The European Debt Crisis Reason And Inspires To China

The aim of this report is to propose a breakdown of recent developments in the Eurozone concerning government debt insolvency issues. This is attempted in a way that will offer clear understanding of major dynamics in currently developing situation, main actors taking part as well as the underlying economic policies influencing the decision makers. Since the beginning of2010, the Euro Area faces a severe sovereign debt crisis, now generally known as the Euro Crisis. The ongoing European sovereign debt crisis continues to shake financial markets and the Eurozone. The International Monetary Fund and the European Union (EU) have acted swiftly to diminish panic and uncertainty by providing emergency assistance to Greece, Ireland and Portugal. However, uncertainty remains and queries have arisen over the vigor and effectiveness of multi-lateral institutions like the EU.This report will establish the origins of the crisis, enumerate European and international responses, bring to light possible alternatives to implemented policies, and finally explore the broader implications for Europe, the United States and the rest of the world. Our findings suggest that there is contagion at work within the Euro Area. Specifically, contagion effects generated by negative rating announcements are documented. These results are crucial when it comes to choosing the correct measure and timing of policy intervention.