By NANCY RYERSON
A major European debt crisis threatens the entire region’s stability. Countries have cut back government benefits like retirement plans to try and save money, and some countries have needed the rest of the countries in the European Union (EU) to save their banks.
Twenty-seven countries in Europe make up the EU, and 17 of those countries share the same currency, called the euro. That means if one country is having economic troubles, the other countries that share the same currency will also have problems.
The first country to experience economic troubles was Greece. Some of the country’s past leaders had lied about the amount of money Greece owed to other countries, leading to government over-spending. Once the current leader took over, the country owed more money than it could pay for.
Another country greatly impacted by the economic crisis was Spain. At first, the Spanish economy was flourishing (doing great). Housing prices went up because people could afford to pay for them. But then housing prices grew too high and the “bubble” popped, leaving people with homes they could not pay for. Homeowners also could not pay back banks that lent them money, eventually leading to a bank bailout in June 2012.
Experts worry that the debt crisis will spread to even more European countries. Wealthy countries, such as Germany, are working to make sure the EU can stay together and sustain its economy in the long run, and countries like Greece hope to be able to recover soon. “We are a proud country. We don’t want to rely on borrowed money,” said Greek Prime Minister Antonis Samaras. “We want to stand on our own two feet.”
Op-Ed PODCAST:IRATI EGORHO DIEZ, age 10, explains the EU economic crisis.