European Economy Crisis and Global Economy Stability
Economy crisis that happens in Europe and several other parts of the world become the main concern of several economists. The fear of debt crisis in Europe has already developed among investors and economists since 2009, this phenomenon was arising due to the high debt level all around the world which amplified by the downgrading of government debt in several country around Europe. The concern about the debt crisis was intensified since then, especially when several European countries like Portugal, Greece and Ireland unable to refinance the debts. The European Finance Stability Facility was created to deal with the economy crisis in Europe and intended to prevent any occurrence that can cause collapsed economy in European countries.
The disability to keep the balance of debt payments among the European countries is one of the important factors that lead to the economy crisis in Europe. The negative balance of payments in several European countries was started after several trade deficits in the import and export ratio since 2009. To fund the deficit, the countries have to borrow more capital that mathematically will increase the total debt owed by the countries. The loss of confidence in the European economy can be seen from the rise of sovereign prices. The condition might indicate the market’s expectation about the disability of the countries to deal with more credits.
The European Economy Crisis has caused economy depression in the continent which need responses made by politicians, regulation makers and also market players to deal with the financial crisis. The crisis in Europe also affects the global economy which causes the decreasing trade and export to Europe from other countries. The nationalization of several domestic European banks and the large amount cash as the addition for capital market is one of the responses made by several European countries to deal with the depression and economy crisis in their neighborhood.
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