European Collapse of 2012-2013

European Collapse of 2012-2013 : Looking back now with the benefit of hindsight, the disastrous European collapse of 2012/13 appears from the vantage point of 2020 to have had a certain grim inevitability. Yet at the time, and in the years leading up to this debacle, it was far from clear what the future would hold, and many protagonists, especially in the policy-making arena, continued to contend that all would turn out alright, especially if their own policy proposals were followed.

The collapse was mainly caused by two chief policy failures amongst European leaders. The first was to assume, myopically, that the unbalanced pattern of intra-European growth that had persisted from 1999 until 2008 could, and would, last indefinitely. The entry of the southern European, and peripheral, countries, such as Ireland into the eurozone (and prospective entry in Eastern Europe), had led to a housing and construction boom in those countries as nominal interest rates fell sharply, enthusiastically financed by banks (and their shadows) both within and outside their own country.

The result in these countries was a massive increase in private sector indebtedness, largely matched by increasing capital inflows (from banks in Germany, France, etc.), and by the same token a large current account deficit. Although much was made of the failure of Greece to get its public finances under control, even before 2008, in fact many of the countries with construction booms, e.g. Ireland and Spain, had been running public sector surpluses. It was not so obvious in 2007/8 that these countries would be in any future difficulty. downoad full articel For the latest updates PRESS CTR + D or visit Stock Market news Today

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