Euro Crisis Essay

2783 words - 12 pages

EUROZONE CRISIS
The Eurozone in 2012

EUROZONE CRISIS: Eurozone fracture in 2012

This paper outlines a plausible scenario in which the Eurozone fractures in 2012. Events are unlikely to follow
the path precisely as described, given the complexity of the problem and the number of variables which are
continually changing. That said, we feel 2012 is unlikely to end with all the current members still being part of
the Eurozone. Mapping a ‘break-up’ scenario should help readers understand how fragmentation could occur
and therefore assist businesses’ contingency planning. To this end the paper highlights some key events and
when they are due to take place. It also identifies some key ...view middle of the document...

With private investor confidence weak, Italy is forced to rely on large EFSF purchases of its sovereign debt
issuance in early 2012, depleting the size of the fund. In the second quarter, Italy suspends its debt
repayments following the collapse of the Monti administration and differences with the IMF and other
Eurozone leaders.
The ECB is likely to increase liquidity provision and work with Eurozone governments to protect their
banking sectors. However, Eurozone leaders remain unable to agree crucial policies in time to stem the
contagion from Greek and Italian sovereign non-payments. Portugal and Spain, unable to access emergency
bailout funding and with no recourse to private investors, suspend their debt repayments and also
announce their intention to leave the Eurozone.
From early 2013 onwards, politics in Europe becomes more polarised and nationalistic. Those nations
withdrawing from the Eurozone impose protectionist measures, in part to limit the loss of their foreign
reserves. Amidst much acrimony, the EU begins the process of scaling back to a free trade agreement.

10 January 2012 | PAGE 1
COMMERCIAL IN CONFIDENCE

WWW.EXCLUSIVE-ANALYSIS.COM

+44 (0) 20 7648 5414

INFO@EXCLUSIVE-ANALYSIS.COM

EUROZONE CRISIS: Eurozone fracture in 2012

DETAILED ANALYSIS
Key indicators in 2012:
Alarming Signs:
1. The failure of the PIIGS to get their debt auctions away in full to private buyers at sustainable interest rates
(e.g. < 5%).
2. Ratings downgrades for the French government and the EFSF, increasing investor scepticism that the latter is
able to support PIIGS struggling to sell bonds to private investors.
3. The IMF losing patience with Greece’s failure to implement structural reforms, refusing to extend further
support.
4. Mario Monti being unseated in Italy and the government’s relationship with European partners and the IMF
turning sour.
5. Weak growth figures in major European economies (e.g. quarterly GDP and employment).
6. A wave of euro-scepticism across the Eurozone with governments under pressure to resist austerity measures
and fiscal union.
Positive Indicators:
1. Eurozone banks making heavy use of the ECB’s unlimited supply of three-year loans and investing this in PIIGS
sovereign debt, driving bond yields lower.
2. The ECB making a commitment to purchase sovereign debt directly and in unlimited quantities.
3. The Eurozone’s AAA rated governments agreeing to issue bonds jointly to support the rollover of PIIGS’
sovereign debt.
4. Governments (especially Spain and Italy) making substantial progress on meeting their fiscal targets and
reform measures.
5. Eurozone governments reaching credible agreements to impose legal limits on sovereign debt and deficits,
empowering AAA rated economies to make the political case for more bailout action.
6. Eurozone leaders delivering the promised funding of €200 billion to the IMF and €500 billion to the European
Stability Mechanism (ESM) during...

Other assignments on Euro Crisis

Greece Debt Crisis Essay

2431 words - 10 pages , 2013). The crisis has clearly affected funding availability and funding costs for individual banks in Euro area and forced the Eurozone develop new crisis management tools in response to fears that other countries might also collapse. Moral hazard Financial institutions, who have lent money to Greeks, are owned many billions dollar by Greece and they apparently want to get paid at all costs. Therefore, they exercise their political power to

Eurobond Essay

2342 words - 10 pages AUGUST 26, 2011 ------------------------------------------------- Questions and Answers on the Eurobond - Full analysis |More Services | Eurobonds are essential to save the euro, yet a flawed structure will produce adverse effects. We must see what needs to be done, what to be avoided. | In explaining the new order of things in the systemic crisis of the euro I concluded saying that a series of structural reforms in the architecture

Imf Raising Extra Lending Capacity

612 words - 3 pages no more dollars. Another issue the author found interesting was concerning the voting power. Emerging countries thought they should have a more strong voice with the fund while an American delegate pointed out financing pledges were not supposed to alter the voting shares within IMF. The Author’s Opinion (350) The Europe has been going through a suffering time since the 2008 financial storm. Last February, the euro zone has set up a constant

No Information Yet

1299 words - 6 pages . Además no se aplicaron las suficientes reformas financieras. También hay que tener en cuenta que en momentos de bonanza el déficit público era altísimo. Todo esto provocó que la deuda externa creciera exponencialmente, una gran desconfianza de la unión europea llegando a plantearse la salida de Grecia del Euro. Además hay que añadir la pérdida de competitividad que ha comportado tantos años de crisis. Italia Como todos los PIGs Italia también

