Basic Critical Thinking Essay Example | Topics and Well Written Essays - 500 words

Basic Critical Thinking - Essay Example The European debt crisis is one of the most critical financial huddles encountered by the global economy, but the problem is also perhaps the hardest to appreciate. The global economy has undergone slow growth since the financial crisis of 2008, which revealed the unsound fiscal policies of European countries and other countries across the globe (Rushe, 2012). Greece, which engaged in vigorous spending for years, was unable to institute financial reforms; thus was one of the initial countries to suffer the consequences of weak growth. This problem is relevant to the modern financial world since it reveals how slow growth causes slow tax incomes, resulting in exceedingly high and unsustainable budget deficits. The magnitude of the problem became evident as Greece announced that the country’s debts exceeded the entire size of its economy. In order to curtail the European debt crisis, the European Union established a series of bailouts for the troubled economies, beginning with the 2010 110 billion Euro bailout for Greece, and subsequent bailouts for Ireland and Portugal in 2010 and 2011, respectively (Lynn, 2010). The EU and IMF establishe d a debt restructuring strategy for the countries experiencing debt issues. However, the action plan moved quite slowly because the EU requires consent from all union members before dispatching bailouts to troubled countries. It is hence critical that the EU develops effective and timely strategies to assist its member countries recover from the debt crisis. The problem essentially concerns European countries’ inability to pay off their debts, owing to their dwindling economic capabilities. The boundaries of the problem situation are essentially the bounds of the European Union, and some of the most viable alternatives include seeking financial assistance from the international community so as to bail out all countries affected by the debt crisis. The greatest advantage