The current financial crisis in Europe has become very serious and it is to the point where there is a fear that if it is not resolved, the entire world economy could sink into a recession. The source of this current crisis can trace back to the real estate bubble collapse and the mortgage investments derived from this market back in 2008. But the problem in Europe is different. It has everything to do with the structure of Europe and their ability to respond to the issue of debt among members of the European Union. In general there is crushing debt that must be dealt with while at the same time keeping growth positive. These two concepts are not compatible with each other, so there is a need to balance short term needs for economic growth with long term needs of reducing deficits.
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The Current Financial Crisis in Europe
In the United States this problem is currently seen as one producing political deadlock. Investors around the world can see the United States as having solutions if politicians embrace compromise. Europe however, is in a much different situation. Although many people like to think of this area of the world as being the United States of Europe, they are not the same. They do have a common currency, but they have no central authority. In the United States, there is a president, but no one person has the equivalent authority in Europe, and this has become a problem. Right now the country in the greatest crisis is Greece. But they are an independent country and cannot be bailed out like a state in America. It is up to the largest nations in Europe, namely Germany, to get the job done. But Germans are hesitant to help, and if this results in a default, a domino of countries will follow.