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Economics > Europe and the financial crisis > Flashcards

Europe and the financial crisis Flashcards

1
Q

How many members of the EU were there in 2015?

A

28, 19 of which used the Euro

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2
Q

To what is the Eurozone conferred to?

A

to the 19 countries that use the Euro

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3
Q

What is it with the danish currency?

A

It is pegged to the Euro

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4
Q

What happened in Europe after the World Crisis?

A

The Eurozoine crisis

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5
Q

What happened to the unemployment rate in Europe, especially of the youth

A

from around 19 % in 2004 to 23 % in 2014. 9 to 11 for the overall

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6
Q

What happened after the World Crisis in the United States compared to Europe?

A

Th US recover much faster

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7
Q

Describe the interconnection of the three crises

A
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8
Q

Which type of crisis did the US not have?

A

A sovereign debt crisis.

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9
Q

Where the root causes in Europe the same as in the United States?

A

Yes, they were

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10
Q

When did BNP Paribas announce that they do not know what is in their portfolio?

A

August 9. 2007

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11
Q

When did Northern Rock go bancrupt?

A

September 14, 2007

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12
Q

When was the UK bank rescue package announced?

A

October 8, 2008

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13
Q

Did the European countrires aid their banks a lot?

A

Yes, absolutely

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14
Q

What was the problem with provaiding aid?

A

That many counries did not have the capacity to provide such aid.

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15
Q

What happened to loans in Ireland in 2007?

A

They increased much faster than GDP, the rest if the EUro Area was also experiencing a boom in lending

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16
Q

What tends to move hand in hand with much lending?

A

a housing boom

17
Q

Did a housing boom happen in Ireland?

A

Yes, absolutely.

18
Q

What can you compare Ireland to?

A

Because as it ran out of local deposits, it was forced to go elsewhere to the wholesale lending market in order to fuel all of the lending that it was doing. Ireland is like northern rock writ large.

19
Q

How much lending needed to be funded from abroad?

A

This gap is 26 billion euros at the beginning of the period and rises to 129 billion euros by the end. A hundred billion of euros needs to be found from abroad for a country, remember at this time, has a total GDP of about 180 billion euros.

20
Q

How did the Irish government react?

A

On September 30th, 2008, the Irish government made the most powerful response of any nation during the global financial crisis. Guaranteeing all liabilities for seven covered banks for a total of 375 billion or about two times Irish GDP.

21
Q

What happened to Ireland?

A

That 375 billion dollars or more than 375 billion Euros, or more than 200% of GDP of Ireland, was just too big of a burden for that government to bear. Ultimately, Ireland required an international bailout in November of 2010. We will discuss much more about this in the next module.

22
Q

By how many banks was Iceland dominated at the time?

A

By three major banks:Glitinir, Landsbanki and Kaupthing

23
Q

How much was lending compared to GDP?

A

2 x in 2003 and 10x in 2008

24
Q

By what was Icelands lending boom filled?

A

By outside funding

25
Q

Is Iceland in the EUro?

A

No

26
Q

What effect had this on Iceland?

A

It added to the nervousness of Investors

27
Q

To what kind of funding did Icelands bankers turn to?

A

online accounts. They were heavily advertised and could be opened from anywhere.

28
Q
A
29
Q

What do we know about the people who opened these online accounts of the Icelandic banks?

A

They did not have any loyalty to these banks

30
Q

What do we see in the middle of 2007 for the Icelandic banks?

A

A massive drop in CDO´s

31
Q

What did Iceland do to the banks

A

natinoalized all three of them.

32
Q

What did Iceland agree on?

A

to pay back only their domestic customers. Iceland was not obligated to pay all of them back.

33
Q

What did the United Kingdom do after Iceland announced that it would only pay back its domestic citizens.

A

The UK put Iceland on the list of regimes to watch

Economics (12 decks)

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