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The Greek crisis and the future of the Euroz bingle Paul De Grauwe The crisis that started in Greece culminated into a crisis of the Eurozone as a whole. There is no doubt that the major province rests with the Greek authorities who mismanaged their economy and deceived everybody about the true reputation of their budgetary worrys. The solution of the problem will therefore consider drastic changes in Greek economic and budgetary policies. This existence said, there is more than one villain in the play. The financial markets and the eurozone authorities also bear part of the responsibility for allow this crisis degenerate into a systemic crisis of the eurozone. The destabilizing role of financial markets has been illustrated dramatically again. Periods of euphoria alternate with periods of depression amplifying movements in asset prices that atomic number 18 unrelated to underlying fundamentals. This is not new, of course, but the speed with which this has occurred is baffling. vindicatory a year ago the sovereign bond markets were gripped by a bubble leading to record low levels of considerable term interest rates at the conviction when governments added infrequent amounts of new bonds in the market. In a few weeks time the situation turned around dramatically and bond markets in a number of countries crashed. It is a repeat of a woeful story.



Financial markets are first blinded and plan no risks, until the wake-up call and then they overreact making the resolution of the problem more difficult. The rating agencies take a central typeset in the destabilizing role of the financial markets. One thing one can say about these agencies is that they systematically fail to see crises come. And after the crisis erupts, they systematically overreact thereby intensifying it. This was the eccentric two years ago when the rating agencies were completely caught withdraw guard by the credit crisis. It was again the case during the live on few months. The sovereign debt crisis started in Dubai. Only after Dubai postponed...If you requisite to get a full essay, order it on our website: Orderessay



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