Author Archives: dk146143

The European debt crisis essentially began in 2008. Since it’s beginning, the European economy as a whole has been in constant flux, sometimes it is up and oftentimes it is down. 2012 showed the first time that Europe had slipped into recession in three years; there were increased unemployment rates in many countries, including France, Spain, and Italy, as well as many unsettled debts. Many countries have needed to be bailed out by international lenders as well as by the European Stability Mechanism (ESM), which was put in place this past October as a way to assist countries by means of granting loans and buying bonds.

With the social unrest in countries such as Greece and Italy, and the unemployment rates which have reached a record high, it was been difficult for the euro zone to focus on rebuilding a stable economy. This is especially difficult since the end of 2012 have shown three consecutive quarters of decline. When the largest economies (France, Germany, Italy, and Spain) have shown deteriorating results, it can be difficult to remain hopeful about any sort of recovery.

The articles of CNN and The Wall Street Journal seem highly skeptical about swift recoveries, often stating that even if these countries manage to be bailed out, they will still suffer as a result of what has been lost in exports during the current economic turmoil. Other sources, such as the Munich Eye and the Economist, remain more hopeful. It is predicted that Germany and Spain may be able to escape almost unscathed. The BBC takes a more unbiased approach and admits that while Germany has a better chance than other euro zone countries at a recovery, it will be difficult to do so when measures of assistance and attention are being place on Greece and Italy. Greece, who has threatened to leave the euro zone, and Italy, who’s fate is still generally unknown as a result of Italy’s instability after the gridlock result of recent elections.

The European Commission has admitted that the recession will likely continue well into 2013 and states that the highest hope for recovery is in 2014. Much of the issues concerned with the debt crisis are a result of over-spending within some of the euro zone’s larger economies, specifically Spain and France. Though these countries are on the list of those which will recover quickly, like Greece, they are also in danger of putting the rest of the euro zone in greater danger. Neither has been able to meet their deficits and the Commission has considered extending them, which, though it may help in the long run, will only serve to weaken the economy in the near future.

The European Stability Mechanism continues to work within the 17 countries of the euro zone, buying bonds, granting loans, and cleaning up the banking systems, but it has been made quite clear that all progress will be slow as a result of the major infrastructure issues.

As swiftly as Germany is predicted to recover, it may need to move things along more quickly than originally anticipated, as the state of the economy may be a factor in whether or not Munich is able to host the 2022 Olympic games. The country may not be chosen if it is obvious that the economy is still in turmoil, and Germany may have to remove it’s bid if it is found that it does not have the wherewithal to withstand the cost of hosting.

1. BBC News

2. The Economist

3. The Munich Eye

4. Eurointelligence Blog

5. Wall Street Journal

My blog will be regarding the European Recession.