The consequences of U.S. financial crisis of 2008 include slow growth of global economy.  The crisis was caused by the unsustainable fiscal policies of European countries. Greece was the first European country that was severely weakened by the globe debt crisis. Its unsteady economy and unsuccessful fiscal reforms lead the country in the “wrong” direction. In late 2009, the Prime Minister George Papandreou announced that previous governments had failed to expose the true size of the nation’s deficits.  Actually, Greek debt was so large that it exceeded the size of the entire economy. The country no longer conceals the problem. Investors took measures by demanding higher yields on Greece’s and caused raising  cost of the country’s debt. This situation imposed to European Union and European Central Bank to make extra efforts. They granted bailouts to Greece. On the other hand, the markets began driving up bond yields in the other heavily indebted countries, anticipating similar problems.

The European Union and the International Monetary Fond were forced to allocate bailouts to all troubled European economies. Greece accepted three amounts of extra financial resources from the ECB and the IMF. They tried to help it to overcome its debt crisis by lending millions of euro in the spring of 2010, in mid-2011 and in March 2012. Other countries such as Spain and Italy accepted bailouts as well. Their financial instability is large too, but the debt crisis there is not so deep such as the Greek one.

Unfortunately, the measures of European policy helped stabilize the financial markets in the short term. For this reason, they were widely criticized. The larger issue is that Greece is a small country and its woes for European Central Bank are comparatively easy to solve, but countries such as Spain and Italy are too large to be saved. The European Union should take tough measures and maintain strong fiscal health of all its members, especially the most vulnerable ones.

The present debt crisis proves to humanity that there is nothing completely certain. Financial irresponsibility caused globe financial problems. The “Domino effect” proved that all countries play important roles in world markets and they should do it with high attention and cautious actions.

The debt crisis affected the bigger part of the world. The financial collapse began because of the irresponsibility of the American financial institutions but it overspread all around the globe quickly. The EU countries experienced serious sovereign debt problems.  The latest reports show that Asia could be affected by the crisis as well.

The Asian Development Bank warns that it is possible for Asian countries to be seriously influenced by the Eurozone debt crisis. The Asian region is the most fast-growing one globally. According to ADB, the Chinese economy will growth at 7 % this year and 7,5 % the next one. These fast-growth rates are praised but China still has its social problems. Regardless, Chinese unemployment rate is one of the lowest worldwide- just 4,5 %. However, social inequality is high. The gap between the poor and the rich should be reduced, because it is possible that the Chinese population expresses its social discontent and riots.

However, weaker European demand could hit Asian developing countries such as China, India and Indonesia. The Asian Development Bank has concerns about this complicated situation. The Eurozone sovereign debt crisis presents the greatest risk to Asian economies in the next year. This statement is based on research about European unemployment and decreased consumption. Most affected European countries have passed through the mortgage and financial crisis, the social crisis and the political crisis. It is completely normal that European demand to be restricted. Furthermore, there is uncertainty surrounding the resolution of sovereign debt problems in Europe. This instability conceals risks for Asian producers as well. They should adjust to the present situation. Also, both parts should look for solutions for their problems. The Eurozone should be tough and serious with countries which financial problems that went out of control. Greece and Spain have the most problematic economies and the European Union should make extra effort to stabilize them. On the other side, Asian countries should be flexible in terms of its external consumers.

The present situation worldwide shows that there is no guarantee for anybody. Before the financial debt crisis of 2008 Europe and the U.S. were in their heyday. Today there are new world powers such as China, India and Brazil. These countries managed to convert their economies to super productive ones. They managed to use their human resources in a extremely smart way.  So, what will happen in the future and what will be the relations between the superpowers, it can be just predicted, but not completely sure.

During 2008 the latest devastating worldwide financial crisis started. Humanity has seen lots of crises of various types but nobody believed a financial collapse of this magnitude could happen again. It was an enormous surprise for the world when the giant Lehman Brothers went bankrupt. Many people were concerned that this event was the beginning of the financial debt crisis, but actually before this corporate collapse many American people were not able to pay their mortgage. This complicated situation was based on wrong financial management and lack of transparency. The enormous desire of banks to make more and more money,made them irresponsible. Most banks and other financial institutions allowed the lending of the so-called “subprime mortgages”. Literally, they would lend credit to everyone who wanted it without checking his/her financial background or credit history.  This model fell apart and started the new debt crisis.

The financial crisis changed the growth pattern of the world. The mortgage crisis affected deeply the US, Europe and Asia. This collapse changed the power balance in the world. There are new super powers such as China and Brazil.

The US problems began with the debt crisis but their consequences are not just financial. The American crisis is not just a mortgage crisis, but also a social and economic one. Unemployment went up and public discontent grew as well. The American president Barak Obama promised serious reforms in the healthcare and educational sectors. Another problem was the crisis of the value of the dollar. Actually, the dollar crisis is strongly related to the debt one. Weak financial institutions raised the distrust in the American currency. However, diminishing competitiveness and financial excess (the enormous American budget deficit) are the real factors that influenced the crisis. By April 2012, the U.S. had serious problems with its deficit, which reached record high levels.

The European crisis began later and “flourished” after the end of 2009 to the present 2012. European countries experienced a sovereign debt crisis as well, but some of them deepened their instability. Countries such as Ireland, Greece, Spain and Italy has had tough crises which continue to the present moment. Ireland and Italy coped with some of their problems. They accepted help from the most powerful European countries such as Germany and France, and from some lenders of last resort such as the IMF and European Central Bank. Spain and Greece are still in a difficult situation. They are not able to handle their high levels of unemployment and economic instability.

What will happen in the near future is not certain. Directions are changing permanently. Political leaders should be more responsible and take well thaught decisions about the future.