World News Stories: European Economic Crisis (25th of July 2012)
The general perception is that the financial crisis is over. That might be true for businesses and individuals, but now the Countries are in danger, especially the Eurozone. Some even speculate that it is about the break down completely.
Why the Eurozone?
The reason that the Eurozone is affected so badly is mainly due to the Euro. A countries finances are very complex, but uniting a number of countries under one currency is even more extravagant. Governments can control the inflation rate and the interest on the loans the national banks give out, which in turn controls the countries economy. If the interest is high not many companies expand, similarly if it is low more money is borrowed to grow businesses.
If you take away the control each country has and generalize it for a whole lot of countries overall its going to be more stable, but the weaker countries become even weaker. And now we see those economies, like Greece, feeding off the stronger, like Germany and France, who are gradually also pulling those under.
America, Britain and other Countries are also Endangered
The British economy is far from strong. A lot of people claim that it is because Britain has outsourced all of the work to other countries, like China and India, where it is a lot cheaper. Whilst that may be so the American economy has similar problems. They are worsened by the economic crisis, but I don’t think they are directly related. A lot of is the huge dept each of the countries have. Every few years here in Australia we hear about how in America all the public services almost came to a dead stop.
That can’t be good and is certainly going to have an effect if not cared for soon. The main reason is that every country that is in debt is living at a standard that they can’t afford. Australia is close to surplus, but all that means is that we aren’t borrowing more money. We have to slow down our consumption before the situation here becomes as bad as it is in Europe.
This post is part of the news series which I will post every Wednesday. In it I will talk about the main news story of the week and give you some detail and insight about it. You can find the whole series here.
I put every effort into bringing you reliable information and keeping it up to date, but some information found on this website might not be accurate, complete or up to date. Please don’t rely 100% on the information I provide.
- The German Economy Caves, And Eurozone Bailouts Take On New Dimension (zerohedge.com)
- Debt crisis live: Germany and Italy near blows over euro (telegraph.co.uk)
- Eurozone crisis heads for September crunch (business.financialpost.com)
- Crisis in Europa (socyberty.com)