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What is the sovereign debt crisis?

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The European sovereign debt crisis began at the end of 2009, when the peripheral eurozone member states of Greece, Spain, Ireland, Portugal and Cyprus were unable to repay or refinance their government debt, or bail out their beleaguered banks without the assistance of third-party financial institutions such as the ... read more

A sovereign debt crisis is generally defined as economic and financial problems caused by the (perceived) inability of a country to pay its public debt. This usually happens when a country reaches critical high debt levels and suffers from (perceived) low economic growth. read more

The European sovereign debt crisis started in 2008 with the collapse of Iceland's banking system and spread primarily to Portugal, Italy, Ireland, Greece and Spain in 2009. The debt crisis has led to a loss of confidence in European businesses and economies (see The European Banking Crisis Explained). read more

Other countries, like Ireland, Portugal, and Italy, had also overspent, taking advantage of low-interest rates as eurozone members. The 2008 financial crisis hit these countries particularly hard. As a result, they needed bailouts to keep from defaulting on their sovereign debt. read more

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European Sovereign Debt Crisis
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