Economic and Politic - Essay Example

The then the situation began to reduce the number of home sales. Then, in 2007, this issue has developed into a credit crunch. Credit for almost any product can get anyone. Lack of control over the number of loans has led to the globalization challenges and the financial crisis. Experts call such causes of the global economic crisis: total cycle of economic development; the “overheating” of the credit market, and, consequently, the mortgage crisis; the high prices for raw materials; the implementation of shaky financial practices (such as credit-default swaps).

In financial markets one of the hottest topics in the last few months was the situation connected with the economy of Greece, the macroeconomic imbalances which have become one of the factors which significantly weakened the euro. The base of imbalances is high fiscal deficit and public debt. According to preliminary estimates of the European Union the public debt of Greece has reached in 2009 113% of GDP, while fiscal deficit amounted to 12,7% of GDP. In terms of criteria for the stability of the EU budget deficit not exceed 3% of GDP, while public debt is limited to the level of 60% of GDP.

So, it is clear that imbalances in the economy of Greece are above the EU limit. Ultimately, one of the causes worsening debt problem in Greece is not only itself the effect of the global financial crisis, but also undermining of the rules-based framework in the economic policy of the EU. First of all it should be admitted that limiting the amount of the budget deficit and public debt, which are the backbone of the so-called Maastricht criteria of the EU. The fact that compliance with these restrictions was not always consistent enough contributed to undermining macroeconomic discipline, especially in the public sector.

The main consequence of concerns about the state of the economy of Greece is the strengthening of the position of the