This summer, the tempers of European citizens hit boiling point. Angry protestors swarmed the streets of Athens, London and Rome—to name a few. This was the pinnacle of the economic panic that has been brewing in the region, and throughout the world, for the last several months.
The eruption in Europe should come as no shock. In recent years, the economy has been the primary problem in the U.S. as well as global politics. We saw it nationally in the form of the failure of major American banking and lending firms, and the huge “bailout” plan that came with it. In Europe, although the shock came later, it appears to have hit just as hard, and the consequences from it have the potential to create shockwaves around the world.
For those of you that have taken an introductory course to economics, the European debt crisis is really not that difficult to understand, let me lay it out for you. Basically, there are economically strong and weak countries in the eurozone (countries that use the euro as currency). In past years, the weak countries—namely Portugal, Ireland, Spain, and Greece—have experienced boom and bust economic cycles, but have been able to stay afloat because of their relations to stronger eurozone countries, like Germany.
But in 2011, things finally fell apart. This past May, the German government authorized a 22.4 billion euro loan to prevent Greece from defaulting on their foreign debt. Not surprisingly, this action hurt the strength of the euro. In the months following the Greek bailout, the euro was devalued, and regional stock markets fell steadily throughout the summer.
Let me explain in simpler terms. When the stock markets in Europe are unhappy, that means that the stock markets in Asia are unhappy, which means the stock markets in the U.S. are unhappy. As we’ve all seen, the downturn in the stock market has caused everyone—businesses, our parents, us—to lose funds and make cuts.
U.S. policymakers would do well to learn from the disaster in the European Union. The German bailout money that Greece received has plenty of strings attached, and Greek citizens are now paying the price for their own government’s irresponsibility. Public services once guaranteed by the Greek government, for example, generous pension plans, are no longer ensured.
In the U.S., the same outcome may become a reality if policymakers continue to dance around the issue. The economy is one of the hottest topics for people to talk about in Washington, but little seems to get done. In a country this big, it’s impossible to stop spending money altogether. But Congressional bickering doesn’t help. A major problem with the slow response to our own economic situation is that partisanship plays too big a part in policymaking.
So where do we fit into all of this? Truth be told, I’ve become more frustrated about the economic situation in Europe after writing this piece. But it has also reaffirmed my belief that keeping informed is one of the most important things we can do. As confounding as economics can be, they are important, and they affect everyone. Additionally, as a voter, you have a powerful voice. Make it heard, write Congress on what you think needs to be done.
Economics is tricky, yes. But stay informed, pay attention to stocks, and keep up on your current events. Whether we like it or not, economics will always play a role in our decisions, and in our politics.
Contact CU Independent Staff Writer Taryne Tosetti at Taryne.email@example.com.