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¶ … European financial crisis a nutshell? (190-200 words) Who responsible crisis, ? a. In financial sector (100-110 words) b. In government sector (100-110 words) What recommendations fix ? (90-100 words).
Causes of the European Financial Crisis
European Financial Crisis Causes
There are several factors that determined the financial crisis in Europe. The most important causes of this financial crisis are represented by the situation of the Greek public finances, but also the situation of the Spanish real estate sector. The problems in these countries have not been solved, which determined several consequences on the eurozone.
The Greek economy represents 2% of the eurozone's economy. Therefore, its influence on the eurozone was reflected by its public debt. In addition to this, the recovery value of the country's public debt was of 50%. This leads to the significant depreciation of the euro.
The problems in Spain are also of great importance. The officials...
This situation leads to problems in other countries also. This is the case of French, German, and other banking systems that are exposed to the Spanish real estate sector (Noord, 2009). In order to improve the situation, the loans that many developers got from the Spanish banks are likely to be written off. However, this does not mean the country's banking system has solved its problems.
Responsibility of the Crisis in the Financial Sector
It is obvious that most of the problems in Europe are determined by the financial sectors in countries like Spain and Greece. The problems in these cases are that these banking systems loaned too much money to their clients. The situation is similar to the housing bubble in the U.S. Therefore, the responsibility of the crisis in the financial sector should be attributed to bank managers. This is because bank managers establish the strategy of the crediting that…
Reference list:
1. Noord, P. (2009). Economic Crisis in Europe: Cause, Consequences, and Responses: A Report by the European Commission. Retrieved September 6, 2012 from http://www.voxeu.org/article/economic-crisis-europe-cause-consequences-and-responses.
2. Eurozone Crisis Explained (2012). BBC. Retrieved September 6, 2012 from http://www.bbc.co.uk/news/business-16290598.
3. Cendrowicz, L. (2010). What Caused the Euro Crisis? Retrieved September 6, 2012 from http://www.time.com/time/world/article/0,8599,1968308,00.html.
Many laws have been successful in restricting such practices in order to avoid a similar situation in the future. Today, "when a mortgage borrower wins a rescission case in court, the bank loses the right to foreclose, and has to give up all profits from interest and fees on the loan" (Carter, 2012). However, just a few years after predatory lending caused so much damage, there are already movements
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These borrowers had -- knowingly or not -- been gambling on a real estate market they did not understand. Understanding the complexities of the real estate market and fiscal policy is complicated -- those who have grown up without access to the best education and who do not have experienced friends and family to help advise them in this process were the most vulnerable. Squires, Hyra and Renner showed that
Financial crisis that emerged in 2008 came about because of a number of different factors that all contributed something to the problem. Ostensibly, this was a credit crunch. A credit crunch occurs when lender either no longer have money to lend or they are prohibited or unwilling to do so. Mussa (2008) notes a truth that Adam Smith recorded that while money is an essential part of an economy's capital stock,
In other words, there are few controls in place to ensure responsible spending or, in the case of Greece, that the books are not cooked. The implication of this is that Greece makes errors and commits fraud, knowing that the eurozone will be forced to bail them out or risk grave instability. The other nations are then forced to bail Greece out, because they share a common currency and