to view this pdf as a projectable presentation, save the file, click...
TRANSCRIPT
![Page 1: To view this PDF as a projectable presentation, save the file, click ...civics.sites.unc.edu/files/2012/06/OverviewoftheEurozoneCrisisPPT.p… · • A single currency offers many](https://reader034.vdocuments.us/reader034/viewer/2022050220/5f655bc7f4d2a7057235aada/html5/thumbnails/1.jpg)
• Toview thisPDFasaprojectablepresentation,savethefile,click“view”inthetopmenubar,&select“fullscreenmode.”Uponcompletionofthepresentation,hitESCtoexitthefile.
• TorequestaneditablePPT versionofthepresentation,[email protected]
![Page 2: To view this PDF as a projectable presentation, save the file, click ...civics.sites.unc.edu/files/2012/06/OverviewoftheEurozoneCrisisPPT.p… · • A single currency offers many](https://reader034.vdocuments.us/reader034/viewer/2022050220/5f655bc7f4d2a7057235aada/html5/thumbnails/2.jpg)
• Wherehaveyouheardtheword“union”?• Whatorganizations,people,countries,etc.youassociatethewordwith?
![Page 3: To view this PDF as a projectable presentation, save the file, click ...civics.sites.unc.edu/files/2012/06/OverviewoftheEurozoneCrisisPPT.p… · • A single currency offers many](https://reader034.vdocuments.us/reader034/viewer/2022050220/5f655bc7f4d2a7057235aada/html5/thumbnails/3.jpg)
WhatistheEuropeanUnion?
• TheEuropeanUnionisauniqueeconomicandpoliticalpartnership between27Europeancountries.
![Page 4: To view this PDF as a projectable presentation, save the file, click ...civics.sites.unc.edu/files/2012/06/OverviewoftheEurozoneCrisisPPT.p… · • A single currency offers many](https://reader034.vdocuments.us/reader034/viewer/2022050220/5f655bc7f4d2a7057235aada/html5/thumbnails/4.jpg)
![Page 5: To view this PDF as a projectable presentation, save the file, click ...civics.sites.unc.edu/files/2012/06/OverviewoftheEurozoneCrisisPPT.p… · • A single currency offers many](https://reader034.vdocuments.us/reader034/viewer/2022050220/5f655bc7f4d2a7057235aada/html5/thumbnails/5.jpg)
WhyWastheEuropeanUnionCreated?
• TheEUwascreatedintheaftermathofWWII.Thefirststepsweretofoster economiccooperation:countriesthattrade withoneanotherareeconomicallyinterdependentandwillthusavoidconflict.
• Throughaseriesoftradeandpoliticalagreementsfrom1951– 1993,aEuropeanCommunity(EC)wascreated.– Focusedoneconomicandpoliticalcooperationamongthecountries.
![Page 6: To view this PDF as a projectable presentation, save the file, click ...civics.sites.unc.edu/files/2012/06/OverviewoftheEurozoneCrisisPPT.p… · • A single currency offers many](https://reader034.vdocuments.us/reader034/viewer/2022050220/5f655bc7f4d2a7057235aada/html5/thumbnails/6.jpg)
WhyWastheEuropeanUnionCreated?
• In1993,theMaastrichtTreatywassigned,replacingtheECwiththeEU.
• MaastrichtTreatyestablished:– CommonForeignandSecurityPolicy– Coordinatedpolicyonasylum,immigration,drugs,andterrorism
– EUcitizenship,whichallowedpeopletotravelfreelythroughouttheEU
– Establishedatimetableforaneconomicandmonetaryunion.
– Specifiedtheeconomicandbudgetarycriteriawhichwoulddeterminewhencountrieswerereadytojoin
![Page 7: To view this PDF as a projectable presentation, save the file, click ...civics.sites.unc.edu/files/2012/06/OverviewoftheEurozoneCrisisPPT.p… · • A single currency offers many](https://reader034.vdocuments.us/reader034/viewer/2022050220/5f655bc7f4d2a7057235aada/html5/thumbnails/7.jpg)
EuropeanUnionSymbols• Thestarssymbolize:
– unity– solidarity– harmonyamongthe
peoplesofEurope.
• Thenumberofstarshasnothingtodowiththenumberofmembercountries,thoughthecircleisasymbolofunity.
