Euro zone

Euro zone

Economic problems
1. Deficits and debts
2. Structural and micro issues
3. Bubble
4. Banks
Political problems
1. Monitoring
  1. All missed
Institutions problem
1. No sanctions
ECB Inflation
Controls - ECB
1. Inflation
2. Interest rates
3. Debt: 60%
4. Deficit: 3%
5. What was the sense of the rules?
  1. Ought to have led to convergence
  2. Had they paid attention, it would have worked well
  3. Failure to obey rule killed applicability of sanctions
6. No bailout
Low interest rates
1. Led to:
  1. Increased consumption
  2. Increased employment
  3. Increased productivity
  4. Increased investments
Why EURO?
1. Integrated steel and iron core
  1. Partially used for war tension
2. Treaty of Rome
3. Cross order trade
4. Capital Flow
5. People
6. Currency
7. Stability
8. Union for competition
  1. Big market => ability to scale
9. Developmental reasons
10. Create one market
Differences
1. Macro problems
2. Panic
3. Structural
4. Countries
  1. Greece
    1. Structural
    2. Macro
  2. Spain
    1. Labor
    2. Real estate overspending
      1. House bubble
  3. Portugal
    1. Structural
    2. Labour : more productivity required
    3. Market
    4. Fiscal
  4. Ireland
    1. Housing bubble
    2. Banks crushed after
    3. Fiscal
    4. Private and govt agreed to fix structural
  5. Italy
    1. Ease of business
    2. Fiscal
    3. Structural
  6. Germany
    1. Fiscal
Solution?

Resource summary

	Created by Andrew Mbuya almost 10 years ago