WHY IT MATTERS: Europe’s Economic Crisis

Europe 1999 (Photo credit: Greg_e)

By Paul Wiseman – The issue: Europe is struggling to control a debt crisis, save the euro currency and stop a repeat of the 2008 financial crisis that sent the world spinning into recession.

Why it matters: Europe buys 22 percent of the goods America exports. U.S. companies have invested heavily in Europe.

Europeans are struggling to repair a system that was flawed from the start. The euro, introduced in 1999, makes it easier to do business across Europe; no more changing francs to deutschemarks when French and German companies do business. But the common currency joined countries with vastly different economies and political cultures — and each got to keep running its own budget. more> http://tinyurl.com/8r5rjfg

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Euro zone making scant headway on growth and reform

By Alan Wheatley – The euro zone is finally getting a move on and slinging a safety net under the single currency. If only it were making as much headway in correcting the economic imbalances that made a rescue plan necessary in the first place.

The European Central Bank has bought time for the euro with a scheme for secondary-market purchases of bonds of countries such as Spain if they are shunned by investors. And the European Stability Mechanism is set to buy the debt as it is auctioned, after Germany‘s top court approved the establishment of the permanent rescue fund. Immediate market pressure has subsided. more> http://tinyurl.com/8nk2lhu

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Spanish short-term debt costs reach alarm levels

By Paul Day and Renee Maltezou – Spain paid a euro era record price to sell short-term debt on Tuesday, pushing it closer to becoming the biggest euro zone country to be shut out of credit markets.

The soaring borrowing costs highlight the shortcomings of a June 9 euro zone deal to lend Spain up to 100 billion euros ($126 billion) for its banks. They also illustrate how Europe‘s problems run much deeper than Greece, brought back from the brink of default in Sunday’s parliamentary election. more> http://tinyurl.com/bmqvqag

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Greeks not alone in bank savings exodus

By Steve Slater and George Georgiopoulos – It is not only Greeks who are worried about their savings. Data shows depositors have also taken flight from banks in Belgium, France and Italy. And on Thursday, Spain’s Bankia was reported to have seen more than 1 billion euros drained by its customers in the past week.

Greeks are afraid they could be hit by rapid devaluation if the country leaves the European single currency, while customers at Bankia have been rattled by the government’s takeover of the recently floated bank on May 9 and growing uncertainty about the final cost of Spain’s banking reforms. more> http://tinyurl.com/78lc5fz

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The Future Of Greece And The Euro

old currency (Photo credit: the queen of subtle)

By William T. Dickens and Stephen J. Rose – After so many intra-European wars, political leaders after World War II created a series of institutions that bound the major countries to each other. That effort reached its pinnacle in the 1990s with the formation of the European Union (EU) and the establishment of the European Monetary Union (EMU) with its common currency the Euro. The EU established common standards, free movement of goods and people across European borders, and subsidies to less developed economies. The establishment of the Euro as the common currency made trade simpler.

The system worked well until the world-wide financial collapse of 2008. more> http://tinyurl.com/cqoya67

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