![Page 8: To view this PDF as a projectable presentation, save the file, click ...civics.sites.unc.edu/files/2012/06/OverviewoftheEurozoneCrisisPPT.p… · • A single currency offers many](https://reader034.vdocuments.us/reader034/viewer/2022050220/5f655bc7f4d2a7057235aada/html5/thumbnails/8.jpg)
EuropeanUnionSymbols
“Unitedindiversity”- EUMotto
ItsignifieshowEuropeanshavecometogether,intheformoftheEU,toworkforpeaceandprosperity,whileatthesametimebeingenrichedbythecontinent'smanydifferent
cultures,traditionsandlanguages.
![Page 9: To view this PDF as a projectable presentation, save the file, click ...civics.sites.unc.edu/files/2012/06/OverviewoftheEurozoneCrisisPPT.p… · • A single currency offers many](https://reader034.vdocuments.us/reader034/viewer/2022050220/5f655bc7f4d2a7057235aada/html5/thumbnails/9.jpg)
PoliticalComponentoftheEU• Whatbeganasapurelyeconomicunionhasevolvedinto
anorganizationspanningallareas,from development aidto environmentalpolicy.
• TheEUactivelypromotes humanrightsanddemocracy andhasthemostambitiousemissionreductiontargetsfor fightingclimatechange intheworld.
• Thankstothe abolitionofbordercontrols betweenEUcountries,itisnowpossibleforpeopletotravelfreelywithinmostoftheEU.IthasalsobecomemucheasiertoliveandworkinanotherEUcountry.
![Page 10: To view this PDF as a projectable presentation, save the file, click ...civics.sites.unc.edu/files/2012/06/OverviewoftheEurozoneCrisisPPT.p… · • A single currency offers many](https://reader034.vdocuments.us/reader034/viewer/2022050220/5f655bc7f4d2a7057235aada/html5/thumbnails/10.jpg)
HowAreDecisionsMade?
• Codecision.– ThedirectlyelectedEuropeanParliamenthastoapproveEUlegislationtogetherwiththeCouncil(thegovernmentsofthe27EUcountries).
• BeforeaCommissionproposesnewlaws,itassessesthepotentialimpact,listingtheadvantagesanddisadvantagestothepolicy.– Solicitawiderangeofinput:experts,citizens,businesses,etc.
![Page 11: To view this PDF as a projectable presentation, save the file, click ...civics.sites.unc.edu/files/2012/06/OverviewoftheEurozoneCrisisPPT.p… · • A single currency offers many](https://reader034.vdocuments.us/reader034/viewer/2022050220/5f655bc7f4d2a7057235aada/html5/thumbnails/11.jpg)
HowAreDecisionsMade?• TheEuropeanParliamentandtheCouncilreviewproposalsbytheCommissionandproposeamendments.
• IftheCouncilandtheParliamentcannotagreeuponamendments,asecondreadingtakesplace.
• Inthesecondreading,theParliamentandCouncilcanagainproposeamendments.ParliamenthasthepowertoblocktheproposedlegislationifitcannotagreewiththeCouncil.
![Page 12: To view this PDF as a projectable presentation, save the file, click ...civics.sites.unc.edu/files/2012/06/OverviewoftheEurozoneCrisisPPT.p… · • A single currency offers many](https://reader034.vdocuments.us/reader034/viewer/2022050220/5f655bc7f4d2a7057235aada/html5/thumbnails/12.jpg)
HowAreDecisionsMade?
• Ifthetwoinstitutionsagreeonamendments,theproposedlegislationcanbeadopted.
• Iftheycannotagree,a conciliationcommittee triestofindasolution.
• BoththeCouncilandtheParliamentcanblockthelegislativeproposalatthisfinalreading.
![Page 13: To view this PDF as a projectable presentation, save the file, click ...civics.sites.unc.edu/files/2012/06/OverviewoftheEurozoneCrisisPPT.p… · • A single currency offers many](https://reader034.vdocuments.us/reader034/viewer/2022050220/5f655bc7f4d2a7057235aada/html5/thumbnails/13.jpg)
WhatistheEuropeanMonetaryUnion?
• The EconomicandMonetaryUnion involvesthecoordinationofeconomicandfiscalpolicies,acommonmonetarypolicy andtheeuroasthecommoncurrency.– Eurozone– EMU
• Theeurowaslaunchedon1January1999asavirtualcurrencyforcash-lesspaymentsandaccountingpurposes.
• Banknotesandcoins wereintroducedon1January2002.
