Europe and the Eurozone crisis Flashcards

1
Q

What kind of problems did Ireland and Spain have right after the shock?

A

They had banking problems

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2
Q

What issues did Italy, Portugal and Greece face?

A

fiscal issues

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3
Q

What were further problems of the Eurozone in terms of politics?

A

Institutional and political aspects make it very difficult to respond to the crisis. Furthermore the fiscal federalism is too weak. There was also a very slow price adjustment due to a common currency.

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4
Q

When was the first period of the Eurozone crisis?

A

December 2009 to July 2011

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5
Q

What happened in the first phase of the Eurozone crisis?

A

The emphasis is on weakness and bailout for smaller countries that are on the periphery of the eurozone. Specifically, Greece, Ireland, and Portugal.

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6
Q

When was the second phase of the Eurozone crisis?

A

July 2011 to July 2012

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7
Q

What happened in this second phase of the crisis

A

the crisis spreads to the larger countries of Spain and Italy

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8
Q

When was the third phase of the crisis?

A

July 2012 to today

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9
Q

What happened in the third phase?

A

Anti austerity government gain power and grexit gets close

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10
Q

What did Greece do in December 2009?

A

it announced a 300 billion debt. 113% of GDP EU limit was 60%

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11
Q

What is historically known about countries such as Greece with such a high level of debt?

A

That they cannot pay that debt back.

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12
Q

Which country has a very high level of debt?

A

Japan sometimes has more than 200% of GDP without anyone getting upset.

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13
Q

What was the main problem in Portugal?

A

Fiscal problems and slow growth

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14
Q

Who is the “Troika” ?

A

The European Commission (EC), the Internatinoal Monetary Fund and the European Central bank

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15
Q

How high were the bailouts?

A

Greece: 110 million
Ireland: 85 million
Portugal 78 million

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16
Q

Did the bailout of 2011 work out for Greece?

A

No, it did not

17
Q

How do Italy and Spain respond to the debt crisis?

A

With austerity programmes

18
Q

What happened by early 2012

A

the situation is more stable but a recession has set in. Levels of unemployment are dangerously high

19
Q

What did Draghi say in 2012?

A

He says that they will do whatever it takes to preserve the EURO. This speech worked and the marked calmed

20
Q

What happened in the third phase

A

Anti austerity parties come to power (the Syriza Party of Zypras

21
Q

Why have the effects been so much worse of the financial crisis in EUROPE?

A

not an optimal currency area. Nobody thinks we should have one currency in the world. It is useful

22
Q

Why is it useful to have more than one current?

A

because if you have a shock you can have monetary policy to react to that shock

23
Q

What si the disadvantage of having your own currency?

A

It creates additional transactions costs