Financial Markets Project should be no more or less than 1,000 words Harvard Referencing, Include some articles from Financial Times and some graphs. No Plagiarism - the quality of English (grammar,...

European sovereign-debt crisis - Overview
Eurozone crisis or the European sovereign debt crisis is the ongoing debt crisis which has
made it increasingly difficult for several countries in the Eurozone to repay or refinance their
government debts. Since 1999, when Portugal and Greece (the major offenders) joined the
Eurozone, they borrowed significantly from banks and other private institutions to fund their
exorbitant amount of investments. This was not a problem during that time, as the banks and
the private sectors were more than willing to lend. This eventually led to higher levels of debt
that were really unsustainable. As the financial crisis gripped the entire world, it literally
shocked the entire Eurozone. With uncontrollable amount of debts, and the inability to
service those with taxable income, Governments in Greece, Ireland and Portugal are facing
extreme difficulties in bringing the debt levels under control. In addition, borrowing cash
from the open markets has turned very expensive thus making it difficult for these economies
to control their debt levels.
Debt related problems that earlier started in few countries can now be seen threatening the
entire European banking system. In addition, sovereign bonds in PIIGS countries like
Portugal, Ireland, Italy, Greece, and Spain have lost their higher ratings, thus forcing banks to
bear the brunt of severe write downs and reduced levels of lending.
Proposed solutions
According to the World Bank, the European sovereign debt crisis will have a cripple affect on
the entire world economy. Thus it is highly important that the crisis situation should be
averted, and a better solution can be implemented to bring the entire nation and world on the
growth path. The very first step that the European countries agreed on was to bring their
spending under control (this was also discussed earlier during 1990s but never implemented
or followed). Further, many strategists also suggested for the introduction of Eurobonds that
would have the backing of all the nations in the Eurozone region. These bonds can only be
issued to the banks for replacing the individual country bonds. Though guaranteed by all the
nations in the Euro region, the individual country (who issued bonds earlier which are
proposed to be replaced by Euro bonds) will be...