![Page 14: To view this PDF as a projectable presentation, save the file, click ...civics.sites.unc.edu/files/2012/06/OverviewoftheEurozoneCrisisPPT.p… · • A single currency offers many](https://reader034.vdocuments.us/reader034/viewer/2022050220/5f655bc7f4d2a7057235aada/html5/thumbnails/14.jpg)
WhatistheEuropeanMonetaryUnion?
• Austria• Belgium• Cyprus• Estonia• Finland• France• Germany
• Greece• Ireland• Italy• Luxembourg• Malta• theNetherlands
• Portugal• Slovakia• Slovenia• Spain
17of27EUcountriesarepartoftheEurozone
![Page 15: To view this PDF as a projectable presentation, save the file, click ...civics.sites.unc.edu/files/2012/06/OverviewoftheEurozoneCrisisPPT.p… · • A single currency offers many](https://reader034.vdocuments.us/reader034/viewer/2022050220/5f655bc7f4d2a7057235aada/html5/thumbnails/15.jpg)
Whyasinglecurrency?
• Asinglecurrencyoffersmanyadvantages:– eliminatingfluctuatingexchangeratesandexchangecosts.
– Becauseitiseasierforcompaniestoconductcross-bordertradeandtheeconomyismorestable,theeconomygrowsandconsumershavemorechoice.
– encouragespeopletotravelandshopinothercountries.
– Atgloballevel,theeurogivestheEUmoreclout,asitisthesecondmostimportantinternationalcurrencyaftertheUSdollar.
![Page 16: To view this PDF as a projectable presentation, save the file, click ...civics.sites.unc.edu/files/2012/06/OverviewoftheEurozoneCrisisPPT.p… · • A single currency offers many](https://reader034.vdocuments.us/reader034/viewer/2022050220/5f655bc7f4d2a7057235aada/html5/thumbnails/16.jpg)
WhyaSingleCurrency?
• Asinglecurrencyalsoallowscountrieswithsmallereconomicstoborrowmoremoney.– Thiscanhelpleadtomoreeconomicgrowth.– Butborrowingtoomuch,canleaddefault,ortheinabilitytopaybackwhatyouhaveborrowed.
![Page 17: To view this PDF as a projectable presentation, save the file, click ...civics.sites.unc.edu/files/2012/06/OverviewoftheEurozoneCrisisPPT.p… · • A single currency offers many](https://reader034.vdocuments.us/reader034/viewer/2022050220/5f655bc7f4d2a7057235aada/html5/thumbnails/17.jpg)
Whatarethedisadvantagestoasinglecurrency?
• Joiningamonetaryunioncanleadtothefollowing:• Monetarypolicy notsuitedtotheindividualcounty’sneeds.• Larger economicfluctuations.• Budgetdeficits• Inabilitytodevaluecurrency
– Therearetwoimplicationsforacurrencydevaluation. First,devaluationmakesacountry'sexportsrelativelylessexpensiveforforeignersandsecond,itmakesforeignproductsrelativelymoreexpensivefordomesticconsumers,discouragingimports.
• Possiblemoralhazard inthelegislationandexecutionofgovernmentbudgets.– Meaning,governmentscouldborrowrecklesslyandknowthatsomeone
willbailthemout.
• Coststhatarenotnecessarilyeconomicinclude• Lossofsomecountryidentityandculture.• Forexample,youcannolongerputthepictureofyourheroesonyourcurrency.
![Page 18: To view this PDF as a projectable presentation, save the file, click ...civics.sites.unc.edu/files/2012/06/OverviewoftheEurozoneCrisisPPT.p… · • A single currency offers many](https://reader034.vdocuments.us/reader034/viewer/2022050220/5f655bc7f4d2a7057235aada/html5/thumbnails/18.jpg)
WhatisMonetaryPolicy?
• Theterm"monetarypolicy"referstowhatacentralbank,doestoinfluencetheamountofmoneyandcreditintheeconomy.
• Whathappenstomoneyandcreditaffectsinterestrates(thecostofcredit)andtheperformanceoftheeconomy.
![Page 19: To view this PDF as a projectable presentation, save the file, click ...civics.sites.unc.edu/files/2012/06/OverviewoftheEurozoneCrisisPPT.p… · • A single currency offers many](https://reader034.vdocuments.us/reader034/viewer/2022050220/5f655bc7f4d2a7057235aada/html5/thumbnails/19.jpg)
Whatisinflation?
