What caused the Euro crises of 2010 Essay Example | Topics and Well Written Essays - 500 words

What caused the Euro crises of 2010 - Essay Example To reiterate, the euro crisis was but a function of lack of a common regulatory system to moderate free-riding and/or inject firepower to member states [economies] faced with insolvency risks, and that other factors such as the globalization of finance as well as the global recession that followed the 2007-2009 global financial crisis only added fodder to a system precariously on the edge. The Eurozone as originally structured was more of a gentleman’s agreement requiring member states to follow a similar fiscal path, yet with much weird freedom to follow own fiscal policies that includes masking of internal monetary undertakings. This feature brought on board fiscally free riding peripheral economies as represented by Greece economic dynamics; pursuing parallel fiscal policies in total disregard of the Maastricht treaty, under which member nations had pledged to limit their debt spending (Cameron 2012; European Commission 2008). Though Greece became the pillar of focus in a crisis that has proved counterproductive to a number of the austerity measures implemented, the pursuit of wealth in non-approved mechanisms were widespread across Europe, with quite a number of states securing future cash flows [via sovereign rights]; in effect, providing governments with a vehicle to raise future revenues that kept up with the debt targets, but in contravention to the lon g regarded conventional best practices and internationally agreed standards: â€Å"In â€Å"Boomerang† Mr. Lewis captures the utter folly and madness that spread across both sides of the Atlantic during the last decade, as individuals, institutions and entire nations mindlessly embraced instant gratification over long-term planning, the too good to be true over common sense† (Kakutani 2011). Like the bursting of the US housing bubble that ignited a second global financial crisis in less than a