EUROCRISIS

Launch of Euro
Formation of EU Launch of Euro Requirements to subscribe to Euro Participating countries Currency conversion

Pre-Financial Crisis Period(2002-07)

Advantage of common currency ECB Euro-zone system Monetary and fiscal policy Greece

Borrowing- Good or Evil??

Greece Italy Spain Germany Misleading borrowing Deficit figures. Actual- 12-13% Projected- 3.5 % Leader in violating deficit Limits. Contained Deficit figures till 2007 to 3% Significant external borrowing but at very attractive Interest Rates (23%) HEALTHY GOVT BORROWING Weaker Currency Steady Wages Huge Competitive Advantage

PUBLIC + PRIVATE BORROWING Huge Tax Evasions

ONLY PRIVATE BORROWING

Rising wages Pricing Disadvantage

SOVEREIGN DEBT KEPT RISING

OVERALL DEBT KEPT RISING

GOVT BORROWING NO PRIVATE TO FUND PRIVATE BORROWING BORROWING AFTER 2008

LOSS OF CONFIDENCE - THE TRIGGER

Greece Debt exposed- Led to Bailout Subprime Crisis and Dubai Sovereign Debt Crisis fuelled the doubts about Sovereign Guarantees Yields on government bonds from Spain and Italy rise sharply whereas Germany's falls to record lows

TIMELINE
Dec 2009- Greece debts reached 300bn Euro 2010 - 110bn-euro bailout package to rescue Greece Nov 2010- Ireland bailout - 85bn Euros. Feb 2011-European Stability Mechanism 500bn Euros May 2011- 78bn-euro bailout for Portugal

Present & The way ahead

Short Term Solutions

Quantitative Easing Direct loans from European Stability Mechanism Increase Investment Mobilization Of Credit

Long Term Solutions

European Fiscal Union Eurobonds