• Inflationisasustainedincreaseinthegenerallevelofprices,whichisequivalenttoadeclineinthe value orpurchasingpowerofmoney.
• Ifthesupplyofmoneyandcreditincreasestoorapidlyovertime,theresultcouldbeinflation.– Asageneralrule,ifaCentralBankprintstoomuchmoney,inflationgoesupbecausethemoneyisworthless.
![Page 20: To view this PDF as a projectable presentation, save the file, click ...civics.sites.unc.edu/files/2012/06/OverviewoftheEurozoneCrisisPPT.p… · • A single currency offers many](https://reader034.vdocuments.us/reader034/viewer/2022050220/5f655bc7f4d2a7057235aada/html5/thumbnails/20.jpg)
WhoManagesMonetaryPolicy?• Theindependent EuropeanCentralBank isinchargeofmonetaryissues.
– Itsmaingoalistomaintainpricestability orkeepinginflationlow.
– TheECBalsosetsanumberof keyinterestrates fortheeuroarea.Theseratesdeterminehowmuchyoupaywhenyouborrowmoney.
• TaxesarestillleviedbyEUcountriesandeachcountrydecidesuponitsownfiscalpolicy.
![Page 21: To view this PDF as a projectable presentation, save the file, click ...civics.sites.unc.edu/files/2012/06/OverviewoftheEurozoneCrisisPPT.p… · • A single currency offers many](https://reader034.vdocuments.us/reader034/viewer/2022050220/5f655bc7f4d2a7057235aada/html5/thumbnails/21.jpg)
WhatisFiscalPolicy?
• Theusebyagovernmentofitstaxing andspendingpowertoinfluenceeconomicactivity.
• IntheEU,theEuropeanCentralBankisresponsibleformonetarypolicy.Whileeachindividualgovernmentisresponsibleforitsownfiscalpolicy
![Page 22: To view this PDF as a projectable presentation, save the file, click ...civics.sites.unc.edu/files/2012/06/OverviewoftheEurozoneCrisisPPT.p… · • A single currency offers many](https://reader034.vdocuments.us/reader034/viewer/2022050220/5f655bc7f4d2a7057235aada/html5/thumbnails/22.jpg)
![Page 23: To view this PDF as a projectable presentation, save the file, click ...civics.sites.unc.edu/files/2012/06/OverviewoftheEurozoneCrisisPPT.p… · • A single currency offers many](https://reader034.vdocuments.us/reader034/viewer/2022050220/5f655bc7f4d2a7057235aada/html5/thumbnails/23.jpg)
WhatistheEurozoneCrisis?
• WhencountrieswithweakereconomiesjoinedtheEuro,theywereallowedtoborrowmoremoneybecausetheywereviewedasasafeborrower.
• Unfortunately,duetopoorgovernmentplanning,countriesborrowedlargesumsofmoneytopayforvariousprojectsandservicesandaccumulatedhugedebts.
![Page 24: To view this PDF as a projectable presentation, save the file, click ...civics.sites.unc.edu/files/2012/06/OverviewoftheEurozoneCrisisPPT.p… · • A single currency offers many](https://reader034.vdocuments.us/reader034/viewer/2022050220/5f655bc7f4d2a7057235aada/html5/thumbnails/24.jpg)
WhatistheEurozoneCrisis?
• Afterthe2008USfinancialcrisis,theworldexperiencedaneconomicslowdown.
• Thisslowdownforcedgovernmentstorundeficitstocontinuetooperateandprovideservices.
• In2009,itbecameclearthatGreecehadtoomuchdebtandwouldbeunabletorepayit.
![Page 25: To view this PDF as a projectable presentation, save the file, click ...civics.sites.unc.edu/files/2012/06/OverviewoftheEurozoneCrisisPPT.p… · • A single currency offers many](https://reader034.vdocuments.us/reader034/viewer/2022050220/5f655bc7f4d2a7057235aada/html5/thumbnails/25.jpg)
WhatistheEurozoneCrisis?• IfGreecedefaulted,orfailedtopaybacktheirdebts,itwouldaffecttheentireEurozone.
• AllthecountriesusingtheEurowouldbeviewedasacreditrisk,andbanksandothercountrieswouldnotlendmoneytotheEurozone.
• ThiswouldshutdownalltheEurozoneeconomiesbecausecountries,businesses,andpeopleneedtoborrowmoneytooperate.
