Khademallah Yassir
Academic Paper
Throughout the last 4 years, the world has been obsessed with the word “crisis.” Newspapers, magazines, websites, TV shows and many others were portraying the reality of the world based on the different connotations that the magical word crisis have. For some people the word means opportunities in the market and for others just accumulated losses and risk. Well, I could say that I am lucky because I have lived in a period of crisis because it has shaped my knowledge about the financial sector and its mechanisms. The sub-prime crisis that started in the US was a very challenging moment in the history of modern world, which showed that the capitalist system is weak because of greed aspects that surround it. Irrationality of choices and crazy profit seeking techniques made the world goes into a deep recession as a consequence of humans’ deeds. Thanks to the effort by the governments around the world, this crisis has been neutralized in some degree, but its leftovers are still hitting the world market and especially the European one.
When all the world was recovering from the big crisis of 2007, Europe was hit with a news that would change its future expectations. The news was about Greece whose budget deficit reached 12.7% of GDP. This reality have had an effect on the bond market since the yield on ten-year Greek government bonds arched to 7.1%, the highest since the country joined the euro area and about four percentage points more than that on German bunds, the euro zone's safest investment. This was a reaction to the decline in the ratings of the major agencies due to the default risk that might hit the bond market in Greece. All Europe was concerned about restoring confidence in that miserable country. Greece is not the only country about which the bond markets are troubled. On the same day as the commission approved the Greek plans, investors were selling Portuguese bonds.
The Europe region appears to be lagging behind