The eurozone and the euro crisis

What is it about?

The global economy has experienced considerable turbulence since 2007. The fnancial crisis has been viewed as the trigger for a prolonged period of eco- nomic decline. This decline remains an issue for all member states of the European Union, the eurozone and beyond. We argue genesis of this crisis lies in the integration negotiations of 1991, ratifed in 1992. These produced a fawed economic model within the eurozone. Given the seeds of decay were planted at origin; we argue the solution can be found through a reconstructed eurozone via looser integration,where countries less equipped to deal with the realities of closer integration will be economically independent.

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Why is it important?

The European debt crisis is an ongoing fnancial crisis that has made it difcult or impossible for some countries in the euro area to repay or re-fnance their government debt without the assistance of third parties.The European sovereign debt crisis resulted from a combination of complex factors, including the globalisation of fnance; easy credit conditions during the 2002–2008 period that encouraged high-risk lending and borrowing practices; the 2007–2012 global fnancial crisis; international trade imbalances; real-estate bubbles that have since burst; the 2008–2012 global recession; fscal policy choices related to government revenues and expenses; and approaches used by nations to bail out troubled banking industries and private bondholders, assuming private debt burdens or socialising losses. In this paper, we discuss this crisis and the long-term solution to it.