The Great Recession and the current situation

The Great recession is a global economic decline that began in December 2007 and took a particularly sharp downward turn in September 2008.

The outbreak phase of the crisis, manifested as a liquidity crisis.

The bursting of the U.S. housing bubble caused the values of securities tied to U.S. real estate pricing  to plummet, damaging financial institutions globally.

The global recession has affected the entire world economy , with greater difference to some countries than others.

The proximate cause of the crisis in 2008 was the failure or risk of failure at major financial institutions globally. The European housing bubbles began to deflate during the 2007-2009 period, depending on the country.

The origin of these housing bubbles involves two major factors:

-Low interest rates in the U.S. and Europe following the 2000-2001 U.S. recession;

– Significant growth in savings available from developing nations due to ongoing trade imbalances.

These factors caused a large increase in demand for high-yield investments. Large investment banks  fueling housing bubbles in the U.S. and Europe

The crisis in Europe generally progressed from banking system crises to sovereign debt crises, as many countries elected to bailout their banking systems using taxpayer money.

Several countries received bailout packages from the European Commission, and European Central Bank, which also implemented a series of emergency measures, but five years after this great recession the world economy is still struggling to recover.

During 2012 a growing number of developed economies have fallen into a double-dip recession:

– firms and households is holding back normal credit flows and consumer and

investment demand;

-unemployment remains high;

-fiscal austerity responses to deal with rising public debts are further deterring economic growth, which in turn is making a return to debt sustainability all the more difficult;

-bank exposure to sovereign debts and the weak economy are perpetuating financial sector fragility, which in turn is spurring continued deleveraging.

This are the causes and the current situations.

 

 

 

 

Authors: Antonella Cassarà, Tedi Marković, Isabel Tina Braun, Ivana Mišura 

Sources:

http://www.un.org/en/development/desa/policy/wesp/wesp_archive/2012wespupdate.pdf

http://en.wikipedia.org/wiki/Global_economic_crisis

 

Andalusia: Romania and Bulgaria Left out of Spain’s Labour Market

 

With the accession of Romania and Bulgaria, there has been a transitional period of seven years to limit the certain conditions. Those limitations refer to the free movement of workers and can be applied by the European member states. Now, Spain applied those restrictions to help their country out of the economic and labor crisis.

Due to the poor situation of the Spanish labour market, the European Commission agreed on the prolongation of the restrictions regarding Romanian as well as Bulgarian workers. But the restriction is only a temporary limitation to ease and loosen the tense situation of the Spanish and especially the Andalusian labor market. However, the restriction expires on December 31, 2013 and no further prolongation is admitted. Reason for this decision is the “Act of Accession” from Romania and Bulgaria of 2005. A specific clause allows member states to reintroduce restrictions concerning the exclusion of Romania and Bulgaria from their national labor market but only if there are serious problems and only if the European Commission agrees on the request of the member state.

On January 1, 2007, Bulgaria and Romania entered the European Union. Only two years later Spain opened up its labor market on the free movement of workers. Only two years later in 2009. Bulgarian and Romanian workers had the possibility to interact in the Spanish labor market until August 2011. Even though the Bulgarian and Romanian do not interact anymore, the situation of the Spanish labor market deteriorates further and further. The EU Commissioner for Employment, Social Affairs and Integration László Andor searches for other reasonable causes. The political and economic crises have left their scars in Spain. But according to Andor, is the restriction of the Spanish labor market is not the right decision to improve the situation of the labor market and its high unemployment, especially the high unemployment of the youth. As a conclusion Andor adds that it is a must to observe the Spanish labor market in the following to add new restrictions or loosen the other ones to improve the situation.

 

Situation in Andalusia – Spain’s Poorhouse

There are over 8,4 million people living in Andalusia which makes it the biggest region in front of Catalonia and Madrid in Spain.The region has many problems caused by the economic crisis, like the whole country in general. It has to be said that Andalusia has the highest unemployment rate of over 30% in September 2011 and according to the National Public Employment Service’s Job Observatory in Cordoba the rate increased over 5% when compared to previous year. It is worth noting that women are especially affected.3 Out of the people who are between 16-25 years old there is a staggering unemployment rate of over 50%. This makes Andalusia the region with the worst rate out of the 27 European Member States.4 Compared to the average unemployment rate of 10,7% and youth unemployment rate of 23,4% in 2012. In 2007 the unemployment rate in Spain had an low of 8,3%, but since then the rate increased.5

Spain Unemployment Rate – Percentage of the Labor Force

blog_(first_graph)

Source: http://www.tradingeconomics.com/spain/unemployment-rate

Approaches to Improve the Spanish Labor Market

Unemployment in Spain by Ethnic Origin: Comparison of Romania and Spain.

blog_(second_graph)

Source: http://www.andaluz.tv/nachrichten/nachricht-spanien-international.php?idArt=11596&url=spanien-rumaenien.

In 2012, there were over  17% of Spain’s entire population who have Romanian roots with a tendency to increase. Referring to data from the European Union Labor Force Survey, there is a large number of Romanians who are unemployed.2 Indeed the unemployment of in Spain living Romanians is higher than the unemployment of the Spanish. Nevertheless, the bad management of the politics and the not-implementation into sustainable industries is a further serious drain on the economy.3

Sources:

web1:

EURES The European Job Mobility Portal (2012): “Free movement: Spain”.

http://ec.europa.eu/eures/main.jsp?acro=free&lang=de&countryId=ES&fromCountryId=RO&accessing=0&content=1&restrictions=1&step=2.

[30.04.2013]

web2:

andaluz.tv (2012): „So kann es auch gehen!“.

http://www.andaluz.tv/nachrichten/nachricht-spanien-international.php?idArt=11596&url=spanien-rumaenien.

[30.04.2013]

web3:

EURES The European Job Mobility Portal (2012): “Labour market information, Spain – Andalucía”.

http://ec.europa.eu/eures/main.jsp?catId=452&lmi=Y&acro=lmi&lang=en&recordLang=en&parentId=&countryId=ES&regionId=ES6&nuts2Code=ES61&nuts3Code=null&mode=text&regionName=Andaluc%C3%ADa.

[30.04.2013]

web4:

andaluz.tv (2012): „Cartama erhält 1,5 Mio. Euro aus Brüssel für Arbeitsbeschaffungsmassnahmen“.

http://www.andaluz.tv/nachrichten_costa_del_sol/det_nachrichten_costa_del_sol.php?idNot=8126.

[30.04.2013]

web5:

andaluz.tv (2013): „Cadiz mit über 40% am schlimmsten betroffen“.

http://www.andaluz.tv/nachrichten/nachricht-andalusien.php?idNot=11115&url=arbeitslosenzahlen-andalusien-spanien.

[30.04.2013]

 

Written by Tina Isabel Braun, Tedi Marković, Ivana Mišura, Antonella Cassarà