What is becoming of Europe.The recession fears along with years of extremely slow growth have crippled the economy of continent.Portugal,Italy,Greece & Spain are all in tremendous debt, and are finding it hard to pay for the borrowings, which they took from European central Bank.As we all know, major contribution for the ECB comes from Germany. Among st all gloom, it is only the Germans who have shown the capacity to withstand the recession and have in fact recorded a good growth rate.On the contrary these PIGS borrowed heavily and are now finding it hard to even pay the installments for the loans taken.One could see, how Greece was bailed out once again to avert a default in payment, which might have had a rippling effect on the banks of Europe and other nations who have exposure in Greece.Years of mindless spending along with fiscal mismanagement have contributed to this situation.There are talks for Greece to be asked to leave European Union as the German citizens are tired of bailing out the over spending Greeks from their hard earned and savings. In fact, some Greeks too want to move out of the union and EURO, as this will help them devalue their old currency and may be make some money via exports.
We just heard that Spanish parliament, has amended their constitution by putting limits on budget deficits and debts to a cetain level.This unprecedented step took place becasue of the collapse of the Spanish Bond market.
The changes will commit Spain to abide by European Union limits – currently 60 per cent of gross domestic
product for accumulated debt and 3 per cent of GDP for annual deficits – from 2020.
