Europe in transition - Lessons to be learned

Abstract

The European Union has experienced a recent roller coaster like experience over the past three years. At first glance, when Lehmann Brothers went bankrupt in 2008, the original causes of this debacle were attributed to the mortgage crisis (the subprime bubble) in the United States. Too many mortgages that were too cheap made too many Americans homeowners who suddenly could no longer afford to pay. It seemed to be a strictly American problem for having lived beyond their means. Europe's challenge seemed limited to avoiding a contagion from the U.S. financial crisis. Three years later, the tides of fortune changed. The sovereign debt crisis in Greece, Portugal and Ireland, and perhaps also in Spain and Italy, has turned into a crisis of the euro, or even a crisis of the whole European Union. It should not be forgotten that France and Germany also have huge public debts. Under the wave of feelings of fear, not only causes and effects were confused, but also contexts and implications. It is time to put things back into perspective in order to understand each of them. I will attempt to do so by offering ten points for reflection.