The Euro Crises Dissertation Example | Topics and Well Written Essays - 4250 words

The Euro Crises - Dissertation Example The availability of easy credit fuelled into the households and the financial sector. The Central bank of Europe managed the cross border lending. The bill of welfare took the upward rising curve when the level of unemployment deepened. Some of the countries had to launch upon in order to find money for their banks. The new expenses had to be borne by the state. The tax receipts collapsed as well. The rates of interest surged. It was assumed by the investors that no government of the Euro zone will default on account of debt before the crisis. Even some of the investors were asked to get rewarded for taking the extra risk while others walked away as they were unwilling to pay for credit crunch. All this led to bond prices to fall which weakened the banks and slowed down growth. The countries of Euro zone were following the unsustainable current account deficits from before the crisis. The domestic spending took the leap as the interest rate was low and wages and the goods got inflate d. This resulted in exports being costly while the imports being cheaper. Germany was recycling the surpluses that were produced by the export machines and financed their consumption. It was anticipated that restoring the continent to its health will take few years because the troubled countries required to control the deficits of the government and reestablish the current accounts so that to improve the competitiveness. A research on the topic will help to analyze the effects of the crisis and the required steps from the countries in order to avoid the crisis. The decreases in output as well as in employment were dampened by the fiscal policies during the periods of... This report stresses that the dent crisis points to a gap between the legal and political thinking in the euro area. The tension between the sovereignty and solidarity has been revealed by the crisis. The government of France acted defend claims regarding the fiscal sovereignty. It also acted to confine the management of the crisis to the intergovernmental rather than Community method. As a result the governments have sidelined the European parliament and decided to favor the European Council. The lessons that the crisis taught is if two folds. The intergovernmental method is not suited to the requirements of the decisive actions during the crisis and there is a mismatch between the speeds in decision making between the council and the markets. This type of problem is regarded as the problem of inter temporal inconsistency. The crisis brought the power realities of the emerging continent. This essay makes a conclusion that the negotiating power of UK also got limited because of the crisis in the Euro zone. The crisis raised the stakes of the European integration to new levels, as well as provided the incentives to move ahead by following the policies of differentiated integration in the reform process of tax and economic governance. The crisis also calls for political populism. The crisis highlighted the economic situation and the financial situation of UK relative to the core Euro countries like Germany. At the time of the establishment the Economic and Monetary Union was less economic than political project. The debt crisis cannot be attributed just as the crisis belonging to the peripheral countries of Europe. The rapid recapitalization of the banking sector of the continent will not be the solution of the crisis.