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The Eurozone is a term used to describe the region of countries using the Euro (currency). This then includes many of the countries of the EU such as Germany, France and Greece, but not all of them (countries like England and Poland still use their own currencies). The Eurozone crisis then refers to the plunging value of the Euro caused by the economic crisis and amplified by the multitude of countries using the system. The problem is, that while one country might be coping well with the financial hardships, others that are fairing less well (such as Greece) can end up pulling the value back down making it a vicious cycle and one that is hard to escape from.
This Eurozone crisis however is not a problem that is contained to Europe; rather it is one that affects the rest of the world through investments, debt and trade and that is risking serious global economic decline. It is in every one s best interests to solve this crisis as soon as possible. Many meetings have been held between the member states of the EU to this end, but as yet no satisfactory solution has been found.
Germany has been shouldering much of the brunt of the economic turmoil and handing bail outs to Greece, but this not yet enough. Other causes of the Eurozone crisis include too much debt from the member states, a lack of competition between the countries, the differing mechanisms of the various economies tied to one currency, and disagreements coming from the lack of a single authority and so many different member states each with vested interests a 17 headed hydra . Criticisms have been leveled at the very idea of a single currency which some skeptics see as unstable and unfeasible.
Opening Ceremony
The country was hit by the downturn, which meant it had to spend more on benefits and received less in taxes. There were also doubts about the accuracy of its economic statistics. Greece's economic problems meant lenders started charging higher interest rates to lend it money. Widespread tax evasion also hit the government's coffers. There have been demonstrations against the government's austerity measures to deal with its debt, such as cuts to public sector pay and pensions, reduced benefits and increased taxes.
Greece's economic problems meant lenders started charging higher interest rates to lend it money. Widespread tax evasion also hit the government's coffers. There have been demonstrations against the government's austerity measures to deal with its debt, such as cuts to public sector pay and pensions, reduced benefits and increased taxes. The EU, IMF and European Central Bank agreed 229bn euros ($300bn; 190bn) of rescue loans for Greece. Prime Minister George Papandreou quit in November 2011 after trying to call a referendum. If Greece were to default, and even leave the euro, it would cause a major financial crisis that could spread to much bigger economies such as Italy and Spain. Under Prime Minister Lucas Papademos, Greece is trying to negotiate a big write-off of private debts and secure a second bail-out of 130bn euros ($170bn, 80bn) before a 20 March deadline.
http://mjperry.blogspot.com/2009/04/house-price-indexes-usa-vs-europe.html
Exchange Rates vs the Dmark or euro (Left Index: 1970q1 = 100 Right Index: 2007m1 = 100)
Source: International Financial Statistics, IMF, Monthly Bulletin, European Central Bank
Germany
100 95 90 85 80 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
3) The PIIGS certainly need to improve their productivity, savings and exports. But they find exports difficult not simply because they are lazy bums but because they are locked into a common currency, the Euro. 4) So they cannot devalue to offset the fact that German Productivity and Quality is higher than theirs and thus they need to lower their prices in order to get export orders. 5) Some Germans want to impose such humiliating conditions on the PIIGS that they will be converted into vassal states. 6) All government spending in these countries will be controlled by a special EU commissioner.
Source: Economist.com
7) The fiscal discipline demanded of them as of now has already plunged the PIIGS into a deep recession with wage freezes and mass unemployment. 8) Any more external control of the Greece s spending and Taxation will be a recipe for the breaking up of the Eurozone. 9) Germans want to have the Euro and the Eurozone. They just don t want to pay the price required for its survival. 10) Something will have to give.
The End