Question

What are the primary triggers of the European sovereign debt crisis? Describe the evolution of the crisis.

Answer 1

The European sovereign debt crisis resulted from:

1.the structural problem of the eurozone and a combination of complex factors, including the globalisation of finance

2. easy credit conditions during the 2002–2008 period that encouraged high-risk lending and borrowing practices.

3. the 2007–2012 global financial crisis.

4. international trade imbalances.

5. real-estate bubbles that have since burst.

6. the 2008–2012 global recession.

7. fiscal policy choices related to government revenues and expenses and

8.approaches used by nations to bail out troubled banking industries and private bondholders, assuming private debt burdens or socialising losses.