1 / 17

The European Debt Crisis

The European Debt Crisis. What caused the global recession of 08?. And thus caused the European debt crisis. Basic Economics - The Bank Run. “It’s a Wonderful Life”. America Sneezes and the World gets Pneumonia!. The Housing bubble bursts 2006. The bubble burst.

artie
Download Presentation

The European Debt Crisis

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. The European Debt Crisis

  2. What caused the global recession of 08? And thus caused the European debt crisis

  3. Basic Economics - The Bank Run • “It’s a Wonderful Life”

  4. America Sneezes and the World gets Pneumonia! • The Housing bubble bursts 2006

  5. The bubble burst • By August 2008, 9.2% of all U.S. mortgages outstanding were either delinquent or in foreclosure. By September 2009, this had risen to 14.4%. Between August 2007 and October 2008, 936,439 USA residences completed foreclosure.

  6. The American Recession of 2008 • Adjustable rate mortgages/Subprime mortgages • Lehman Brothers & mortgage securities (MBS) • Fannie Mae • Moodys and other bond rating agencies • Property taxes

  7. What Caused the Crisis? • American Housing Market • UK Housing Market • Profligacy in the PIIGS • Decades of Low Interest Rates • Inflation in Wages and Goods • Overleveraged Banks • Lack of competitiveness

  8. European Exposure to US Housing Bonds Country Banks Losses • Britain Royal Bank of Scotland US $15.6 bn. HBOS US $9.5 bn. Barclays US $6.7 bn. • Switzerland UBS US $48.6 bn Credit Suisse US $13.7 bn. - • Germany BayernLB US $14.4 bn. IKB Deutsche Industriebank US $14.0 bn. Deutsche Bank US $12.7 bn • France BNP Paribas US $5.8 bn.

  9. Debt in the Euro Zone (17 of 27states)

  10. Debt in the Euro Zone (17 of 27states) • Can the Governments in Greece, Portugal, Ireland, Spain and most importantly Italy cover their $4.2 trillion in borrowing without wrecking European banks?

  11. Greece as a Case Study The darkening clouds of civil disobedience and anarchy in Greece

  12. European Exposure The end of EMU – “Europe’s Melancholy Union”

  13. Will Greece bring down the Euro?

  14. Which Path to Recovery?Austerity (Taxes, spending cuts) or Growth (Tax and regulation cuts)

  15. US Response – Ambassador Smith (CU Grad) and Secretary of State Clinton The Fed v. The European Central Bank

  16. The US Solution vs. the European one

  17. What can they do? • The Greek gray economy/Greek culture • Euro zone writes off half of the Greek debt – EFSF • Do the Germans, French and Dutch have to continue to pay? • Austerity and taxes vs. Priming the pump • Growth – Competitiveness, bureaucracy, deregulation, labor & the welfare state (The German example) • The ageing population • Integrate or Disintegrate • Break up the Euro or even the EU (Nationalists – Anti-globalists) • More Sovereignty to Brussels

More Related