Kurt Lewin
Contents
Introduction…………………………………………………..2
The External Factor…………………………………..……..2
The Internal Factor…………………………………...……..3
The effect of European crisis on China………………..........7
China should use some methods to avoid effect of crisis…..9
Conclusion………………………………………………..….10
References…………………………………………………..11
Introduction
The European Crisis is the European sovereign debt crisis, which refers to the debt crisis in Greece and other EU countries occurred after the 2008 financial crisis.
It is no doubt that Greece triggered the European sovereign debt crisis. In 2001, Greece reached the requirements of the budget deficit rate. In the same year, Greece joined the euro zone. But in this process, however, the Greek paid a quiet huge cost. Specifically, in order to reduce its own foreign currency debt, Greek government assigned a currency swap agreement with Goldman Sachs. Through the currency swap agreements, Greek reduced its foreign currency debt to achieve a sufficient rate of fiscal deficit to join the euro zone. But viewed the agreement signed with Goldman Sachs, Greece must pay the higher rate of return than the market price for a long time in the future. Over time, the Greek deficit rate will obviously become stagnant state, which led to the formation of the sovereign debt crisis in 2009.( Chunyan Zhao, (2007))
The External Factor
Since the eruption of subprime mortgage crisis in the summer of 2007, both developed countries and developing countries have generally adopted the double loose monetary and fiscal stimulus policies. In a certain period of time, the method was effective to inhibit the global economic downturn. But at the same time, due to the massive debt, the debt burden of Governments in the world greatly improved, especially for some European countries which were deeply in debt because of complex population structure were even worse. Europe sovereign debt crisis, under this particular context, erupted
Introduction…………………………………………………..2
The External Factor…………………………………..……..2
The Internal Factor…………………………………...……..3
The effect of European crisis on China………………..........7
China should use some methods to avoid effect of crisis…..9
Conclusion………………………………………………..….10
References…………………………………………………..11
Introduction
The European Crisis is the European sovereign debt crisis, which refers to the debt crisis in Greece and other EU countries occurred after the 2008 financial crisis.
It is no doubt that Greece triggered the European sovereign debt crisis. In 2001, Greece reached the requirements of the budget deficit rate. In the same year, Greece joined the euro zone. But in this process, however, the Greek paid a quiet huge cost. Specifically, in order to reduce its own foreign currency debt, Greek government assigned a currency swap agreement with Goldman Sachs. Through the currency swap agreements, Greek reduced its foreign currency debt to achieve a sufficient rate of fiscal deficit to join the euro zone. But viewed the agreement signed with Goldman Sachs, Greece must pay the higher rate of return than the market price for a long time in the future. Over time, the Greek deficit rate will obviously become stagnant state, which led to the formation of the sovereign debt crisis in 2009.( Chunyan Zhao, (2007))
The External Factor
Since the eruption of subprime mortgage crisis in the summer of 2007, both developed countries and developing countries have generally adopted the double loose monetary and fiscal stimulus policies. In a certain period of time, the method was effective to inhibit the global economic downturn. But at the same time, due to the massive debt, the debt burden of Governments in the world greatly improved, especially for some European countries which were deeply in debt because of complex population structure were even worse. Europe sovereign debt crisis, under this particular context, erupted
References: 3.Chunyan Zhao, (2007), Direct foreign investment situation in China and Counter measures, Wuhan University of Technology 5. European Central Bank, 2010, “Final Monthly Report on the Eurosystem’s Covered Bond Purchase Programme”. [C] 6.Focus on European sovereign debt crisis 8. International Monetary Fund, 2010, (April & July), “World Economic Outlook”. [C] 9 11. Yongqiang Gao, (2007), Transnational corporate investment in non-market risk and management research, International economic cooperation