Tuesday, September 10, 2019

Effects of the 2007-2009 Financial Crises on the Euro-zone Economies Research Paper

Effects of the 2007-2009 Financial Crises on the Euro-zone Economies - Research Paper Example The effects in the Eurozone began from the banking system to debt issues. Prior to the recession, people used to borrow money to the banks and the banks would offer this money at a very low lending rate citing the fact that the funds were readily available. Providing low lending rates was one of the blunders that the banking system carried out in the region. After the depression hit, people started maintaining their funds and stopped taking it to the banks since they had to utilize it. This was the onset of the crisis in Europe. Banks listed in the respective country’s stock markets made the general stock market get affected (Black, 2011, 67). The banks had to keep running and the only source of money that they had to utilize was the money saved by taxpayers. This led to the banks replenishing their resources to a point that they had debts owed to the taxpayers. The main economic variable shown from this is that of public borrowing. Contemporary days have seen banks borrowing money from different banks and if a condition goes to bad for a certain bank such that it is on the verge of bankruptcy, it ends up borrowing money from the public to save it. Ireland was the first nation in the Eurozone to undergo the recession. This happened between the second and third quarter of the year 2007. This was approximately a whole year prior to the recession catching on to the rest of Europe. The country registered a contraction in GDP measuring 1.5 per cent. Eurozone was one of the worst-hit regions by the recession that had hit the entire world. Economists have said that this is out of the ideologies presented by the member countries.  

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