News / Europe

Euro Hits Crisis Stage

Multimedia

Storm clouds have been brewing over Europe and not even the biggest and most prudent economies are exempt from their threat.  Europe's decade-old currency, the euro, is in crisis with some eurozone members mired in massive debt and others having to provide bailout-loan guarantees to prevent default and shore up the common currency.

Europe's economic giant, Germany, has put up a large share of those guarantees.  Many Germans, however, are not happy about having to bail out what they consider Europe's big spenders, such as Greece.  Some are even questioning whether the euro can survive in the long-term.

Germany has introduced the country's most ambitious austerity plan since World War II, to bring its public debt within European Union limits and hopefully encourage others to follow suit, thereby stabilizing the euro.

Artur Fischer
Artur Fischer

The austerity plan has calmed markets down, says Artur Fischer, head of the Berlin Stock Exchange.

"The normal retail investor, he understands and realizes that serious measures have been taken," says Fischer.  "The professional investors, they understand that what happened right now is significant and going in the right direction."

The markets had been jittery for months about the stability of the euro.  The crisis was triggered by the Greek government's inability to pay back loans.  Fears spread about a possible default that could drag the entire eurozone with it.  Germany agreed to a bailout package of loan guarantees, but in return, Greece had to implement strict austerity measures. Those have not been popular on the streets.  The bailout was not popular in Germany either, where many felt they were being called on to help those who had simply spent beyond their means.

Fischer says that Germans need to understand why the bailout is important for the German economy.

"Let's just say we let Greece go into bankruptcy - well, their loan is in euros so going into bankruptcy the ones who are lending them the money they would have to take a cut [loss]," says Fischer.  "Who lent that money?  Well to some extent, quite a lot of German banks.  So, if Greece would have gone into default, as a consequence a number of banks in Europe, and in Germany especially, would have another big problem."

Since then Europe's big economic players and the International Monetary Fund have hammered out an additional loan guarantee plan worth around a trillion dollars to shore up other fragile European economies.

Michael Stuermer
Michael Stuermer

It has Michael Stuermer worried.  He is a historian and chief political correspondent for the influential German newspaper, Die Welt. He has doubts about the long-term viability of the euro and sees a break-up as quite possible.

"Some of the more solid partners in the euro system led by Germany would turn around and say, 'Look we've had enough of that'.  In order to save you, we first have to save ourselves.  We suspend our membership and we go back or we go forward to a kind of north European franc or guilder or something which sounds good and solid.  And, of course the southern part of the euro would fall apart," says Stuermer.

Many analysts have pointed to structural flaws in the euro, noting that countries in the eurozone may share the currency, but have little say over individual member budgets and spending.

Economic analyst Markus Kerber of Berlin's Technische University says the eurozone must be restructured.

"In the current form, the eurozone can not survive," says Kerber.  "We have to reshape it.  In the long run, in my opinion, unless there is a miracle, Greece cannot belong to the European Monetary Union because we cannot provide for the financial means to keep that country stable."

Kerber believes the German bailout plan is unconstitutional and violates the EU treaty, and he's bringing suit against the German government over it.

Not everyone sees such cracks within the euro and the European Union.  Fischer has no doubt, the euro will survive.

"What we experience now was predicted when the eurozone and the euro were put together because we all understood that we have economies with different kinds of speeds, different kind of abilities.  Now, today we're in a world where a few countries are very strong and others are weak.  So, we reach out and we try to help them.  There will be a point in time where that might the other way around," says Fischer.

So while the euro is under severe strain - and some see its demise - others believe the common currency along with Europe's political bonds have benefited too many to be discarded.

You May Like

Video Miami Cubans Divided on New US Policy

While older, more conservative Cuban Americans have promoted anti-Castro political movement for years, younger generations say economically, it is time for change More

2014 Sees Dramatic Uptick in Boko Haram Abductions

Militants suspected in latest mass kidnapping of over 100 people in Gumsuri, Nigeria on Sunday More

Video Cuba Deal Is Major Victory for Pope

Role of Francis hailed throughout US, Latin America - though some Cuban-American Catholics have mixed feelings More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Sudan School Becomes Target of Aerial Attacksi
X
December 19, 2014 12:45 AM
The school dropout rate is at an all-time high in Sudan's South Kordofan state because many schools have been destroyed during the three-year civil war between the government and SPLA-N rebel forces. Adam Bailes visited Sudan's Nuba Mountains' region and reports many children are simply too scared to go to school
Video

Video Sudan School Becomes Target of Aerial Attacks

The school dropout rate is at an all-time high in Sudan's South Kordofan state because many schools have been destroyed during the three-year civil war between the government and SPLA-N rebel forces. Adam Bailes visited Sudan's Nuba Mountains' region and reports many children are simply too scared to go to school
Video

Video VOA Reporter Tours Devastated Peshawar School

Islamist militants wearing military uniforms and strapped with explosives attacked a military run school Tuesday in the northwestern Pakistani city of Peshawar. At least 141 people were killed in the horrific attack, most of them young students. VOA reporter Ayaz Gul visited the devastated school and attended the funeral of the principal who courageously tried to save her students from the deadly attack.
Video

Video Nigerians Fleeing Boko Haram Languish in Camp Near Capital

In its five-year effort to impose Islamic law in northeastern Nigeria, the Boko Haram extremist group has killed thousands of people and forced hundreds of thousands to flee. Some of those who ran for their lives now live in squalor on the edges of the capital, Abuja. Chris Stein reports for VOA.
Video

Video Putin Says Russian Economy Will Emerge Stronger

Russian President Vladimir Putin has said his country's sinking economy will not only recover but also become stronger, despite falling oil prices and Western sanctions over Ukraine. VOA's Daniel Schearf reports.
Video

Video Detained Turkish Journalists Follow Teachings of US-Based Preacher

The Turkish government’s jailing of critical journalists has sparked international condemnation and is being seen as an effort to undermine the followers of an ailing Turkish preacher based in the United States. VOA religion reporter Jerome Socolovsky has more.
Video

Video ‘Anti-Islamization’ Marches Increase Tensions In Germany

Anti-immigrant rallies in Germany have been building in recent weeks, peaking Monday night in the city of Dresden where tens of thousands of people turned out to demonstrate against what they call the ‘Islamization’ of the West. Germany has offered asylum to more Syrian refugees than any other country, and this appears to have set off the protests. Henry Ridgwell reports from London.
Video

Video Aceh Rebuilt Decade After Tsunami, But Scars Remain

On December 26, 2004 there was an earthquake in the Indian Ocean so powerful it caused the Earth’s axis to wobble a few centimeters. Onshore on the island of Sumatra, the resulting tsunami was devastating. A decade later, VOA Correspondent Steve Herman reports from Banda Aceh, Indonesia, where although there is little remaining evidence of the physical devastation, the psychological scars among survivors remain.
Video

Video Refugees Living in Kenya Long for Peace in the Home Countries

Kenya is host to numerous refugees seeking safe haven from conflict. Immigrants from Somalia face challenges in their new lives in Kenya. Ahead of International Migrants Day (December 18) Lenny Ruvaga has more for VOA News from the Kenyan capital.

All About America

AppleAndroid