![Page 26: To view this PDF as a projectable presentation, save the file, click ...civics.sites.unc.edu/files/2012/06/OverviewoftheEurozoneCrisisPPT.p… · • A single currency offers many](https://reader034.vdocuments.us/reader034/viewer/2022050220/5f655bc7f4d2a7057235aada/html5/thumbnails/26.jpg)
WhatistheEurozoneCrisis?
• AsaresultofGreece’sproblems,thecrisishasspreadtotheotherPIIGScountriesandtheyhaveseentheirdeficitsriseanddebtswell.– Portugal,Ireland,Italy,Greece,Spain.– ConsideredtheweakerEuropeaneconomies
• GermanyandFrancestillhavestableeconomies,butiftheEurozonecollapses,theireconomies,willsufferbecausemanyoftheirbanksholdthedebtsofthePIIGSnations.
![Page 27: To view this PDF as a projectable presentation, save the file, click ...civics.sites.unc.edu/files/2012/06/OverviewoftheEurozoneCrisisPPT.p… · • A single currency offers many](https://reader034.vdocuments.us/reader034/viewer/2022050220/5f655bc7f4d2a7057235aada/html5/thumbnails/27.jpg)
WhatistheEurozoneCrisis?• TwomajorsolutionstotheEurozoneCrisis:
1. Germanycouldbailouttheweakereconomies,buttheyarereluctanttobecauseofmoralhazard andbecausetheyfeelitwillpunishGermanyforthepoordecisionsmadebyothernations.
2. TheEuropeanCentralBankcanactasthelenderoflastresortandbailoutthebanksbyprintingmoremoneyandgivingittocountriestopayofftheirdebts.• ThisiswastheUSFederalReservedidin2008topreventthecollapseoftheUSbankingsystem.Thisiswhatthe“bailouts”referto.
![Page 28: To view this PDF as a projectable presentation, save the file, click ...civics.sites.unc.edu/files/2012/06/OverviewoftheEurozoneCrisisPPT.p… · • A single currency offers many](https://reader034.vdocuments.us/reader034/viewer/2022050220/5f655bc7f4d2a7057235aada/html5/thumbnails/28.jpg)
WhatistheEurozoneCrisis?
• Thehistoricalreasonsfornotwantingtobailoutnationshastodowithinflation.
• WeimarGermanyexperiencedmassiveinflationafterWorldWarI.Itwassobadthatthepriceofbreadwouldrisethousandsofdollarsinaday.
• ManyhistorianscountGermany’seconomicwoesasareasonforHitler’srisetopower.
![Page 29: To view this PDF as a projectable presentation, save the file, click ...civics.sites.unc.edu/files/2012/06/OverviewoftheEurozoneCrisisPPT.p… · • A single currency offers many](https://reader034.vdocuments.us/reader034/viewer/2022050220/5f655bc7f4d2a7057235aada/html5/thumbnails/29.jpg)
WhatistheEurozoneCrisis?
• TheECBisafraidthatbygivingmoneytotheindebtedcountries,theywillcauseinflationtoskyrocket– whichiscountertotheirstatedmissionofkeepinginflationlow.
• Whatshouldbedone?
![Page 30: To view this PDF as a projectable presentation, save the file, click ...civics.sites.unc.edu/files/2012/06/OverviewoftheEurozoneCrisisPPT.p… · • A single currency offers many](https://reader034.vdocuments.us/reader034/viewer/2022050220/5f655bc7f4d2a7057235aada/html5/thumbnails/30.jpg)
TwoViewsAbouttheCrisis
PaulKrugman• NobelPrizewinning
economist• Liberalopinionwriterfor
theNewYorkTimes.
DavidBrooks• Respectedpoliticalpundit
andbestsellingauthor• Conservativeopinionwriter
fortheNewYorkTimes.
![Page 31: To view this PDF as a projectable presentation, save the file, click ...civics.sites.unc.edu/files/2012/06/OverviewoftheEurozoneCrisisPPT.p… · • A single currency offers many](https://reader034.vdocuments.us/reader034/viewer/2022050220/5f655bc7f4d2a7057235aada/html5/thumbnails/31.jpg)
Sources
• http://www.unc.edu/depts/europe/euroeconomics/
• http://www.unc.edu/depts/europe/conferences/eu/netscape5.htm
• http://europa.eu/index_en.htm