The European Debt Crisis — International economy 101
October 26, 2011
For the past two years, European leaders have been confronting a debt crisis that, if not resolved, could spell disaster for the 17 countries that use the Euro, the 27 member states of the European Union, and perhaps the U.S. and the global economy at large. Europe has already bailed out Greece, Ireland and Portugal, and fears are that Italy, the Eurozone's third largest economy, is the next to fall. This past weekend, European leaders met in Brussels to develop a comprehensive plan to deal with the crisis but reached no agreement. Their next meeting, scheduled for today, was abruptly cancelled. Among their challenges are to reduce Greece's debt; help European banks, many of which are holding Greek bonds; shore up their reserves in preparation for a financial melt-down, and to create a bailout fund that is large enough to prevent widespread financial disaster. How did the European debt crisis begin, what are the politics that have complicated it, why has it taken so long for European leaders to come to some sort of agreement about next steps, and what are the threats to the U.S. economy? In this hour of Radio Times, MAURO GUILLEN, professor in International Management at the University of Pennsylvania's Wharton School, helps us understand Europe's economic crisis.