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European crisis - Essay Example

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[Instructor Name] European Crisis European crisis refers to the increasing budget deficit in the European states due to debt crisis. The crisis is most prominent in a few eurozone countries but its effects are being witnessed in the Europe as a whole…
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European Crisis European crisis refers to the increasing budget deficit in the European s due todebt crisis. The crisis is most prominent in a few eurozone countries but its effects are being witnessed in the Europe as a whole. As the crisis is reaching a higher point, it is affecting countries other than the European countries as well. The following paper would take three recent articles into consideration which are somehow related to the European crisis and it would be evaluated how the concepts presented in the article relate to the concepts of macro-economics. The first article is taken from and it was last updated on 21 May 2010 when the European crisis was still in its initial stages. The article deals with the initial steps taken by the European Union’s economic taskforce in order to deal with the crisis. There had been a lot of criticism that Europe is not responding to the crisis and the steps taken to deal with the crisis would not suffice. After the criticism, the economic task forces of the EU decided to do more efficiently in the future. The objectives in order to deal with the crisis were developed and it was said that all the member countries would agree with the objectives. Herman Van Rompuy, European Council president said that the member states had agreed to the following objectives; greater budgetary discipline, to look for ways to reduce the divergences in competitiveness between member states, to establish an effective economic crisis management mechanism and to strengthen economic governance to be able to act quicker and in a more coordinated and efficient manner to deal with any future economic crisis (, 2011). The article relates to macroeconomics because it discusses the objectives which are regulatory. The first objective is about budgetary discipline which is exclusively related to macroeconomics. Budgetary discipline is the development of fiscal policy of a country in such a manner that it controls the deficit in the budget. Fiscal policy is a macroeconomic concept that helps the regulatory bodies in regulating the annual budgets. The objectives also include strengthening of economic governance which is also a concept of macroeconomics. Economic governance includes development of such policies that help a country in controlling its economy and in bringing it out of crisis. The tools used in economic governance include fiscal policy and monetary policy. The second article is written by James Lamont and Henny Sender and it was last updated on 22 November 2011. Since the article is recent therefore it presents a better view of the current state of the European crisis. The article is about the impact of the crisis on the Asian markets. According to the article, the crisis has pummeled global markets and it is now threatening to spill over into the Asian banking sector as the lenders of the region take into account their own exposure to the ongoing crisis. The article presents that the Asian borrowers will be affected by the European crisis because they are linked with it either directly or indirectly. Following is an excerpt from the article, “Domestic interest rates are high after 13 successive rises in the benchmark lending rates by the central bank. Foreign capital is retreating to the core in Europe and the US, restricting the ability of Indian companies to raise capital through loans or bonds.” Thus, the crisis will impact Asian borrowers because the borrowers depended upon the European banks significantly for their financial needs. Due to the increase in the domestic interest rates, it has become difficult for the Asian borrowers to acquire financial assistance from European financial institutions (Lamont & Sender, 2011). This article relates to macroeconomics because it discusses the concept of interest rates. Interest rates are exclusively related to macroeconomics. Interest rates have a huge impact on the economy because the influence the level of investment and borrowing. If the interest rates are high, there is less borrowing in the economy therefore there is less economic activity on the whole. However, if the interest rates are low, the borrowing is very high thus the accelerated economic activity. The third article is written by Ralph Atkins, David Oakley, Tracy Allowey and Dan Thomas and it was last updated on 23 November 2011. The article deals with the effect of the European crisis on the overall industry in the Eurozone. There has been a loss of a number of jobs due to lack of overall demand. Due to the lack of demand, the production from almost all the industries have decreased and due to lack of operative activity, there has been significant loss of jobs (Atkins et al, 2011). This article is related to macroeconomics because it deals with the concept of market demand and how the market demand drives other economic factors. Market demand is one of the basic economic forces. If the demand is low, there would be less productivity and therefore low economic activity in the region. Works Cited Atkins, Ralph., Oakley, David., Allowey, Tracy., Thomas, Dan. Eurozone Industry Hit by Big Fall in Orders. Financial Times, 23 November 2011. Web. 23 November 2011. EU Ministers Seek Better Economic Crisis Response. BBC, 21 May 2011. Web. 23 November 2011. Lamont, James. Asian Borrowers on Guard over European Crisis. Financial Times, 22 November 2011. Web. 23 November 2011. Read More
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