Eu Risk

INTRODUCTION

As we know that in the early years of the twenty-first century, the EU countries facing a big problem that is global economy crisis. Several EU countries facing about the huge current account deficit. For examples, the collapse of Lehman Brothers, banking crisis and so on. The government in the European Union was obligated to borrow money to offset their own country deficit. That was the question facing by the policymakers in European Union: How to solve this economy crisis? Use austerity measures? Use other policy to handle it?

Although the Euro is officially begun on January 1, 1999 has brought many benefits to companies in euro zone such like reduce the exchange rate uncertainly. But it does not mean that the economy of the European country will become better and better. Greece is a good example who is facing the sovereign debt crisis, not only Greece at risk, other country like Spain, Italy, Ireland, and Portugal also at risk.

When the government imposes the austerity measures, the citizens in that country will do the protestation. We cannot determine that which sites are right or which sites are wrong. Because the government made this policy is to maintain the economy and reduce the quality life of their citizen, and citizens protests is to maintain their quality of daily life.

QUESTION 1: Why are Greece, Ireland, Italy, Portugal, and Spain sometimes referred to as the euro zone's peripheral countries?

The peripheral countries are those that are less developed countries. These countries usually have a disproportionately small share of global wealth. There are three features that can describe the problems that occurred for the peripheral Euro zone economies: domestic preconditions and instabilities, current account deficits and the euro, and outside contagion from the US. 

The first are local instabilities and the way these countries ran their economies in the wake of the crisis. This doesn’t in all cases imply budget deficits and...