1. BW- Do Not Do Freyonomy yet!!!!!!!!!! We will do it at the end if we have time Tues B2 & B3 moved to room 153F

2. The Euro Crisis 101

3. The European Union • EU- an economic and political union of 27 member states which are located primarily in Europe. • Utilizes a single market in which the euro is the single currency shared by (currently) 16 of the European Union's Member States • The introduction of the euro in 1999 was a major step in European integration. • Around 329 million EU citizens now use it as their currency • European Central Bank- responsible for the monetary policy for EU member nations (similar to the Federal Reserve) EU Member Nations:

4. Benefits of the Euro • Trade and Travel are easier • It is more efficient. • Using a single currency increases price transparency, eliminates currency exchange costs, and facilitates international trade • It gives the EU a more powerful voice in the world. • Economic integration prevents political conflict and war

5. Costs of the Euro • Economic Interdependence • Disadvantage Bad things that happen in one country can affect others • Because members participate in a single market, debt in one country can spread and cause problems in others

6. What caused the Euro crisis • Lack of economic growth • Many European countries have turned to service industries and are not manufacturing anything anymore • As result, they have incurred a lot of debt due to their balance of trade • More imports than exports • Germany is the one exception • Produces cars, planes, engines, and technology • Remains the strongest country in Europe

7. Euro Crisis Video PIGS • Portugal • Ireland & Italy • Greece • Spain Video discuss their debt that they can’t pay (they might default) and questions who will bail them out IMF- International Monetary Fund • Goal to improve the economies of its member countries by fostering global monetary cooperation and facilitating trade • Countries contribute money to a pool from which countries with payment imbalances can borrow funds on a temporary basis.

8. What caused the Greek Debt Crisis • Greece added in 1981 during the Cold War b/c despite being one of the EU’s poorest countries, the allies wanted access to the Balkan area. • Tourism was one of main revenue generators in the Greek economy. • But in the early 2000s, tourism in Greece started to decline due to overcharging • The cost of the Olympic games in 2004 was huge. Greece needed to build roads, stadiums, public transport and airports. The cost of doing this was astronomical and was financed by the EU. • Political corruption • Lack of economic growth- doesn’t produce anything • More imports than exports (balance of trade) • Can’t produce more money to fix its debt

9. Greek Crisis Video • Video discuss Greece’s large debt • Fall 2011- Greece can’t pay its debt and was in danger of defaulting (essentially like declaring bankruptcy) • Video discusses the dilemma over bailing them out • Pro bailout= if Greece defaults countries in the EU and throughout the world will lose $ because their debts won’t be repaid • Anti- bailout= Greece will become even more dependent on foreign help and it may take a long time to fix the problem. Why should other countries have to pay for Greece’s irresponsibility? (ex. increased taxes in other EU states)

10. Euro Crisis Update • Greece is still teetering on the edge. It hasn’t fallen into the toilet yet because it was bailed out. It received money to pay its debt so it won’t default on its loans • Greece received approval from Germany (the strongest country in the EU) and was bailed out • Greece is now able to partially pay its debt (like consolidating your loans) • Problem- Countries and people that invested in Greek bonds got screwed because the bonds are only being paid back partially • Meanwhile problems in Spain, France, Italy and Ireland continue. • Spain- 25% unemployment. 50% unemployment of college grads - occupy movement similar to occupy Wall street