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

Lion Cecil's Killing Sparks 'Canned Hunting' Debate in S. Africa

Conservationists believe incident, which triggered worldwide outrage, will reshape debate about practice in which hunters are allowed to target animals bred for hunting More

Taliban's New Leader Says Jihad Will Continue

Top US Afghan diplomat also meets with Pakistani, Afghan officials following news of Mullah Omar's death More

Environmentalists Issue Warning on Mekong Biodiversity

Scientists say decades of economic development, hydropower-dam construction, lax law enforcement and trafficking have taken their toll 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.
Astronauts Train Underwater for Deep Space Missionsi
|| 0:00:00
...    
🔇
X
George Putic
July 30, 2015 8:59 PM
Manned deep space missions are still a long way off, but space agencies are already testing procedures, equipment and human stamina for operations in extreme environment conditions. Small groups of astronauts take turns in spending days in an underwater lab, off Florida’s southern coast, simulating future missions to some remote world. VOA’s George Putic reports.
Video

Video Astronauts Train Underwater for Deep Space Missions

Manned deep space missions are still a long way off, but space agencies are already testing procedures, equipment and human stamina for operations in extreme environment conditions. Small groups of astronauts take turns in spending days in an underwater lab, off Florida’s southern coast, simulating future missions to some remote world. VOA’s George Putic reports.
Video

Video Civil Rights Leaders Struggled to Achieve Voting Rights Act

Fifty years ago, lawmakers approved, and U.S. President Lyndon Johnson signed, the Voting Rights Act of 1965. The measure outlawed racial discrimination in voting, giving millions of blacks in many parts of the southern United States federal enforcement of the right to vote. Correspondent Chris Simkins introduces us to some civil rights leaders who were on the front lines in the struggle for voting rights.
Video

Video Booming London Property a ‘Haven for Dirty Money’

Billions of dollars of so-called ‘dirty money’ from the proceeds of crime - especially from Russia - are being laundered through the London property market, according to anti-corruption activists. As Henry Ridgwell reports from the British capital, the government has pledged to crack down on the practice.
Video

Video Hometown of Boy Scouts of America Founder Reacts to Gay Leader Decision

Ottawa, Illinois, is the hometown of W.D. Boyce, who founded the Boy Scouts of America in 1910. In Ottawa, where Scouting remains an important part of the legacy of the community, the end of the organization's ban on openly gay adult leaders was seen as inevitable. VOA's Kane Farabaugh reports.
Video

Video 'Metal Muscles' Flex a New Bionic Hand

Artificial limbs, including the most complex of them – the human hand – are getting more life-like and useful due to constant advances in tiny hydraulic, pneumatic and electric motors called actuators. But now, as VOA’s George Putic reports, scientists in Germany say the future of the prosthetic hand may lie not in motors but in wires that can ‘remember’ their shape.
Video

Video Russia Accused of Abusing Interpol to Pursue Opponents

A British pro-democracy group has accused Russia of abusing the global law enforcement agency Interpol by requesting the arrest and extradition of political opponents. A new report by the group notes such requests can mean the accused are unable to travel and are often unable to open bank accounts. VOA's Henry Ridgwell reports.
Video

Video 'Positive Atmosphere' Points Toward TPP Trade Deal in Hawaii

Talks on a major new trade agreement among 12 Pacific Rim nations are said to be nearing completion in Hawaii. Some trade experts say the "positive atmosphere" at the discussions could mean a deal is within reach, but there is still hard bargaining to be done over many issues and products, including U.S. drugs and Japanese rice. VOA's Jim Randle reports.
Video

Video Genome Initiative Urgently Moves to Freeze DNA Before Species Go Extinct

Earth is in the midst of its sixth mass extinction. The last such event was caused by an asteroid 66 million years ago. It killed off the dinosaurs and practically everything else. So scientists are in a race against time to classify the estimated 11 million species alive today. So far only 2 million are described by science, and researchers are worried many will disappear before they even have a name. VOA’s Rosanne Skirble reports.
Video

Video Scientists: One-Dose Malaria Cure is Possible

Scientists have long been trying to develop an effective protection and cure for malaria - one of the deadliest diseases that affects people in tropical areas, especially children. As the World Health Organization announces plans to begin clinical trials of a promising new vaccine, scientists in South Africa report that they too are at an important threshold. George Putic reports, they are testing a compound that could be a single-dose cure for malaria.
Video

Video 'New York' Magazine Features 35 Cosby Accusers

The latest issue of 'New York' magazine features 35 women who say they were drugged and raped by film and television celebrity Bill Cosby. The women are aged from 44 to 80 and come from different walks of life and races. The magazine interviewed each of them separately, but Zlatica Hoke reports their stories are similar.
Video

Video US Calls Fight Against Human Trafficking a Must Win

The United States is promising not to give up its fight against what Secretary of State John Kerry calls the “scourge” of modern slavery. Officials released the country’s annual human trafficking report Monday – a report that’s being met with some criticism. VOA’s National Security correspondent Jeff Seldin has more from the State Department.
Video

Video Washington DC Underground Streetcar Station to Become Arts Venue

Abandoned more than 50 years ago, the underground streetcar station in Washington D.C.’s historic DuPont Circle district is about to be reborn. The plan calls for turning the spacious underground platforms - once meant to be a transportation hub, - into a unique space for art exhibitions, presentations, concerts and even a film set. Roman Mamonov has more from beneath the streets of the U.S. capital. Joy Wagner narrates his report.
Video

Video Europe’s Twin Crises Collide in Greece as Migrant Numbers Soar

Greece has replaced Italy as the main gateway for migrants into Europe, with more than 100,000 arrivals in the first six months of 2015. Many want to move further into Europe and escape Greece’s economic crisis, but they face widespread dangers on the journey overland through the Balkans. VOA's Henry Ridgwell reports.
Video

Video Stink Intensifies as Lebanon’s Trash Crisis Continues

After the closure of a major rubbish dump a week ago, the streets of Beirut are filling up with trash. Having failed to draw up a plan B, politicians are struggling to deal with the problem. John Owens has more for VOA from Beirut.
Video

Video Paris Rolls Out Blueprint to Fight Climate Change

A U.N. climate conference in December aims to produce an ambitious agreement to fight heat-trapping greenhouse gases. But many local governments are not waiting, and have drafted their own climate action plans. That’s the case with Paris — which is getting special attention, since it’s hosting the climate summit. Lisa Bryant takes a look for VOA at the transformation of the French capital into an eco-city.

VOA Blogs