Introduction:

The euro debt crisis started in the Europe at the last quarter of 2009 and with the situation becoming particularly tense in early 2010. This debt crisis particularly affected the Greece, Ireland and Portugal. Greece will be our main focus in the Europe debt crisis because this country face more severe crisis than other country. This analysis will be interesting because Greek economy was one of the fastest growing in the euro zone from 2000 to 2007, so it will be interesting to see that what causes the so much trouble in the economy.

Causes of the Crisis

Greek economy was considered one of the fastest growing economies of the Europe; there was annual 4.20% growth of the foreign investment in the country. At that time their economy was very strong so they decided to run large scale of structural deficit. They wanted to make large level of structural deficit, for that purpose they started to burrow very large level of the funds, in fact they paid so much fees to that banks like Goldman Sachs that their debt increases to the greater level. Their ideas was right they wanted to spend more and more on the country infrastructure but there was not enough forecasting. So for that purpose they started to hide facts from the world. They started to manipulate the country's official economic statistics. The thing is they started so much borrowing that immensely increases their foreign debt to the economy. So what happened now is their debt increase so much that their default rate risk is very high now, the current debt on the Greek now is almost 300 billion ($413.6 billion), is bigger than the country's economy. So what is the Greece credit rating? The assessment of its ability to repay its debts -- has been downgraded to the lowest in the euro zone, meaning it will likely be viewed as a financial black hole by foreign investors. This leaves the country struggling to pay its bills as interest rates on existing debts rise. Another thing is when Greece included in the EU; it helped the country to easily borrow the money. These funds very obtained by Greece government at

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very high prices. Greece is considered one the richest country in the world (currently 30th richest country in the world) so burrowing was quite easy for them. So after the sudden debt crisis arises they started to panic, there was sharp decline in their stock exchange markets, and investors was keen to take out their money as soon as possible. This situation becomes bad to worse for the country economy. Greece embarks on tough economic reforms it is facing the prospect of deep social unrest, with tens of thousands of workers taking to the streets this week. The Greek debt crisis is spilling over to other European economies - and threatening international prospects for economic recovery. Tens of thousands of disgruntled workers spilled into Greek streets on Wednesday, registering their dissatisfaction with government seriousness to control Greece's growing public deficit and debt

Debt Effects of other Countries

The debt effects could be very severe across the Europe; in case of the default of the Greece there may be series of the default countries across the Europe. Greece represents only 2.5% of the euro zone economy. Despite its size, the danger is that a default by Greece will cause investors to lose faith in other euro zone countries. If Greece goes down, so does Portugal, then Ireland, then Spain and so on, until it is "game over" for the euro zone Italy is another country who is now facing economic crisis, Italy is the second strong in the Europe and now they are facing economic crisis. Some says France will be the next country to face the crisis. But when you see the France economy it very strong economy and their GDP is also very strong. One might say that overall there is panic situation and investors are not feeling very safe and they hesitating to invest any more money in the markets. There is some charts the will enhance our understanding about these crisis. This crisis comes from the series of mistakes. So it will be not easy for the European countries to overcome that problem.

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This particular diagram shows us the clear picture about current standings of the European countries. As we see Greece and Italy debts are very huge as compared to their GDP. And their default rate is risk is very high. According to the news Greece has total debt of $413.6 billion. When you see the country is now facing this kind of national debt, you will assume that the economy of this country will eventually fall down. Portugal is in also very dangerous position. Their national debt is also climbing. It will be a matter of time when these economies going to fall down one by one and may lead to the Global Economic Crisis.

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This particular diagram shows the long term interest rates on the government bonds. As we see Greece has sharp rise in the interest rate of the bonds. So that means they are not been able to paying their debts.

Possible Solutions to the Crisis

Greek Crisis is far from solved. For the solution, they are taking too many ifs and making too many assumptions. What they need to do is make their political structures very stable and make those polices that will reflect that they are working in the interest of the country. Some experts says that their assumption about raising the money from privatization over a short period is also highly optimistic. Obviously you sale

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your assets at fire price then means you have sell them at low prices. So thats not really an option for best possible solution.

Second, the latest agreement has done nothing to build confidence in the other weak economies of the euro zone. Borrowing costs for Italy and Spain were back on the rise in this year. The future course of the euro crisis will still depend on whether or not the other European countries bail out the countries like Greece and Portugal. There is also a saying when this bail out thing starts then it going to happen again and again with others countries.

Another possible reason for the crisis is that the euro zone did not have the firepower to fight such contagion. According to BBC they have raise $1 trillion rescue fund through agreements. But the problem is that many analysts believe it is simply not large enough to give the euro zone's bark some bite. A chunk of the money has already been committed to the Greek, Portuguese and Irish bailouts, leaving the fund depleted. And with the other troubled economies Spain and Italy so much larger, investors won't be convinced the current fund can achieve much of anything. By one estimate, the fund would have to expand to a lending capacity of $2.9 trillion.

The real problem is that the European countries are still not addressing its deeper problems. There is no action on the sort of wide-scale economic reform across the zone to foster the growth and investment that would help weaker economies return to health. There is still no acknowledgement that the shaky standing of the euro zone's banks is at the core of the problem. The leaders of the euro zone have to finally realize that they are not dealing with a liquidity problem, but a structural problem that won't go away no matter how much money is dumped into bailouts.

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