Credit Crunch

Who do you think is most responsible for the credit crunch? o The banks o George Bush o Alan Greenspan o Somebody else Do you think that some companies should be "bailed out" (given money) by governments? Under what circumstances should this happen? Some companies (and banks) are called "too big to fail." What do you understand by this? Some say that if a company (or bank) is "too big to fail" it is also "too big to exist", and should be broken up into smaller units. What is your opinion? One of the main reasons for the existing crisis is the fact that cheap money was pumped into the economy. Governments have responded by reducing interest rates even further and by trying to persuade banks to lend more money. What is your opinion of this policy? Governments have invented ways of simply creating money to fight the crisis and increase the quantity of money in the system. What do you think the consequences of this will be? Instead of the well-known problem of inflation (where prices increase), during the crisis some countries faced deflation (where prices fall). Why should falling prices be a problem? House prices are now falling in many parts of the world. What are the advantages and disadvantages of this? Is it the governments obligation to try to maintain full employment in their countries? Which problem should governments be most concerned about - unemployment or inflation? What actions can they take to control these two problems? Stock markets have performed very badly during the crisis. What difference, if any, do you think that makes to average people? Before the crisis, rating agencies (Standard & Poor's, Moody's, and Fitch) claimed that all the investments which turned out to be bad were "high quality". Now the agencies are downgrading countries saying they may not be able to pay their debts. What is your opinion of the rating agencies?

Banks and the crisis

Many people feel that the recent global crisis was caused by the banks - who then, for some reason, had to be bailed out with taxpayers' money. As a consequence of these bailouts some banks made enormous profits. How do you feel about the fact that many bankers then paid themselves themselves huge bonuses as a consequence of these enormous profits?

The euro

What is your opinion of the euro? Has it helped countries or given them problems? What advantages was the euro expected to deliver? What advantages has the euro, in fact, delivered? Why do countries want to join the eurozone? What impact do you think the euro had on inflation when it was introduced? If you live in a country which has adopted the euro - do you think in euros or in your old currency? What currency do you use to talk about the price of cars and houses? The main economies in the Eurozone are Germany and France. Some claim that the European Central Bank designs its interest rate policies to mainly help these two countries and the rest of the Eurozone simply has to put up with it. What is your opinion? Some countries within the Eurozone have become less competitive - their goods cost more to produce than those of their competitors. One thing that causes this to happen is high salaries. In the past countries could get round this problem by devaluing their currencies, but within the Eurozone this isn't possible. What actions can such countries now take to become more competitive? Should poor countries which break the rules be expected to pay really high fines? If not, what other sanction could be imposed?

Leaving the euro

People increasingly speculate about the possibility of countries leaving the euro. If a country were to leave the euro tomorrow or next month - what would it use for money? Why would a country wish to leave the Eurozone? If a country breaks the Eurozone rules should it be forced out of the euro? According to european treaties it would take about two years for a country to leave the euro. Would this really solve any short-term problems? If you were a rich person who lived in a country which said it was going to leave the euro and devalue its currency, what would you do with the euros you had in the bank? In mid 2010 speculation began to be heard about the possible break-up of the euro. What do you think would be the consequences of the euro breaking up for (a) individual countries (b) the European Union (c) the wider world?

Euroscepticism

Before the euro's difficulties began some countries, and especially the UK, were sceptical of the euro. These are some of the arguments they used. What do you think of them?

In the UK some people maintain that they should retain their the pound sterling because they have used it for hundreds of years and they want to keep this tradition and not have something external imposed on them. It is claimed that Eurozone policies - and especially the interest interest rate - are set mainly for the convenience of Germany and France and that being able to set an interest rated independently is useful. If a country which is not in the euro becomes uncompetitive it can find ways to devalue its currency in order to to regain competitiveness "painlessly". Within the euro this is impossible. A country which is not in the eurozone has the option of "printing money" is a worst-case scenario.

Eurozone countries have no real way to force another country to comply to Eurozone standards. Thus if one country in the Eurozone overspends and this damages the stability of the euro then other countries have no choice other than to bail out that country and pay its debts.