European Union Debt Essay Example | Topics and Well Written Essays - 500 words

European Union Debt - Essay Example The European Union debt crisis was a fusion of complex elements in the world market. The globalization of finance and facilitation of easier access to credit in 2002-2008 period enhanced risky lending and borrowing among the member states. Moreover, the fiscal policies, trade imbalances and property bubbles accelerated the dept status (Dikson, Julie, and Pavlos 30). The governments were losing money following the banking system bailouts to defaulters of the property bubble. Furthermore, the pension commitments and the unsustainable public wages increased the debt level (Lynn 11). The increased capital and savings in the global pool of the European Union and other investors set the policy and regulatory structures in the member countries. This is because lenders and borrowers were quick to transact thus generating economic bubbles in each continent (El-Agraa 39). A decline in the monetary value resulted in significant losses and declines in property values. However, the liabilities owed to the global investors remained at constant prices resulting in major losses to the borrowers and insolvency of banks and government (Crifò 30). According to Sanghera (21), the Northern countries, such as Norway and Sweden, were able to cope with the crisis because their governments lent capital to property developers. This generated huge property bubbles. When the bubbles collapsed, their governments and citizens assumed private debts. These reduced excessive burden to the government to bail the nation out. After some time, these nations were able to retain a fair economic position with better employment percentage. In Greece, however, the government enhanced its commitment to the public employees by facilitating higher wages and pension settlements. Notably, the employment wage bill doubled exponentially in real terms. Moreover, the banking systems grew quickly creating enormous external