Reasons for European Economic Crisis Essay Example | Topics and Well Written Essays - 2500 words

Reasons for European Economic Crisis - Essay Example The essay "Reasons for European Economic Crisis" overviews the reasons for European Economic crisis such as imbalances in international trade, inappropriate and inflexible monetary policy, increasing levels of households, banks, and governments debts, confidence loss in the economic system. The European economic crisis started in 2007 and was preceded by a considerably long duration of low-risk premiums, the growth of real estate bubbles, abundant liquidity, and fast credit growth. The economic misfortunes sequence that began in 2002 created a fiscal dilemma in Europe that included spiraling debt by the governments and banks of a number of European states. Some economists and policy analysts believe that the uncontrolled or unregulated debt resulted to the fiscal quandary that went beyond normal proportions. About 20 European states were in debt as of 2012 and this compounded the problem of European economic crisis because they have closely connected economies and shares a monetary currency. What has been of greater concerns to many analysts is how Europe got into the crisis in the first place. It is believed that focus on social welfare and irresponsibility by some European states evidenced by heavy borrowing and not paying heed to the balance of payment are main facto rs that led to the crisis. This paper will explain in details the reasons for European Economic crisis. Musialkowska and Wroblewski point out that no doubt the European economic crisis was as a result of a combination of various complex factors.