The Economic and Financial Crisis by the European Union: Lessons to be learned Upheaval and Rescue

Abstract

Just a year ago observers were still declaring the euro to be one of the victors of the crisis. The Icelandic frenzy to join Europe and the euro after years of sarcasm about Brussels’ bureaucracy and the Baltic countries’ determination to undertake deflation policies to maintain a stable exchange rate with the euro seemed to confirm the success of the single currency. Whilst Europe suffered particularly badly during the recession at the end of 2008 and at the beginning of 2009, it had at least been able to avoid the mortal competitive devaluations which had amplified the damage incurred by protectionist policies in the 1930s. At present we have to somehow “climb down”: the euro area is in complete turmoil and following the Greek misery of spring 2010, doubt about Irish public finances in autumn 2010 has caused the euro to plummet once more.