EURO SURVIVAL

Will the Euro Survive?



Euro Survival

Introduction

Europe is currently experiencing a period of great upheaval. The financial crisis severely complicates the process of European construction (basic construction in positioning Europe as a world power). The economic collapse visible in the peripheral countries and emerging is a harbinger of dismantling the current European Union (EU) and the dislocation of a constellation of satellites orbiting countries of the Franco-German axis (the Six).

This case highlights the factors being the reason of poor rankings given to these countries by the World Economic Forum (WEF). These countries are also termed as “Peripheral countries” due to their poor economic situations.

Discussion

Burst of the housing bubble caused the collapse of the financial house of cards PIIGS countries (Spain, Portugal, Italy, Ireland and Greece). Economy of these countries has been based on the last decade the famous "Mediterranean diet" whose main ingredients were the "boom" town planning, tourism and domestic consumption and excellent situations created minimalist, highly suggestive appearance and exorbitant price but empty culinary content and outdated.

Troika which includes the European Union, the IMF and the European Central Bank (ECB) has real pressure on Greece, with a rigorous program of privatization as a response to excessive debt in this country. It urged political parties to adopt austerity measures and reforms that have sparked violent protests popular because Troika offers privatization as the only alternative to the crisis. Privatization will be under the supervision of a new organization and professional independent. This will affect the public sectors of railways, the port areas, airports, banks and companies of water and electricity.

In addition, structural reforms to modernize public administration and the health sector, to improve the employment sector and align the tax system conditions (a decrease in the value added tax (IVA ), which is currently 23%) will result in an increase in taxes, a reduction in staff positions, the liquidation of public bodies, wage cuts and easing of the labor market.

According to the reports, Athens not only cannot meet its financial commitments but it will know, of on the other hand, a strong internal devaluation, and a significant drop in prices and wages in the years to come. Thus, it is expected that government debt increased to 172.7% of Domestic Product (GDP), or 381, 2 billion in 2012, with the risk of going insolvent (Default) to bankruptcy. Termination payment is the situation in which a company or corporation is when it ...