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Financial and economic - Crisis 2008 in the EU.docx

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Financial and economic crisis of 2008 in the EU – Roots, effects and aftermath. - Economic History approach - Theory - Statistics I. Brief Introduction to the EU II. The financial and economic crisis of 2008 and its effect on the European integration - The American crisis spread to EU instantaneously - All countries were infected - Housing bubbles - Trust is the first victim of the financial panic - FDI inflow declined by nearly 34% by 2008. - In October 20
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  Financial and economic crisis of 2008 in the EU  –  Roots, effects and aftermath. -   Economic History approach -   Theory -   Statistics I.   Brief Introduction to the EU II.   The financial and economic crisis of 2008 and its effect on the European integration -   The American crisis spread to EU instantaneously -   All countries were infected -   Housing bubbles -   Trust is the first victim of the financial panic -   FDI inflow declined by nearly 34% by 2008. -   In October 2008 bailouts, huge bank losses and the freefall of stock exchanges -   In November 2008 the EC announced a 200billion recovery plan  –  European Economic recovery Plan (5% of the EU’s aggregate GDP)  -   The decline in the entire economy became unavoidable. -   Lack of credit, loss of stock values, confidence and trust slowed down the European economy -   In February 2009, the euro- zone’s GDP dropped by 1.5% the industrial output declined by 3.5% in a year -   Europe declined into a major economic recession in 2008/2009. -   The previous super performers Baltic countries suffered a dramatic decline -   The recession did not last for years and the Baltic countries returned to the pre-crisis growth pattern -   Rapid recovery of Europe after the crisis? -   Five countries reported recession on the peripheries  –  crisis of the common currency   The crisis of the euro -   Transformation a financial and banking crisis into a sovereign debt crisis -   Public indebtedness : 137% in Greece, 119% in Italy, 85% in Portugal, 79% in Great Britain -   The common currency was endangered -   Harsh austerity policy -   The European banks had to be recapitalized -   The general confidence in the European Union disappeared -   Selling the government bonds became increasingly difficult -   Increasing interest rates  –  extremely expensive loans for the debtors countries -   The possibility of default in two or three euro-zone countries endangered the euro Why trouble makers? -   Indebtedness became dangerously high in Italy and Portugal -   Household debts! -   Crisis hit countries were located on the eastern and southern peripheries of Europe -   PIIGS -   Sick men of the EU The PIIGS as peripheral countries were latecomers to industrialization and economic modernization They maintained a dual economy and institutional weakness Backwardness means clientalism and corruption The state is an enemy  –  tax avoidance is a virtue TAX AVOIDANCE Tax collection has virtually collapsed in Greece in 2011 In Italy 0.17% declare income over 200 000$ and 210 000 luxury cars are sold a year Social networkings is a strong substitute for efficient institutions Black economy 25-28% of the greek GDP and 22-26% of the Italian GDP  Szabolcs.pasztor@econ.unideb.hu Faire summary du cours de 5 pages a rendre avant vendredi 21h Irrzsponsible borrowing and spending worked during years of prosperity, the financial crisis stopped the cash flow All of a sudden getting fresh money and credit became extremely difficult The greek crisis did not come to surface in 2008 As it turned in 2008 the budget deficit was 12.7%, 300 mn € public debt, 110% of GDP   Lesson 7 Changing patterns of consumption and reckless borrowing in the EU Globalization and consumption -   Imitating the previously never heard consumption patterns -   Consumption as a value in itself -   Consumption has become a pleasure -   Product as a pleasure, pleasure of the advertisement and purchase -   The EU as a special region Stages in the development of consumer society -   1880- 1945 : Mass production and standardized goods  –  modern consumer in the west -   1945  –  1970 : Mass consumption society, goods available for every social group (Fresswelle  –  eating wave, Kleidungswelle  –  clothing wave, Reisewelle  –  Travel wave) -   1970- …. : Society is organized for consumption “ Marketing did not promote materialism. Quite the opposite. It promotes a narcissistic pseudo spiritualism based on subjective pleasure, social status, romance, and lifestyle as a product’s mantal associati  ons become more important than its actual physical qualities “    “Shopping and spending is the main form of construction and reconstruction of self identity  . A  personalized self identit can be communicated to others through the use of various symbols”     Consumarism in Europe -   A relatively new phenomenon that began in the 70’s - 80’s  -   The USA had a tremendous demonstration effect on the European countries -   The latecomer and poorer countries wanted to follow suits Giddens “ The  consumption of ever novel goods becomes in some part a substitute for genuine development of self; appearance replaces essence”   “Mental illness of narcicissism, the intense need for admiration, a strong status seeking desire, to display wealth, status and taste”  MARC DAVIS : COMMERCIALIZATION “Every aspect of human social life across the life course has been commerc ialized including music, sports, the human body and even death”  Today capitalism produces not only goods and services, but new desires what to have. The new products, besides satisfaying new pleasures, also have a mental association that is sometimes more important than the financial qualities ERIC HOBSAWN “Even an average person could live as only the very wealthy lived in their parents’ day”   JK GALBRAITH “Demand depends on corporate production and manipulation of the consumers and the “invisible hand” plays a very limited role”  SPAIN AND PORTUGAL So called noble societies where the small noble elite and the gentry’s attitude formed the “national characteristic “ living beyond one’s means spending more than one earns, was an old tradition that expressed elegance. Thrift was look down upon. “The 20 th  century is recognized as a moment when traditional fears of debt and feelings about the va lue of thrift were overtaken by the appeal of a hedonistic life style”  

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Jul 23, 2017
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