Europe's Sovereign Debt Crisis; DSK's Scandal
Europe's sovereign debt crisis seized global stock markets for the good part of 2011. Debt problems that started in Greece spread to larger players on the Continent, namely Italy, Spain and France. Portugal became the third eurozone country to seek and receive aid in April. The eurozone also approved further bailout money for Greece in the summer as the country faced an imminent default.
By September, fears escalated that Italy would be next to ask for assistance. The euro fell below $1.30 and hovered just a bit above that. Sovereign borrowing costs across the eurozone surged with Italian 10-year bond yields spiking dangerously to unsustainable levels. By the fall, major ratings agencies warned of a possible mass downgrade to credit ratings in the region.Because Germany is the lone player of the eurozone that can provide credible funding that would resolve the crisis, the country faced intensifying pressure to make sacrifices for what it viewed as its profligate neighbors.
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