Friday, 21 September 2012

The Euro Crisis Explained, Introduction

Starting from this Friday, Schoolonomic will expand the scope of it's covered topics by introducing a new form of articles - from now on, once or twice a week, one of this blog's posts will be a coverage of contemporary economic events, providing an unique opinion and explanation on the issue, most likely using examples of economic, historical and political history. This week's first post is about the euro - how did the countries of the European Union reach their current, volatile debt status, and why is it a problem? Look at the infographic below to discover, and read our explanation on the matter below.

Source: Infographics Archive

So what is the problem?

While the explanations regarding the beginning of the European financial crisis are quite diverse, one thing is sure - between 2000 and 2010, state debt levels of many European countries has increased, as it can be seen above. This meant that these now-debt-ridden states had difficulties with financing government deficit - who would want to fund someone who doesn't pay them back and only collects loans? Government bond yields - profits - at which governments could sell their bonds increased, meaning an in turn increased amount of new debt for these economies, further deepening the crisis.

During the weekend, Schoolonomic will present a new article regarding the beginnings of the present crisis - until then, do keep on reading.

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