's largest airline by market value. S&P wrote that the Netherlands is the most vulnerable "net exporter" country. and higher borrowing costs for eurozone countries such as Belgium. Austria. saw its economy shrink 1. and Cyprus. according to figures from Ireland's national statistics office cited by The Financial Times. said on Friday that if elected. Hollande. The interest rate on ten-year Belgian government bonds was 4. Lufthansa's chief executive. according to the WSJ.will suffer at least as much as other eurozone countries from the imminent European recession. --Bonnie Kavoussi Share this: 1:19 AM – 12/17/2011 8 of 10 07-07-2012 16:49 . the value of the euro fell to $1.m." he said. the FT wrote. followed by the Netherlands. "I would rather have a change in practice than a change in the treaty.
The value of the euro has plunged 13 percent since its peak in May to $1.1 percent during the first three months of 2012. although the CAC-40 has started to drop a bit. The Organization for Economic Cooperation and Development (OECD) forecast in late November that the British economy would fall back into recession during the winter because of government spending cuts and the eurozone crisis.5 percent as long as the fall in the value of the euro sticks. which is driving down the value of the euro and making European exports more competitive around the world. said Stijn van Nieuwerburgh.and it's going to have to undergo structural reform. associate finance professor at New York University's Stern School of Business. the centrist Free Democratic Party (FDP). which economists say could raise economic growth in the eurozone by at least 0. especially for countries outside the European Union. according to The Guardian. "It is true that the economic situation in Britain is very worrying today and one prefers to be French than British at the moment on the economic level. barged his way through more than 50. long term solutions to its sovereign debt crisis. and that's just a very painful and slow process. Italian Prime Minister Mario Monti said Europe's response to the debt crisis "should be wrapped in a long-term sustainable approach. German Coalition Party Gives Limited Vote Of Confidence In Merkel German Chancellor Angela Merkel's junior coalition party.. Share this: 6:23 PM – 12/16/2011 'Hunger For Rigour' Italian Prime Minister Mario Monti has said in a speech that the EU must look for more sustainable. For example. While Entering Recession Two of Europe's strongest economies now seem to be in a competition to see which one will shrink the least. they backed the decision to create a permanent eurozone bailout fund: the European Stability Mechanism. according to The Wall Street Journal. according to The Wall Street Journal. most likely in another confidence vote. It also forecast that the unemployment rate in France. Reuters reports." 9 of 10 07-07-2012 16:49 . --Bonnie Kavoussi Share this: 8:05 PM – 12/16/2011 Monti Survives Confidence Vote Mario Monti has survived his first vote of confidence over austerity. the sizable minority in the FDP that is skeptical about the euro probably will prevent Germany from pursuing larger bailout efforts." van Nieuwerburgh told The Huffington Post.2 percent between October and December of this year. contested by Italy's unions and the opposition Northern League. noting that the textile industry in emerging economies has boomed. Reuters reports (via CNBC). Though the FDP did not reach a quorum in the vote. which is currently 9. The French statistics agency Insee recently forecast that the French economy will have shrunk 0. "It will have to lie in something else -. according to The Financial Times. according to the WSJ and the head of Portugal's textile association told the WSJ that the weaker euro "will help Portuguese textiles exports.com/2011/12/21/european-debt-crisis_n_11. But it needed full parliamentary approval within 60 days to remain in force. Portugal's textile industry accounts for 10 percent of the country's exports. is expected to approve the package definitively next week. would rise to 10 percent by the middle of 2012. according to the WSJ.in R&D [research and development] -. Markets have not reacted to much today and have been flat. The upper house." But this is not a sustainable strategy. Nonetheless.30.The European Debt Crisis: A Beginner's Guide http://www.7 percent. and that it will shrink another 0. has been in effect since Monti's government approved it on December 4. according to the FT. not just to feed short-term hunger for rigour in some countries.huffingtonpost.. however short-term: exports. gave Merkel a limited vote of confidence in her handling of the eurozone crisis." French finance minister Francois Baroin said on Friday. --Bonnie Kavoussi Share this: 9:23 PM – 12/16/2011 European Debt Crisis Could Boost Exports The sovereign debt crisis ironically could boost economic growth in Europe through one avenue. "The future of Portugal does not lie in textiles. His predecessor. and politicians must overlook the short term needs for "rigour" in order to achieve the goal of stability. The plan. Investors are selling euros as they lose confidence in the future of the eurozone. But the fall in the value of the euro also could keep struggling European countries dependent on exports that no longer will stay competitive over the long term." --Bonnie Kavoussi Share this: 9:01 PM – 12/16/2011 France Sneers At United Kingdom. where Monti is a life senator. SIlvio Berlusconi.
10 of 10 07-07-2012 16:49 . Share this: More Play Play Play Finding High Ground During the European Debt Crisis European Debt Crisis Concerns Push Global Equities Lower... such as European Central Bank (ECB) intervention or discussions of collectively-issued eurobonds... Euro Falls 1% Vs." he told a conference in Rome.huffingtonpost. the risk of conflicts between the virtuous North and an allegedly vicious South. Energy. we cannot afford that the crisis in the euro zone brings us .. which has routinely blocked market-friendly approaches.. Risk Aversion Resurfaces as EU Debt.com/2011/12/21/european-debt-crisis_n_11. not divides. "To help European construction evolve in a way that unites. Dollar.The European Debt Crisis: A Beginner's Guide http://www. The speech could be interpreted as a thinly veiled attack on Germany...
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