Greek Credit Crisis

1919 words - 8 pages economy. (Freris) However, once again after high hopes and broken promises, five years since its credit crisis first rocked the global economy, Greece finds itself inching towards the brink of default and a possible forced exit from the euro. This is a potentially devastating outcome for EU financial leaders, as it could tilt the entire eurozone back into recession and hurt economic growth on a global scale. This concern has led to a G-20 meeting in

Disney's Cultural Adaptation

5149 words - 21 pages , opened on April 12, 1992, as the Euro Disney Resort. It is the first to be owned and operated by Disney (through Euro Disney S.C.A.). The resort was designed specifically to follow the model established by Walt Disney World in Florida. Area: 19 km2, encompassing: -          2 theme parks, with 59 attractions -          7 hotels collectively housing 5,800 rooms -          1 shopping, dining, and entertainment complex -          1 golf course

Marketing Channel

875 words - 4 pages increase to 5.6%. In September 2008, Ireland became the first euro zone country to officially enter recession. The recession was confirmed by figures from the Central Statistics Office showing the bursting of the property bubble and a collapse in consumer spending that terminated the boom that was the Celtic Tiger. The figures -3.0% shown the GDP growth rate fell. Next was followed by GDP -7.0% in year 2009, Ireland’s government debt had become

Financial Crisis In Tourism

3345 words - 14 pages 43% increase in foreign tourists has helped Malaysia overcome the crisis. In the latest financial crisis, the United Kingdom saw its people travelling locally instead of overseas, which resulted in its tourism industry growing to 115 billion euro in value and hiring 2.6 million more people per year. It is no wonder that the world is looking for ways to further bolster the tourism industry. But where should the industry head in the future? The

Exchange Rate Systems

3857 words - 16 pages abandon the euro and reissue its own money. This would surely be quite inflationary and could not be done without also adopting severe capital controls. A more likely scenario is that strong countries decide that they can no longer afford to bailout the weaker countries, which causes a crisis of confidence in the European banking system and a call for the reissuance of the Deutsche mark. Things would have to get very bad before the political

Institutions And Governance: A New Treaty, A Newly Elected Parliament And Anew Commission

9969 words - 40 pages the Treaty on the European Union and the Treaty on the Functioning of the European Union’ (Council, 2009a). The purpose of the promised Protocol was to facilitate a second referendum in Ireland on the Lisbon Treaty and to help ensure a successful outcome. The Irish government soon announced that the referendum would take place on 2 October. The prospect of a favourable result looked bright, thanks to the global economic crisis, which hit

Hola

3774 words - 16 pages otorgado por los bancos brasileños se ha disparado en los últimos El endurecimiento de la política años, como una consecuencia de los estímulos del fiscal es la mejor defensa de Brasil gobierno al consumo y como medida anti cíclica, durante la reciente crisis financiera. contra los problemas económicos Los datos económicos recientes demostraron finalmente Estado es una buena alternativa que la producción se está acelerando tras un largo período

Similar Documents

Summary Of The Euro Crisis – Overview Of Events Till Date

1010 words - 5 pages SUMMARY OF THE EURO CRISIS – OVERVIEW OF EVENTS TILL DATE The Euro Crisis had its making in the US financial crisis of 2008-09. Before 2008, Euro Zone nations had been borrowing indiscriminately owing to low interest bonds available due to being part of Euro Zone. Also, they were banking on their high growth rates to pay back those loans. However, as a result of US financial crisis, growth slowed down, resulting in slowing down of tax

France Essay

651 words - 3 pages France If there was one thing at the forefront of the minds of French voters, with the upcoming presidential election, it would be the current economic crisis focusing mainly on the failing euro. (Hey, Big Spender) This paper will summarize three articles that relate to the failing euro and the French President Nicolas Sarkozy’s role in this issue, part of a possible solution of getting it back on track in “Going Dutch” by Martin Feldstien, in

Portugal, Exchanges Rates And Labour Force

493 words - 2 pages has been a depreciation of the euro due to the euro crisis. This factor has affected Portugal in the decrease of the trade deficit as we saw previously. However, Portuguese productivity has not increase in the same line as the main countries. To see how the evolution of real exchange in Portugal within the euro zone, the major factor is the evolution of CPI and Labor productivity: Observe how Portugal has lost competitiveness against

Spanish Financial Crisis Essay

561 words - 3 pages to try and get their money out of the banks before they became worthless. You can see that spain was in a dangerous cycle of bailouts, bunk runs, decreasing bank shares, and a sinking economy. The 2 major causes of Spain’s financial crisis were the unregulated banks and the introduction of the Euro into the euro zone. Because the government did not keep a close enough watch on the cajas and banks, they were able to make delinquent loans to