Greece, Ireland in the middle of the European debt crisis
A summit was held in Brussels on the 21 th of July 2011. At the summit the leaders in the euro zone reached a consensus that they would work to lower the European Union loans interest rates to at least 3.5%. The European leaders, the IMF and the banks agreed on the 27 th of October 2011 for the banks to write off half of the debt the Greeks had in order to reduce the effects of the European debt crisis. The amount written off came round to about %u20AC100 billion. This was done so that Greeks total debt would be reduced to at least 120 % by the year 2020. The president of the interim government of the national union Lucas Papademos handed in his official blueprint for the budget for the year 2012 on the 7 th of Dec 2011. He promised that the deficit would drop from the then 9 % to 5.4 % in 2012. This was going to be made possible by a write off that was being held in the banking sector. If payments of interest are set aside, Greece might even see a surplus of 1.1 % in 2012. It is now a fact that the debt crisis of Ireland was not caused by an over expenditure on the governments part. It was as a result of the state offering to guarantee six banks that had financed the property bubble that was on at the time. He finance minister then, Lenihan, gave a one year guarantee to the banks on the 29 th of September 2008. He also went on to add a further one year guarantee in September of the following year following the launch of NAMA which was a body put in place to take away bad loans from the group of banks. At the time this was happening, Ireland had lost almost %u20AC 100 billion mostly due to defaulted loans especially during the property bubble which burst in 2007. Ireland’s gravest mistake occurred when instead of letting the bondholders who had taken the loans suffer the loss they got money from the ECB to pay off the debts and in doing so transferred the debt to its citizens. This happened when the body called NAMA bought 80 million in euros of the bad loans. This is when Ireland really felt the European debt crisis. It was in the year 2008 that the economy of the Irish people collapsed.
